The proposal is contained in a consultation paper, ‘Building a Hydro Nation’, released yesterday, which examines how Scotland, in particular Scottish Water, can better exploit its expertise, assets and water resources for the continuing benefit of water customers, the environment and the wider Scottish economy. The paper suggests Scottish Water should have increased flexibility to generate green energy, develop commercial opportunities and take on additional functions.

“Scottish Water, already a huge success story, has the potential to play a greater role in the development of a low carbon economy and grow from a successful utility to become a widely based, dynamic, world-leading water organisation, while remaining within public ownership,” said First Minister Alex Salmond. “Scotland has a world-leading emissions reduction target and is spearheading the transition to a low carbon future. A new era for the management and use of Scotland’s water builds on these actions.”

The consultation document seeks views on the range of opportunities for Scottish Water to take on new activities – from converting redundant treatment works into recycling facilities to putting hydroelectric schemes in redundant reservoirs; from upgrading sewage treatment plants to harvest biogas, to new wind power projects on its land.

The consultation runs until 9 March 2011.