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A cap on returns from energy investment is making Scottish Power's owner Iberdrola reluctant to invest in the UK energy infrastructure.

According to the company's chairman and chief executive Ignacio Galan, he wants to invest in new energy transmission equipment but a cap on returns means the company is unable to raise the money it needs.

"I don't know if British banks will provide the money to make the investment," he said.

He has compared the situation in the UK with that in the US, which will see Iberdrola receive state subsidies to start the construction of a more efficient and cost effective smart grid.

"The normal rate of investment is ten per cent to 11 per cent. The authorities have increased the rate of return to 12.9 per cent. This means we can raise money for doing those things," Mr Galan claimed.

Meanwhile, Iberdrola has said that the Scottish parliament's ban on new nuclear power plants does not affect the firm, which has nuclear interests in a variety of countries.

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