Alex Salmond lays out his plans for a 'hydro nation'

ALEX Salmond has outlined his vision for Scotland as a "hydro nation" that would see Scottish Water generate 5 per cent of the country's electricity through wind farms, water turbines and gas produced by sewage plants.

Launching his consultation paper Building a Hydro Nation yesterday, the First Minister said a publicly-owned Scottish Water could harness biogas from water treatment plants and build wind farms on the 70,000 acres the company owns.

Having ruled out building nuclear power stations, Mr Salmond spoke of the crucial role that could be played by Scottish Water in providing green energy. He said the new borrowing powers recommended by the Calman Commission would help achieve his vision.

The cash made from electricity generating schemes would help keep household water bills down, the First Minister said.

Mr Salmond said: "Scottish Water is a commercial organisation, but a public company. The commercial opportunities are vast. If you take just one of them. Scottish Water is the largest consumer of electricity in Scotland. It consumes about 1.5 per cent of Scotland's electricity.

"A very modest estimate of the generating capacity in the 70,000 acres that Scottish Water has as land holdings would be three or four times that. In other words this company could generate 5 per cent on its own land. Not just from wind, but hydro and other energy projects about 5 per cent of Scottish energy needs."

He added: "This means turning reservoirs into hydro dams, putting water turbines into high-pressure water pipes, putting wind turbines into Scottish Water land."

But the Conservatives, who argue that Scottish Water should be mutualised to release cash, criticised Mr Salmond's approach. Finance spokesman Derek Brownlee said: "We all know Scottish Water will have to be mutualised if it is to realise its potential and generate the best possible deal for the Scottish taxpayer."