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, centred 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 recognise 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.”
However “uncommercial” public sector support for the sector has been
criticised 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.”
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