Scottish tidal energy firm MeyGen has signed a 10-year, £50m ($82m) power purchase agreement with independent energy company SmartestEnergy, the firms announced yesterday.

MeyGen chief executive Dan Pearson said the deal was an important step for the Edinburgh-based company and its backers, who hope to demonstrate the technology’s potential with their tidal stream power project in Scotland’s Pentland Firth.

Construction is set to begin later this month on the project’s initial phase, which will install four 1.5 MW tidal turbines on the seabed. The eventual aim is to install as many as 269 turbines, which MeyGen says could generate between 253 and 398 MW depending on cost-effectiveness.  

In a parallel statement, the firm has also announced the completion of its first funding round. Tidal turbine maker Atlantis Resources Corporation (ARC), which will contribute turbines to the project along with Andritz Hydro Hammerfest, is to provide £10.8m, receiving an 86.5 per cent stake. Funding body Scottish Enterprise will take a 13.5 per cent share with an investment of £9.7m, and with The Crown Estate, which has leased the land for the project, will provide £17.5m in loans. The UK’s Department of Energy and its Highlands and Islands Enterprise agency will contribute grants totalling £13.3m.

A £20.5m investment from the Scottish government was announced last month.

Responding to the news, Scottish energy minister Fergus Ewing said: “This latest milestone towards harnessing Scotland’s tidal power is very welcome, and illustrates Scotland’s huge energy potential.

“Our ambition for Scotland’s emerging wave and tidal sectors remains great. The Pentland Firth development takes our ambition to the next level and further cements Scotland’s reputation as a world leader in deploying renewables technology.

“We know that the successful harnessing of ocean power takes hard work and persistence which is why we are determined to support those in the industry,” he added.

The announcements came as analysts warned that a Scottish vote for independence from the UK could derail Scotland’s renewable energy sector. With Scotland’s ‘no’ vote announced today, the sector is set to remain on track.