SCOTLAND??S fledgling renewables industry has been hit with a fresh crisis after energy firm Aquamarine Power announced it is to ??significantly downsize?? its business, laying off all but its core staff.

SCOTLAND??S fledgling renewables industry has been hit with a fresh crisis after energy firm Aquamarine Power announced it is to ??significantly downsize?? its business, laying off all but its core staff.

The Edinburgh-based company said it had launched a consultation process with employees as part of a major restructuring amid reports its workforce could be cut from more than 50 to less than 20.

Aquamarine??s move came less than two weeks after the collapse of rival wave energy pioneer Pelamis into administration. The world-leading renewables firm that had received more than £15 million of funding from the Scottish Government went into administration with directors claiming they had been unable to secure much-needed additional finance.

Both Aquamarine and Pelamis have advanced the sector??s technology with projects in Orkney but renewables industry professionals are reported to have claimed the firms have found it increasingly difficult to persuade backers that their technology can soon be made commercially viable.

Aquamarine Power Chief Executive John Malcolm said the decision to downsize the firm came after a strategic review.

He said: ??This will involve retaining a core operational and management team to run the business and continue maintaining our Oyster 800 wave machine at the European Marine Energy Centre in Orkney.

??We have entered into a consultation process with all of our employees on how we will take forward the restructuring and redundancy programme.

??This is obviously taking place at a difficult time of year and we will be working very closely with every employee to achieve the best outcome for all.??

He added: ??None of this is a reflection on the extraordinary dedication and hard work of every single member of the Aquamarine Power team; rather it is a consequence of the considerable financial, regulatory and technical challenges faced by the ocean energy sector as a whole.

??In a relatively short number of years our business has significantly advanced the goal of generating electricity from waves and this has relied wholly upon the bright ideas, innovation and talent of the people who work here.

??We remain confident that Oyster technology offers the best route to a commercial near shore wave energy machine.??

The Scottish Government recently announced it would set up a new technology development body to encourage innovation in the wave energy industry.

It added that Wave Energy Scotland would bring the best engineering and academic minds together to work on furthering the technology.

The downsizing of Aquamarine is the latest to beset the industry, which former First Minister Alex Salmond, a vocal supporter of wave and tidal power, said had the potential to transform Scotland into the ??Saudi Arabia of marine power??.

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.

Scottish Renewables said recent troubles highlighted the challenging conditions of the sector and the risks inherent in developing new technology.