Alex Salmond is gambling with Scotland’s economy by placing a £46 billion “fantasy” bet on green energy despite its “catastrophic” record of making money, one of the world’s leading banks has told MSPs.
Peter Atherton, Citigroup’s head of utilities research, said the SNP’s radical renewable power targets require up to £7 billion of investment a year but the figure at the moment is only £750 million.
It is “borderline fantasy” that this difference can be made good because banks and international investors do not think green energy schemes provide reliable returns, he said.
The industry expert, who advises the bank’s clients where to invest their money, said utility share prices are “dire” and green energy manufacturers have proved a “terrible, catastrophic investment” in recent years.
Mr Atherton’s evidence to Holyrood’s economy, energy and tourism committee infuriated SNP MSPs but he warned there will only be a market for green energy if oil and as prices remain high in perpetuity.
“You are making a bet that fossil fuel prices will continue to rise greatly forever, so you are taking a very long position on oil,” he said.
“And you are betting that the consumers of the UK generally, or somewhere else in Europe, will be willing to pay for all this. Those are two big bets.
“I’m not sure I’d bet £45 billion on it and I’m not sure I’d bet the economy of Scotland on it. You might want to slow down and see whether those assumptions turn out to be right.”
He said no one knows what fossil fuel prices will be in the middle of the next decade and it is not inevitable they will increase, adding there are numerous examples of people wrongly predicting this over the last 40 years.
Mr Salmond has set a target of generating the equivalent of all Scotland’s electricity from green sources by the end of the decade.
Citigroup estimates this will require between £6 billion and £7 billion a year being spent on new power projects but Scottish Renewables, the industry body, has confirmed only £750 million was spent last year.
Describing the available finances for green power as “grim”, Mr Atherton said: “Utility company share prices have been dire, struggling. The renewable manufacturing companies are terrible, catastrophic investment.
“I’m not saying that this will last forever but where we speak today the idea that the capital markets are going to double, triple and quadruple their exposure to this, given the performance over the last three or four years, is borderline fantasy.”
Andrew Buglass, the head of energy structured finance at RBS, said there were 50 banks that funded renewable energy projects before the financial crash but this has now fallen to 20 at most.
He said the bank has a £50 million fund for small renewable schemes but only for “proven” technologies.
Maitland Mackie, the ice cream tycoon, insisted that wind power is economic but MSPs had to persuade financiers to invest in the sector.
He also disclosed he had named three turbines at his Aberdeenshire company after three of his ex-girlfriends, Margaret, Mirabel and Matilda.