A leading energy investment expert has cast fresh doubt on the Scottish Government’s confidence in renewables – warning the market is heavily dependent on subsidy.
Edinburgh-based consultant Robert Yates said Alex Salmond was wrong to dismiss a Citigroup report which warned investors against renewables because of uncertainties caused by the prospect of independence.
And he argued the sums behind the SNP’s renewable energy policies are unreliable, because they assume current levels of subsidy will continue.
Mr Yates said: “Investors always dislike uncertainty, particularly in the energy market, where investments in new generation capacity are large and investment recovery is long term, often 25 years or more.
“The Citigroup report highlighted an uncertainty that has been there for some time – in the event of independence for Scotland, renewable generators north of the Border cannot assume they will continue enjoying the level of subsidies they receive at present.
“The response of the First Minister will have added to the uncertainty. He had the opportunity to state categorically that an independent Scotland will continue to support the current subsidies. He did not take it – why not? And let us be clear, those subsidies are huge.”
Mr Yates said offshore wind power is currently subsidised at a rate of 16p per kilowatt hour, compared to 6p per kilowatt hour for gas-fired generation.
He argued in the case of independence, there would be no guarantee that production could be subsidised at the same rate, or that England would continue to buy energy from Scotland.
“Under the EU rules renewable energy could come from any member state, or even from outside the EU,” Mr Yates said.
“In this way Scottish renewables would have to compete for the England, Wales and Northern Ireland renewable market against bio-mass from Finland and Sweden, solar from Greece and Spain, and hydro from Austria and Romania.
“Scotland’s very expensive tidal, wave and offshore wind will be in competition with these much cheaper sources.”
A Scottish Government spokesman dismissed Mr Yates’ comments as “alarmist”.
He said: “Major international corporations, such as Mitsubishi, Doosan, Gamesa and Repsol, as well as domestic firms, are already investing for the future in Scotland’s world leading renewables industry
“And Altium Securities, one of Europe’s leading investment banks, has found that Scotland’s renewable energy sector will continue to prosper, whatever Scotland’s constitutional future, including independence.
“With investment in Scotland’s world-leading renewables industry continuing to the tune of an estimated £46 billion, creating thousands of new jobs in Scotland, we agree with the view of the director general of the IoD [Institute of Directors] that such reports are alarmist.”
Francis Stuart, parliamentary officer for Friends of the Earth Scotland said: “It would seem, by using figures from the KPMG report published earlier this week, this report overestimates the cost of renewables and underestimates the cost of nuclear and fossil fuels,” he said.
“It’s the rocketing price of gas responsible for recent price hikes, not renewables.
“Although the report is correct in pointing to the importance of an interconnected electricity grid, increased investment for fossil fuels and nuclear at the expense of renewables will only lead us down a highly expensive, environmentally unsustainable future.”
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