Aquamarine Power, an Edinburgh-based company that specialises in wave energy, has called in administrators. The move comes just weeks after being awarded a 580,000 grant from the EU to help speed up the development of its commercial wave energy technology.
According to Aquamarine, the current economic climate is to blame for its financial difficulties.
James Stephen, from administrators BDO, said: "The lack of private sector backing to supplement public funding support placed the company under cash flow strain and the directors concluded the best prospect of concluding a transaction was via the protection of administration."
Mr Stephen added that Aquamarine has liquid funds, which will allow the strategy to be pursued.
"We are continuing discussions with interested parties who were in discussions with the company prior to our appointment and are working closely with the Aquamarine Power board to engage with other potential purchasers," he said.
Aquamarine added that its 14 employees would be retained as an attempt is made to sell the business.
Chief executive at Aquamarine, Paddy O'Kane, said that the team has worked tirelessly over many years to design, build and demonstrate its wave energy machines.
"During this time we have achieved a number of major milestones that have put our technology at the forefront of the industry," he added
Two of the company's full-scale wave energy converters, which are called Oysters, have already been built and are running at the European Marine Energy Centre in Orkney.
"Oyster is the only wave technology to have proven it can operate in all ocean conditions and we have a superb understanding of how well Oyster captures energy at sea," Mr O'Kane explained.
"However, today's news underscores the financial as well as technical challenge in bringing an entirely new form of energy generation to commercialisation," he said, adding that private sector funding is now required to deliver the firm's "technology roadmap".
Commenting on the news, energy Minister Fergus Ewing said it was disappointing.
"The company has benefited from significant public support in recent years to commercialise its wave energy technology and has built up valuable expertise and intellectual property in the sector," he explained, adding that he is pleased the administrators plan to continue trading during the search for a buyer.
He also said that the Scottish government is "committed" to the marine energy sector.
"That's why we created Wave Energy Scotland, the biggest wave technology development programme of its kind, because we recognised the many challenges facing this developing industry."
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