SCOTTISH taxpayers have lost about £35 million in renewable energy firms which went bust as funds were “badly used or misused” by economic development agencies, MSPs have been told.
Economist Tony MacKay said the collapse of flagship marine energy companies Aquamarine and Pelamis shows that public money could have been “better used.”
Holyrood’s economy committee is conducting an investigation into the renewables industry in Scotland amid concerns that major subsidy cuts from the UK government could decimate the sector.
But Professor MacKay said: “A lot of the R & D [research and development] that Scottish Enterprise and Highlands and Islands Enterprise have put into the renewable energy industry, particularly for wave energy, has been badly used or misused.
“You’ll probably know both Pelamis and Aquamarine Power have gone out of business. Scottish Enterprise has lost about £20m on those two companies and Highlands and Islands about £15m.
“It’s very difficult to say, but I think we could make much better use of the money, the public sector money, that we’re putting into renewable energy.”
But Joan MacNaughton, a senior energy and climate policy professional, told the committee that taxpayers must be ready to take a hit on these projects.
“If we’re going to get the innovation we need, state funding has to be prepared to tolerate failures – failures which will be written off either because the old technology was wrong or it’s at too early a stage”, she said.
“It brings us back to the point about long-term investing and long-term confidence because with the resources we’ve got around this island it would be a huge missed opportunity not to think in terms of how we can exploit our new technologies.”
The Westminster Conservative government unveiled sweeping cuts to its subsidy regime for renewables in the summer, following a £1.5 billion overspend on the notional budget for clean energy.
But Mr MacKay said these have been “far too high”, with profit rates for wind farms in Scotland of about 22 per cent.
“The subsidies might have been justified in the early days, but for the last few years they’ve just been far too high.”