One of the world’s biggest banks has warned its clients about the dangers of investing in renewable energy projects in Scotland.
Citigroup analysts have called the SNP’s two flagship policies into question by telling investors across the globe to exercise “extreme caution” and take a “precautionary approach” because of the nation’s uncertain constitutional future.
An investors report published yesterday said the debate over Scottish independence was likely to deter investment in renewable energy, which the SNP hopes will generate 100% of electricity within nine years.
Lead author Peter Atherton, a Citigroup research analyst, said £46billion of infrastructure was needed to generate 26 gigawatts of power from windfarms, wave and tidal schemes.
The London-based expert said it was “questionable” if an independent Scotland could afford to pay an annual subsidy of £4billion to deliver that amount of power.
Experts at the firm, which looks after 200million customers in more than 100 countries, said Scotland seceding from the UK would place existing subsidy streams from England and Wales at “grave risk”.
The Scottish Government, which has an annual budget of about £30billion, hopes the sector will drive an industrial renaissance and create 130,000 jobs.
Scottish Secretary Michael Moore said the report, which said the SNP’s policies on independence and renewable energy were incompatible, reinforced the need for the independence referendum to be held as soon as possible.
“It is vital that we maximise the potential of the renewables sector by providing the stable environment in which that can happen,” added the Liberal Democrat MP.
Labour leader Iain Gray said: “The SNP’s refusal to come clean about a referendum is creating uncertainty and damaging Scotland’s economy.”
A Scottish Government spokeswoman said the report claims were wrong because major firms had invested in renewables projects since plans for a referendum in the second half of the parliamentary term were confirmed.
The report, which reflects the opinion of the authors and not the bank, stated: “The referendum process will naturally create huge uncertainty at precisely the time when major investment decisions are due to be made.
“More importantly, that amount of renewable power would require annual subsidy of around £4billion.
“Scotland’s consumer base is far too small to support this level of subsidy.
“Continued subsidy from consumers in England and Wales would be required, but Scotland seceding from the UK would clearly place this subsidy stream at grave risk.”
According to the report, renewable projects in Scotland are currently funded by payments from 27million households and 4.7million businesses across the UK.
By contrast, Scotland has 2.3million households and 300,000 businesses.
The report said renewable investors risked seeing their assets “stranded” in a newly independent Scotland.
“In our view utilities and other investors should exercise extreme caution in committing further capital to Scotland,” it stated.
The government spokes-woman said most renewable energy produced in Scotland will be exported abroad.
“What Scotland doesn’t need are more massive subsidies paid for more costly and dangerous nuclear power stations,” she added.
She said a capital investment of £46billion would create thousands of new jobs.