Setting the start dir when calling Powershell from .NET?

Setting System.Environment.CurrentDirectory ahead of time will do what you want.

Rather than adding Set-Location to your scrip, you should set System.Environment.CurrentDirectory any time before opening the Runspace. It will inherit whatever the CurrentDirectory is when it's opened:

using (Runspace runspace = RunspaceFactory.CreateRunspace())
{
    System.Environment.CurrentDirectory = "C:\\scripts";
    runspace.Open();
    using (Pipeline pipeline = runspace.CreatePipeline())
    {
        pipeline.Commands.Add(@".\foo.ps1");
        pipeline.Invoke();
    }
    runspace.Close();
}

And remember, Set-Location doesn't set the .net framework's CurrentDirectory so if you're calling .Net methods which work on the "current" location, you need to set it yourself.

You don't need to change the System.Environment.CurrentDirectory to change the working path for your PowerShell scripts. It can be quite dangerous to do this because this may have unintentional side effects if you're running other code that is sensitive to your current directory.

Since you're providing a Runspace, all you need to do is set the Path properties on the SessionStateProxy:

using (Runspace runspace = RunspaceFactory.CreateRunspace())
{
    runspace.Open();
    runspace.SessionStateProxy.Path.SetLocation(directory);
    using (Pipeline pipeline = runspace.CreatePipeline())
    {
        pipeline.Commands.Add(@"C:\scripts\foo.ps1");
        pipeline.Invoke();
    }
    runspace.Close();
}