The UK government and the EU look likely to extend long-awaited lifelines to the marine energy sector, according analysts Frost & Sullivan. The nascent European marine energy industry, says the company, is still weathering storms unleashed by the global economic crisis, but can recover if government support and new investments materialise.

The recession has effectively bottlenecked investment, says Frost & Sullivan, temporarily slowing down development. In response, the UK government recently announced a raft of rescue measures. The UK Carbon Trust granted £250,000 and £150,000 to Pelamis and MCT respectively to focus on installation and maintenance, while the Marine Renewables Deployment Fund has offered a £22 million grant to wave and tidal developers.  A part of a £20 million of venture capital from the budget for low carbon technologies has been earmarked for marine energy technology developers.

The EU is also supporting the sector, notes Frost & Sullivan. A consortium led by the Finnish wave energy company AW Energy, signed a 3 million EUR contract with the EU in October 2009 under the CALL FP7 -Demonstration of the innovative full size systems. The project will focus on deploying a 300kW device, known as the WaveRoller, in Portugal for a one year testing period.

"Continued government intervention is absolutely necessary to boost the marine energy market," says Frost & Sullivan Industry Analyst Gouri Kumar. To a certain extent, this is an inevitable consequence of the fact that the sector is still in the prototype development stage. "Consequentially, the injection of venture capital, private equity or government grants is critical, especially since the financial crisis effectively sank contributions from private investors," Kumar adds.

Now more than ever, government support is imperative. However, such support alone will not be enough to boost the market and push it in the right direction. Investment from venture capital and private equity players would be ideal at this stage, but is unlikely to be extended at sufficient levels until the economy starts to recover.

It remains, then, for companies to try to weather the current economic climate, says Frost & Sullivan. To do so, major players should strive to differentiate the merits of their technology in order to showcase the future potential of the device and solicit enough capital to be able to reach commercialisation. With investors getting pickier these days, the overall environment is becoming much more difficult and competitive.