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Basically you're saying that these investors are just following the old saying "in for a penny, in for a pound".
However I think a more interesting question is why is this situation peculiar to Ireland? You don't really see an equivalent of Steorn in other countries. Some Irish engineers appear to think that text-book physics is wrong, and they are successful in getting investors to fund them. JEB's view of the situation is summarised in this paragraph from his recent piece "Crash!":
"The Steorn story is an intriguing one for the student of metaphysical inventions. At Number Watch we first came across it in August 2006 (Free energy at last!) and naturally it was recipient of a Numby award. Now, however, it is almost unique in its status as a (multiple) survivor of the (inevitable) crash. It appears that shareholders have continued to pour in capital by the millions. What makes it so uniquely fit to survive? The only hypothesis we can come up with is – in a land where leprechauns hide their pots of gold at the ends of rainbows, the laws of physics do not apply."
My explanation for how this situation came about is that it is not so much the influence of Irish folklore as the influence of an Irish engineer called Al Kelly (where Al is short for Alphonsus), who died about ten years ago and had a prominent position in an Irish company called HDS Energy Ltd.
For people not familiar with Al Kelly this webpage gives a pretty comprehensive biography of him:
Kelly was a sceptic of Einstein's relativity, and modern physics in general. He also seems to have been sceptical of classical physics in the form of Faraday's Law. He wrote a book that was published just after died in 2005 called "Challenging Modern Physics: Questioning Einstein's Relativity Theories". Reviews of the book by newspapers include quotes such as: "Irish engineer solves the dark secrets of space" by the Sunday Times, and "Einstein got relativity theory wrong" by the Bangkok Post of Thailand.
There were several things that distinguished Kelly from other relativity sceptics: a) he was an engineer whereas sceptics are nearly always physicists, b) he was probably the only relativity sceptic in the last forty years who was actually getting paid to be a sceptic (his sceptic studies were funded by HDS Energy) and c) he received strong support from a professional organisation, the Institution of Engineers of Ireland, for his work whereas normally sceptics just receive the support of other like-minded sceptics.
The Institution of Engineers of Ireland published six of his papers, described as monographs, and free-to-view links are given on his biography webpage.
I had a quick look at the HDS Energy website, the company seems to have been around for 30 years and its main work seems to be designing CHP (combined heat and power) plants. It doesn't look as though they are continuing with the Al Kelly-style work, or at least are not publicising it.
So I'd say the background to how Steorn came into existence is that a sceptical atmosphere about physics was created in Ireland in the 1990s by Al Kelly, backed up by the Institution of Engineers of Ireland. The investors may be attracted to the idea of Ireland achieving some sort of glory through proving that established physics is wrong.
I thought I'd try to see if I could find out how much investment Steorn have managed to rack up over the years, and there is an Irish newspaper article published at the beginning of 2015, set up as a scanned image by the "Dispatches from the Future" blog, which gives the details:
They've managed to spend 21 million euros (£14.7 million) over the last ten years, which is considerably more than I would have guessed.
Normally people who are a bit sceptical of "hard science" tend to be far more sceptical about "soft science". One thing I noted about Steorn back in 2006 is that the firm appeared to be quite Green-leaning, which means they don't have a problem with the soft science that underpins Greenery, like AGW. The inconsistency in sceptical attitudes towards hard and soft science suggests to me that they're not genuine sceptics.
Thanks for the updates Dave.
Very interesting about Al Kelly.