Industry News

Scottish Enterprise Takes Huge Loss as Pelamis Sinks £16m Beneath the Waves

According to an article appearing in The Herald (Scotland):

“The collapse of Scotland’s pioneering wave energy generator Pelamis has led Scottish Enterprise to its biggest ever write off in a single year, the agency’s annual report and accounts have revealed.

 

The summary of losses and amounts written off in accounts published last week show that SE wrote off a total £23m in irrecoverable balances to 47 companies, of which £16.3m or 70% was owed by the Edinburgh-based Pelamis.

The sum represents SE’s biggest single loss in a single year, £10m or 44% more than £13m that SE wrote off in 2013-14.

Paul Lewis, Managing Director at Scottish Enterprise called the loss "exceptional" but pointed out that support for the company covered 10 years of its ultimately unsuccessful development costs and ocean trials.

Led by Richard Yemm, Edinburgh-based Pelamis called in administrators KPMG in November 2014 after failing to secure development funding. No buyer was found in a subsequent search, and the company’s 56 employees were made redundant later that year.

The collapse of Scotland's flagship deep water wave energy company, closely followed by the near-collapse of its near-shore counterpart Aquamarine, marked the nadir of the fortunes of Scotland’s fledgling wave energy sector, centered around the European Marine Energy Centre in Orkney.

The failure of the investment model led to the establishment of a new public body called Wave Energy Scotland, with a radically new approach based on incremental advances in technology rather than sea trials of full-scale prototypes. Lewis said: “This is an exceptional year given the £16 million write off in Pelamis Wave Power, that went into administration late last year. It’s important to recognize that this investment spanned over a decade and also secured more than £70 million funding from the private sector.

“Since 2003, our investment activities have secured more than £500 million private investment in Scottish early stage firms and supported thousands of jobs. We’ve also generated £38 million in income over the last three years through this work.”

Kerry Sharp, Head of Scottish Investment Bank, said: “Backing Scotland’s early stage companies is not without risk, but it is critical for growth in our economy. Our co-investment model is about managing and sharing that risk as effectively as we can.” Share article.

However “uncommercial” public sector support for the sector has been criticized by the economist Tony Mackay who said: "Scotland's public bodies have provided a lot of support for the industry over the last few years but there has been increasing evidence that some of it has been poor value for money."

To read the original article, click here

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