The Point

Last updated: 27 June 2022.

Wave Power - The Quiet Nationalisation

Nick Durie tells the story of Wave Energy Scotland, the Saltire Prize, and the battle with British monetarism

Total nuclear generating capacity in Scotland:1000 MW capacity Hunterston B, 1364 MW capacity Torness

Total potential capacity of wave power in Scotland: 14000 MW

Scotland has no major operating wave power stations. Yet. As a technology wave power is in its infancy.

During the 1970s and 1980s Scotland pioneered wind turbine technology, but the UK Government's failure to support the early wind power industry meant that this early technological lead was squandered. Wind turbines are now largely built by Danish, Chinese, and German companies, and what little domestic manufacturing and maintenance we have based in Scotland has been the result of Scottish Government investment in what is a mature industry.

Part of the issue for this is that private investment capital pours into technologies where there is likely to be a proven return on investment. The UK's poor industrial productivity is as a direct result of the state's insistence that private enterprise shoulder an increasing portion of the burden of risk. This means that despite cutting edge science, new industries and technologies often have to play the lottery of 'the dragon's den' to secure support, often with ludicrous targets for achieving profitability to satisfy the spivs fronting the cash. The direction of travel from the UK is for even more of this reliance on the private sector in future, as the Chancellor of the Exchequer seeks to bring state spending into line with post-Wall Street crash austerity.

In Scotland we have seen a rather different story. With co-ordinated development planning industrial sites have reopened. Nigg - once the major industrial employer for much of the Highlands - has reopened, following its closure under Labour. 1000s of jobs and apprentices are based there now. Scotland was subject to shock and awe style deindustrialisation in the 1980s, but the moderate success story of Silicon Glen which was achieved under the Major regime was squandered by the Labour government's lack of support for industry. The result: 130,000 manufacturing jobs lost under Labour.

In addition to setting the most ambitious renewables targets of any government in the world, part of the Scottish Government's programme to reverse this industrial decline was its support for the development of wave power. A centre for marine renewables research was established in Orkney by the UK government in the noughties. In 2008 the Scottish Government moved to consolidate the research base there, announcing the Saltire Prize. To be considered for the £10 million award teams must demonstrate, in Scottish waters, a commercially viable wave or tidal stream energy technology

"that achieves the greatest volume of electrical output over the set minimum hurdle of 100GWh over a continuous 2 year period using only the power of the sea."'

In 2012 Dr Richard Yemm, CEO of Pelamis Wave Power, was awarded the annual Saltire Prize medal for scientific contributions to date. No individual or institution has won the Saltire Prize yet. The next assessment period ends in 2017. Pelamis is seen by many to have developed the sectoral leading technology. The numbers involved in such a critical industry appear small, because they are. This is an industry in its infancy, which is not significantly supported by the UK government. The Scottish Government as we know operates a fixed budget and is unable to borrow money in a conventional way (although it can access private finance through the non-equity distributing PFI of the Scottish Futures Trust, but those of us on the left will appreciate this is far from satisfactory) nonetheless, testimonials from those in the industry draw significant distinctions between the attitudes of Holyrood and Westminster.

Nonetheless the spivs want their money back. For leading wave power developers Pelamis Wave Energy this was to prove decisive. In November of last year, the money ran out. The company was placed into administration and a buyer sought. None was forthcoming. Any buyer would inherit the debts as well as the assets. Administrators KPMG said of the process:

"Following the sales process, I am pleased to confirm that Highland and Islands Enterprise has been appointed preferred bidder in relation to acquiring the assets of Pelamis Wave Power Limited. Over the coming days we will be working to finalise the sale and are hopeful that the transaction can be concluded in the near future. Unfortunately, as no going concern solution has been found, the remaining staff will shortly be made redundant. We are working with government agencies to ensure employees obtain as much assistance as possible."

In the end the company assets were purchased within days by this directorate of the Scottish Government. The Holyrood administration faced widespread criticism for failing to nationalise the debt stricken company. It nonetheless moved immediately to acquire all of its property at auction. The Scottish Government then set up Wave Energy Scotland. This would be a new public body dedicated to research into wave energy. The assets bought by Highland and Islands Enterprise were transferred to this body. In the following weeks it was announced that Dr Richard Yemm would be taken on to lead the new public vehicle, together with the 11 lead researchers. £14.3 million of funding for a year's development was put in place to move forward. In effect, Pelamis was nationalised on the cheap.

Had the company been bought when it went into receivership the state would also have carried all the debts of the firm. Effectively this allowed these millions of pounds to be written off. Dr Yemm has been tasked with 'captur[ing] the knowledge of the Pelamis technology development path for the wider benefit of the wave energy sector.' Professor Stephen Salter, who first pioneered wave energy in the 1970s, noted of the deal "I am also very glad that we were able to deliver on our aspiration to capture the know-how from device development and retain some of the best brains working in marine energy in Scotland."

The move also drew praise from industry bodies. Scottish Renewables and Renewable UK both issued a note of thanks to the Scottish Government. What the whole tale exposes though is that without the ability to borrow to invest, with a Government completely committed to the renewables sector, prepared to step in with cash to make things happen, working with industry partners, and attempting to concentrate investment capital and innovation, we are still developing these industries with our hands tied behind our back as a nation. In other countries, less constrained to a monetarist development framework, who don't have to battle hostile Governments filled with climate change deniers whom they legally must swear fealty to, many of these problems simply would not exist. Science and technology innovation would not have to rely on commercial risk, but the public sector could accelerate research.

The Scottish Government took pelters for not immediately nationalising Pelamis when it went into receivership, but there is little doubt they played the best of a bad hand, and should be rightly praised for doing so. Imagine how much more could be achieved with control over grid charging, energy regulation, and full access to government borrowing?

That's why these issues, and not just 'priorities' are central to Scotland's re-industrialisation. Political will can and has achieved a lot. Political power will achieve a whole lot more.

Nick Durie is a professional community organiser and activist, based in Maryhill, Glasgow