Have Scottish energy SMEs been left in the cold?

Written by Rod Hutchison and originally published in Energy Voice

With Scotland about to head to the polls, sentiment around the country’s energy policy has become one of the most pressing issues on the minds of voters.

This will particularly be the case for those who own and work in small and medium-sized enterprises in this sector.

Earlier this year, Aberdein Considine released the findings of our 2026 SME Business Outlook, which found that more than four fifths of Scotland’s energy SMEs fear for their survival in the next 12 months.

Surveyed in January, the study of more than 600 businesses showed that concerns about viability in the Scottish energy industry had risen in the last year, up from the 67% recorded in our 2025 SME business research.

Now, a few months on, looking at the developments shaping our energy discourse today, it feels like whenever we take one step forward, we must take another back.

The ongoing conflict in the Middle East led to a dramatic increase in global oil prices and brought energy security into headlines around the world. Recent weeks have also seen a renewed surge in calls for the Energy Profits Levy (EPL) to come to an end, including from Scottish Labour leader Anas Sarwar.

Aberdein Considine’s SME Business Outlook asked energy SMEs if they felt prioritised by the Scottish and UK governments, with more than a third (35%) saying that they didn’t feel that this was case for both. Disagreeing with policy decisions like the EPL will likely be a major driver in this sentiment towards the government.

With viability fears so prevalent in this sector, it is important to look at what factors are driving the heightened sense of anxiety. While our research found that reduced demand and the wider economic downturn remain significant concerns (cited by 40% of respondents), alongside supply chain disruption (37%) and rising recruitment and retention costs (35%), these challenges do not exist in isolation.

For many energy SMEs, these are symptoms of the deeper issues of prolonged policy and fiscal uncertainty, which are filtering through the entire value chain.

Rising operational costs were also identified as a key barrier to growth for 30% of those surveyed. Yet, as many in the sector point out, cost pressures are being compounded by a slowdown in project activity, with fewer contracts being issued and investment decisions delayed as operators respond to an unpredictable environment.

The knock-on effect from this is critical. When investment at the operator level stalls, SMEs will often be among the first to feel the impact, with work pipelines tightening and confidence eroding, leaving many SMEs thinking that government priorities are not aligned with the realities of running smaller businesses. 

Against this backdrop, it is perhaps no surprise that optimism among Scottish energy SMEs has fallen sharply. Just 46% of respondents said they felt optimistic about the year ahead, a significant drop from 83% in 2025.

Last year, we also highlighted that the recovery of debt instructions for energy supply chain firms have seen a 60% increase, driven by suppliers and contractors not being paid on time. This trend, which is reflective of the challenging market conditions oil and gas businesses face, is predicted to continue as prolonged uncertainty rocks the UK’s energy industry.

Given the strategic importance of Scotland’s energy sector to jobs, supply chains and long-term energy security, this raises an important question: why do so many businesses feel they are being overlooked at a time when clarity and support are needed most?

That is not to say there are no signs of change. Indeed, in the months since our SME research was conducted, we have seen a small, but noticeable, sense of cautious optimism across the sector. Recent political signals may suggest a softening in attitudes towards further oil and gas exploration and drilling, but we must wait and see how this plays out.

SMEs and larger operators have a symbiotic relationship, so if conditions improve at the top, this will trickle down and create a stronger supply chain.

However, for many businesses, any potential shifts remain largely rhetorical at the moment, and even if policy changes are announced today, it will be months before any tangible effects are really felt.

No business wants to feel ignored by government, and our survey highlighted the key actions for policymakers to take that could right the ship on energy SME confidence. Close to a third of the respondents from the energy industry said that the Scottish Government could improve conditions to stimulate inward investment, followed by 29% calling for greater availability of grant funding. Cutting taxes or providing tax reliefs was also highlighted as a key measure.

Without a permanent, predictable tax regime, the North Sea will remain an unattractive investment option for operators, which has direct implications for SMEs in the sector.

At the same time, while the growth of renewables remains essential, the reality is that delivery is not immediate. Long development timelines, grid constraints and the gap between consenting and operation mean that renewables alone cannot currently meet energy demands. There is a clear need for a balanced energy mix in the interim.

There are signs that policymakers are recognise this more, alongside calls for a less aggressive fiscal regime that supports investment and stability. But for many in the industry, the message is clear: words alone will not restore confidence - action must follow.

There is perhaps no greater irony than an industry responsible for keeping the country’s lights on and homes warm feeling left in the cold by those shaping its future. Until clarity and consistency are delivered in practice, that sense of uncertainty hanging over energy SMEs will remain, and with it, the risk of long-term damage to one of Scotland’s most strategically important sectors remains high.

Rod Hutchison, who leads Aberdein Considine’s energy sector practice and is a director of the Aberdeen Renewable Energy Group (AREG), has extensive experience advising clients on mergers and acquisitions, equity investments, corporate governance and structures, commercial contracts and employee share schemes.

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Aberdein Considine’s 2026 SME Business Outlook report can be downloaded here.