Gareth Parry: Scottish firms should be riding the crest of a wave

Scotland's climate and geography mean we are ideally placed to harness the economic potential of tidal and wind power, both on and off-shore. Scotland has more than 6,000 miles of coastline and it has been estimated that our seas could produce electricity worth 14 billion by 2020.

The most recent figures for renewable energy generation are promising. Last year more than one quarter of the electricity generated in Scotland was produced from wind, hydro and other renewable resources. The figure represents a rise of about one fifth on 2009.

So what could possibly go wrong for Scotland as we seek to realise the economic potential of our natural resources? We need only look to the 1970s to see how the opportunity to become a world leader in wind power technology slipped from our grasp.

As wind power moved into commercial development, the future looked promising. The UK has more consistent wind speeds than some of our European neighbours and a similar potential existed to exploit this natural resource and to develop a world leading industry. Yet the UK failed, while Denmark capitalised on the opportunity by exploiting emerging wind turbine technology.

Denmark now makes about 20 per cent of the world's turbines. Its success can be explained in large part by the clear political leadership early in the development of the sector. Denmark established a capital grants programme for the installation of wind turbines, which included the payment for grid connection for remote wind farms. As the sector grew companies that had previously make agricultural machinery switched to producing wind turbines instead. Today, these companies are among the world's largest turbine makers.

Denmark's enthusiasm to capitalise on this emerging technology has shown returns not only in the onshore market, but also now in the offshore market. Although the UK is a world leader in the consenting and installation of offshore wind facilities, our lack of manufacturing expertise means we haven't created a design, manufacturing and supply chain industry on the back of these advances. Once again, we missed a trick while countries such as Denmark, Germany and Spain lead the way in the design and production of turbines.

The potential for generating power from waves and tidal flow around the UK is immense. It is estimated that 15-20 per cent of the UK's electricity needs could come from this source.UK companies are at the forefront of development of the sector, with test sites such as the European Marine Energy Centre in Orkney proving pivotal in attracting companies keen to trial their technology.

With the commercial generation of large amounts of energy from wave and tidal power comes the opportunity to develop a manufacturing base around this new industry and consequently a supply chain to facilitate design, installation and maintenance of the new technology.

The one clear message from the Danish experience is clear, stable and consistent long-term policies are required from our politicians. These foundations provide investors with the confidence to approach the market knowing that a stable environment will maximise the potential for a return on investment.

Very serious consideration needs to be given to allowing capital grants and/or capital allowances to developers in the wave and tidal sector. This applies particularly in relation to transmission charges, which, it has been claimed, discriminate against renewable energy producers in remote locations. These charges are under review and it will be vital to this new industry to find a cost-effective route to the National Grid. In addition, we must ensure that the planning process supports future growth.

• Gareth Parry is head of the construction and engineering team at law firm DLA Piper Scotland.