The proposals are contained in the consultation paper, Building a Hydro Nation, which examines how Scotland, in particular Scottish Water, can better exploit its expertise, assets and Scotland's water resources.
Scottish First Minister Alex Salmond, says: "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.”
He adds: "This consultation 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 hydro electric schemes in redundant reservoirs; from upgrading sewage treatment plants to harvest biogas, to new wind power projects on its land.
"As Scottish Water develops its wider role, we remain committed to ensuring that average customer charges rise by less than inflation, giving the customer the benefits of public ownership through better service and lower bills. But recent debates which see Scottish Water as a utility to be sold or mutualised completely miss the point. In giving Scottish Water room to grow, within public ownership, we have the potential to create a great Scottish enterprise."
A Scottish Water spokesperson comments: “Scottish Water is happy to take on new opportunities which will allow it to continue to develop as one of Scotland’s most successful businesses and to play a continued role in the future success of Scotland. We can re-assure our customers that our core business of delivering the best quality drinking water Scotland has ever had, a cleaner environment and improved customer service will remain our top priority.
“In our investment programme we support more than 4,000 construction jobs in Scotland as we deliver a £2.5 billion five year investment programme which is continuing the transformation of the water industry.
“In addition, Scottish Water has been making significant inroads on a number of innovative renewable energy developments, including schemes to generate power to supply works. We have also opened an anaerobic digestion plant at Deerdykes in Cumbernauld to transform food waste into renewable energy.”