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Wave Power Technology (Pelamis)

– in the Scottish Parliament on 25th November 2014.

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Photo of Alison Johnstone Alison Johnstone Green

1. To ask the Scottish Government how the development of wave power technology will be affected by the company, Pelamis, entering administration. (S4T-00853)

Photo of Fergus Ewing Fergus Ewing Scottish National Party

The news that Pelamis Wave Power has gone into administration is deeply disappointing. I have spoken with the administrators of Pelamis and with some of the main players in the wave sector to express my continued support for the development of Scotland’s wave industry. It will be an anxious time indeed for the employees of Pelamis, especially at this time of year, and we stand ready to support affected employees through partnership action for continuing employment. Indeed, I raised the matter with Blair Nimmo just this morning.

Wave energy’s development has been hampered by the investment uncertainty facing the energy sector more generally during the United Kingdom Government’s reforms to the electricity market. Pelamis’s administration is a setback for the sector. It brings into sharp focus the difficult environment in which the sector operates, but we should not lose sight of the monumental achievements that the industry has made. Full-scale machines have been tested at sea, the sector has amassed a huge body of technical data, knowledge and experience, and the wave and tidal sectors have invested more than £217 million in Scotland to date.

The Scottish Government’s belief in the potential future success of wave energy is undiminished. I have therefore announced a new model of support for the development of wave power technology: wave energy Scotland. It will promote collaboration between industry and academia to solve the common challenges facing the sector. First, it will seek to retain the intellectual property and know-how from device development in Scotland for future benefit. Secondly, it will assist Scotland’s indigenous technologies towards commercial readiness in the most efficient and effective manner, and in a way that allows the public sector to exit in due course. Finally, it will avoid duplication in funding, to encourage collaboration between companies and research institutes. We have produced a fact sheet with further details on the objectives of wave energy Scotland, and I have placed a copy in the Scottish Parliament information centre.

Photo of Alison Johnstone Alison Johnstone Green

The minister will be aware that Pelamis is responsible for a £70 million net contribution to the Scottish economy and employs 56 people in Orkney and in Lothian, and more in associated industries and services. He will be aware that it is technically better placed than ever and has a timeline for commercial wave farms. Can the minister put any Scottish Government funding decision on hold and intervene as strongly as possible to allow further consideration of all options for Pelamis?

Photo of Fergus Ewing Fergus Ewing Scottish National Party

I welcome the support from Alison Johnstone and her party for the wave and tidal sector in Scotland. Their support is appreciated and it has been consistent. Pelamis is in administration. The Scottish Government and Scottish Enterprise have looked extremely closely at the whole situation, and we believe that the best outcome is to establish wave energy Scotland. The initiative has already been welcomed by people in the sector including Lindsay Leask, senior policy manager of Scottish Renewables, and Professor Stephen Salter, the founding father of wave energy technology, and several other players with whom I have had initial discussions.

I believe that we and Alison Johnstone are wholly committed to the future of wave energy in Scotland. We believe that the best way to ensure collaboration, to bring the best minds together, to harvest the IP and to ensure that we work to seek common convergence for both offshore and nearshore solutions is wave energy Scotland, and we are committed to making that succeed.

Photo of Alison Johnstone Alison Johnstone Green

The minister will understand that Pelamis is now a vulnerable target for buyout and that a low offer could see us lose our industrial lead, perhaps to a company overseas, in a technology that we may be buying back in the near future. Pelamis has brought the technology out of the lab and into the ocean and, although we support the creation of wave energy Scotland, I want to know how many such jobs it will provide. I would be grateful for the minister’s comments on what kind of support the Scottish Government will offer now to help Pelamis and its employees.

Photo of Fergus Ewing Fergus Ewing Scottish National Party

As Alison Johnstone correctly states, the 55 or 56 employees of Pelamis have produced some of the most advanced engineering solutions for the wave energy sector. We anticipate that wave energy Scotland will be able to provide employment opportunities for some of those experts in the sector. However, its function will primarily be to bring together the best minds in the sector, to bring together and preserve for Scotland the intellectual property and to develop the best solutions in what is an extremely challenging sector.

Photo of Malcolm Chisholm Malcolm Chisholm Labour

I, too, am a great supporter of wave energy, and I have always been very proud to have Pelamis based in my constituency. Will the Scottish Government do everything possible to stabilise the situation at Pelamis and save its key staff, who are global leaders in wave power expertise? I welcome the creation of wave energy Scotland. Can the minister, either through wave energy Scotland or in other ways, act now to ensure that the jobs are kept in Leith and that wave technology continues to be developed, given that the work that Pelamis has done is admired throughout the world?

Photo of Fergus Ewing Fergus Ewing Scottish National Party

I certainly agree with the sentiments that Malcolm Chisholm expresses. It will not be possible for wave energy Scotland to employ people on the same scale as the head count at Pelamis, but we hope and seek to retain the best brains in Scotland.

The difficulties facing the wave energy sector have been experienced in Ireland, Australia and elsewhere in the world. At the same time, however, we understand that there is substantial support from the European Union through its blue energy plan, which was published earlier this year, and the inclusion of ocean energy in the European strategic energy technology plan. There is therefore a prospect of support for marine energy from the EU in future and we will use every avenue to maximise that potential support.

Photo of Rob Gibson Rob Gibson Scottish National Party

In the light of the unfortunate administration of Pelamis, can the minister tell me whether the United Kingdom Government has made clear its policy of support for wave power projects in Scottish waters, given that such a developing technology, which is of huge importance for climate change mitigation, needs secure seed money and steady Government support?

Photo of Fergus Ewing Fergus Ewing Scottish National Party

I have sought to work with the UK Government over the past three years or so. Greg Barker was personally committed to the technology, and we together opened the Pentland Firth and Orkney waters marine energy park. I also met Amber Rudd, Greg Barker’s successor, in Paris in October. At that meeting, I asked whether Amber Rudd or her senior officials would be prepared to meet representatives of Pelamis. I am sad to say that, as far as I am aware, that meeting did not take place, despite Ms Rudd’s assurances at the time.

We understand that the UK Government is supportive of marine energy in principle, but it is not willing to make any specific commitment until after the UK elections next year.

Photo of Liam McArthur Liam McArthur Liberal Democrat

Like others, I welcome the announcement about wave energy Scotland. As has been testified, Pelamis is a global leader, born, bred and anchored in Scotland. Having been the first to generate electricity from the waves, it boasts a series of world firsts and world onlies. Pelamis has an impeccable health and safety record, and I emphasise the economic benefit to which Alison Johnstone alluded.

The minister is correct that the value of the company remains with the expertise and experience of those who are employed by it. Does he accept that, given the uncertainty and risks of administration, we have perhaps days, possibly weeks, but certainly not months, to reach a solution for Pelamis? Does he agree that Pelamis provides an excellent foundation—indeed, it is the ideal foundation—for wave energy Scotland?

Photo of Fergus Ewing Fergus Ewing Scottish National Party

We have been very supportive of Pelamis, and we have contributed fairly substantial funds through Scottish Enterprise, although they still account for a very small part of the funds, most of which were contributed by the private sector.

I dispute the suggestion that Liam McArthur has, I believe, made in the press, that, had a short-term loan been made available to Pelamis, that would have secured its future. That is simply not the case. I mention that for the record. However, I agree with his sentiment that Pelamis has led the way in the sector. It has led the way because of the human expertise of the people who work for it, and we will do our very best to retain that human expertise in and for Scotland.