Investors recognise this. The latest survey of European utility investors by Exane BNP Paribas for October shows the UK ranking highest for political risk, and that is partly why the UK’s spare generation capacity at peak times could fall as low as 2 per cent in 2015-16, according to Ofgem.
Yet large energy companies such as ScottishPower and its parent Iberdrola continue to invest in the UK – we have 5.6 million customers who need power and gas 24 hours a day.
So it was interesting to read a recent commentary in The Scotsman by former energy minister Brian Wilson. We agreed with several of Brian’s points, including the importance of our Longannet power station in Fife in ensuring Scotland’s energy security. This was pertinent given the high charges Longannet and other Scottish plant face to be connected to the national grid, compared with generators in southern England.
But Brian also asked what had happened to Iberdrola’s promised multi-billion pound investments in the UK and was anyone counting?
Well, we have counted all of the £6.3bn Iberdrola has invested in the UK since the integration of ScottishPower in 2007. For 2014-16 Iberdrola is investing £7.7bn globally, with the largest proportion, 41 per cent or £3.12bn, going to the UK, mainly in transmission and distribution networks and wind farms. Annual investment in the UK has more than doubled from £600m in 2006.
After putting £2.8bn into distribution networks from 2010-15, we are finalising with Ofgem a £4.7bn programme from 2015-23. In long distance transmission, we are implementing a £2.6bn programme from 2013-21, including a 2,000MW sub-sea interconnector linking Scotland with England, allowing Scotland’s windfarm power to flow south and baseload power to flow north. These projects are based on investment returns determined by Ofgem following public consultation.
If we don’t invest, it is difficult to see who else would. Then the lights would definitely go out.
• Keith Anderson is chief corporate officer of ScottishPower