A WORLD-leading renewables firm that has received more than £15 million of funding from the Scottish Government has entered administration, placing 56 jobs at risk.
Edinburgh-based Pelamis Wave Power announced the move yesterday, with directors saying they have been unable to secure much-needed additional finance.
The firm, recognised as a key player in the wave renewable sector, was the first company in the world to export electricity from an offshore wave energy converter to an onshore grid network.
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Hailed for its innovation by Alex Salmond when he was First Minister, the firm also supplied and commissioned the world's first multiple machine wave farm.
Scottish Enterprise has given £12.9m to Pelamis since 1998 in the form of grants, equity and loans, while the company has also received £2.47m from the Government's Marine Renewables Commercialisation Fund.
A statement from the firm said: "The directors of Pelamis regret to announce they have been unable to secure the additional funding required for further development of the company's market leading wave energy technology.
"As a result the board has reluctantly moved to appoint an administrator to assess the options for securing the future for the business and employees of Pelamis."
The firm said it was dedicated to the success of its "revolutionary technology" and was committed to working with administrators to find a way forward.
In July last year, energy giant E.On pulled out of the Pelamis wave power research project in Orkney over concerns that development of the technology has been too slow.
It was hoped the wave energy converter at the European Marine Energy Centre in Stromness would lead to 500 homes being powered, but doubts were cast over the viability of the scheme without E.On's involvement.
At that time, Pelamis claimed it would not affect its plans to generate electricity on a commercial scale.
The Scottish Government said it would work the administrators to "understand the implications for our investments", adding that its belief in wave energy was "undiminished".
A spokesman said: "This is a sad day for Pelamis and an anxious time for employees and their families.
"Clearly the news that PWP has gone into administration is a matter of real regret. Scottish Enterprise and Scottish Government have been working closely with the company and its shareholders to try and find a way forward and help support the company in its current form."
He said the Government would offer support to affected workers and added: "Early stage technologies such as this can be difficult, but the development of wave energy has been blighted by the uncertainty facing the energy sector more widely following reforms of the UK's electricity market.
"Our belief in the future success of wave energy is undiminished."
Scottish Renewables said the announcement highlighted the challenging conditions of the sector and the risks inherent in developing new technology.
Senior policy manager Lindsay Leask said: "The contribution of Pelamis' employees to the development of this technology has been immensely important, and it is hoped a viable way forward can now be found for the business."
The firm has received significant private sector investment of about £70m, as well as additional funding of £4.89m from the UK Government's Marine Renewables Proving Fund.