Image caption Citigroup said the referendum process would "create huge uncertainty" over green investment

A major finance group has urged extreme caution over investing in Scotland's renewable energy sector, partly because of the independence referendum.

Citigroup said the referendum process will create huge uncertainty at the moment when major decisions on green projects are needed.

First Minister Alex Salmond dismissed concerns in the report.

He said much of the renewable energy produced would be for export and would help "keep the lights on" in England.

A new report by Citigroup analysts said SNP's two flagship policies - an independence referendum towards the end of the current parliament and a big increase in renewable energy and green jobs - may be in conflict.

It argues the referendum process will "create huge uncertainty" at precisely the moment when big investment decisions in renewable projects will need to be taken.

The report also argues that an independent Scotland would have too small a consumer base to generate the annual subsidy of £4bn, which they believe would be needed to support a hugely increased reliance on renewable energy.

As so often in both politics and business, it is, I suppose, a matter of confidence. Are we optimistic or pessimistic about Scotland's renewable energy prospects?

It states: "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.

"Renewable investors risk seeing their assets stranded in a newly independent Scotland."

The Citigroup report concluded: "Utilities and other investors should exercise extreme caution in committing further capital to Scotland."

But Mr Salmond told BBC Radio Scotland's Good Morning Scotland programme: "In order to get anywhere near the renewable energy obligations that London is going to have, England is going to have to have Scottish renewables from the sea.

"Perhaps the reason why all these international companies are committing funds to Scotland is because in 10 years' time, without Scottish offshore wind power, then there would be a severe danger of the lights going off in England. I don't think anybody is going to want or allow that to happen."

Mr Salmond hit out at the Citigroup report saying: "The analyst from Citigroup, he seems to think we're going to use all this power in Scotland. We're not. It's power for export.

Media playback is unsupported on your device Media caption Alex Salmond: "In 10 years' time, without Scottish offshore wind power, then there would be a severe danger of the lights going off in England."

"Believe me, in the modern world the ability to produce power is a great asset, not a liability."

The first minister added: "If an analyst in Citigroup has a kind of brainstorm, so what? You don't need a crystal ball. You just need to read the book and the book tells you that over the last year alone £750m has been invested in Scottish renewables."

Scottish Labour leader Iain Gray said the report showed "the SNP's refusal to come clean about a referendum is creating uncertainty and damaging Scotland's economy".

He added: "We have been warning about this for months and now we see a major global bank actually advising its clients not to invest in Scotland.

"What is even worse is they are advising clients not to invest in Scotland's key growth industry of renewable energy. The best future for that industry is for Scotland to remain part of the bigger economic market that is the UK."

'Create uncertainty'

Scottish Secretary and Lib Dem MP Michael Moore agreed that the report pointed to a "perfect example of the referendum uncertainty".

He added: "It is vital that we maximise the potential of the renewables sector by providing the stable environment in which that can happen.

"The Scottish government must end the uncertainty and confusion caused by the delay over the referendum and should bring forward their proposals now.

"Scotland's renewables sector has enormous potential, and we are determined that Scotland will feel the full benefit of it. But the report makes absolutely clear that it is only the size and scale of UK investment and its consumer base that will make that happen."

The Scottish Conservative Party's David McLetchie agreed that the referendum was starting to create uncertainty among the business community.

He added: "We have repeatedly called for the SNP to set a single question and to set a date as soon as possible for the referendum so we can settle this matter once and for all.

"With businesses being advised not to invest in Scotland until this is resolved we can ill afford any further delay. We need to start concentrating on what Scotland needs, rather than on Alex Salmond's narrow minded independence agenda."