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Wave energy company Aquamarine Power has called in administrators.

The Edinburgh-based company blamed the current economic climate for the decision.

The move comes only weeks after the firm announced it had been awarded a £580,000 grant from the European Union to help it accelerate the development of commercial wave energy technology.

Aquamarine said its 14 employees would be retained as attempts were made to sell it as a going concern.

The company has already built and run two full-scale wave energy converters, called Oysters, at the in Orkney.

In November last year, another wave power technology firm, Pelamis, called in administrators after failing to secure development funding.

James Stephen, from administrators BDO, said the economic climate had "significantly affected" Aquamarine's business.

He added: "The lack of private sector backing to supplement public funding support placed the company under cash flow strain and the directors concluded the best prospect of concluding a transaction was via the protection of administration.

"The company holds liquid funds which will allow this strategy to be pursued.

"We are continuing discussions with interested parties who were in discussions with the company prior to our appointment and are working closely with the Aquamarine Power board to engage with other potential purchasers."

Aquamarine Power chief executive Paddy O'Kane said: "The team at Aquamarine Power has worked tirelessly over many years to design, build and demonstrate Oyster wave energy machines.

"During this time we have achieved a number of major milestones that have put our technology at the forefront of the industry.

"Oyster is the only wave technology to have proven it can operate in all ocean conditions and we have a superb understanding of how well Oyster captures energy at sea.

"However, today's news underscores the financial as well as technical challenge in bringing an entirely new form of energy generation to commercialisation.

"New private sector funding is required now to deliver our technology roadmap."

Energy Minister Fergus Ewing said he was disappointed that Aquamarine had gone into administration.

He added: "The company has benefited from significant public support in recent years to commercialise its wave energy technology and has built up valuable expertise and intellectual property in the sector.

"I am therefore pleased the administrator plans to continue trading while it seeks a buyer and that all staff will be retained at what will be a difficult time.

"The Scottish government is absolutely committed to the marine energy sector which has the potential to offer significant economic and environmental benefits.

"That's why we created Wave Energy Scotland, the biggest wave technology development programme of its kind, because we recognised the many challenges facing this developing industry."