British Energy and Climate Change Secretary Edward Davey met with Scottish officials to review renewable energy developments in the region.
Davey, in an address to a low-carbon investment conference, said he was "very impressed" with wind and marine developments in Scotland.
"The Scottish Islands are blessed with tremendous tidal, wind and wave renewable resources and we should look to fully utilize this huge potential where we can," he said.
The Scottish government this week unveiled a $164 million Renewable Energy Investment Fund to help attract more private investments in the renewable energy sector.
The fund is designed to complement existing public and private sector financing and will be delivered through the Scottish Investment Bank.
Both sides agreed to form a working group to examine the future development of renewable energy. The first meeting of the group is scheduled for November.
Scotland has one of the most ambitious clean energy plans in the world, setting a goal of delivering 100 percent of its electricity needs through renewable energy projects by 2020.