The German power utility RWE pulled out of a planned wave energy project in Scotland this week the in the latest sign of investor balkiness in the field.

Voith Hydro Wavegen, the builder of the planned 4-megawatt Siadar Wave Energy Project off the Isle of Lewis, issued a statement Tuesday indicating RWE had exited the costly project, which is to be world's biggest tidal energy effort.

Saying RWE's npower renewables subsidiary won't be proceeding with the project, Wavegen Chief Executive Officer Matthew Seed asserted the company is "in discussion with a number of parties in order to seek an owner and investor" and that civil engineering work remained "ongoing."

The move was the latest in a series of setbacks in which Scottish marine renewables field, the Glasgow newspaper The Sunday Herald reported.

Wavegen, an Inverness company and developer of the Limpet device to harvest wave action, has been seeking to construct the $50 million plant off the Hebrides coast for three years. The technology uses an oscillating water column and would require the construction of a breakwater that would hold a set of turbines.

When Wavegen announced the Siadar project in 2008, RWE praised it as a possible model for a large-scale new industry.

Bill Langley, marine development manager for npower renewables, said then the company was "convinced that (Siadar) could be the gateway to harnessing the best wave resource in the U.K. This pilot scheme could be the stepping stone to realizing large-scale wave energy projects around the U.K. and worldwide."

But Tuesday the company confirmed it has abandoned the effort, saying it was "no longer proceeding with the Siadar project."

The wave project, which is envisioned to provide enough energy for 2,500 homes, had received nearly $10 million from a $21 million Scottish government fund meant to encourage the development of wave energy, the Financial Times reported.

Npower renewables told the newspaper it remains committed to wave power but not to Siadar, saying it was still seeking ways to "harness marine energy off the Scottish coast, and in particular, in the waters off the Orkney Islands."

Scotland's coasts generate approximately 10 percent of Europe's wave power and the government has estimated a potential of around 15 gigawatts that could be harnessed through oscillating water columns, wave attenuators, point absorbers and flaps, according to the trade group Scottish Renewables.

Lease agreements totaling 1.6 gigawatts are already in place in the Pentland Firth and Orkney Waters strategic area involving 11 sites -- six wave power efforts for 600 megawatts and 1,000 megawatts in tidal stream projects, with another round of leases of up to 30 megawatts in the offing, the group said.

Officials said they hope to have wave power contributed to the country's electric grid by 2020 but RWE's move is part of a wider pattern of problems in the funding and commercialization of wave power, the Sunday Herald said.

It cited the layoffs of 20 workers at the Edinburgh company Pelamis Wave Power and the pullout of Norway's Statkraft from a $493 million deep-water tidal turbine project in the Pentland Firth.

"The industry is in a precarious position, with much activity, lots of expectation but few confirmed successes and major challenges to overcome resulting in key backers such as utilities starting to lose the faith," an unnamed senior marine renewable power executive told the newspaper.

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