E.ON and Lunar Energy are to develop a major underwater tidal stream power project off the coast of Pembrokeshire.

The two companies, which in March announced their intention to build a commercial-scale tidal energy stream plant, have now submitted a scoping report to the Department of Business, Enterprise and Regulatory Reform (DBERR) and other key stakeholders.This is the first step towards gaining consent to take the project forward.

The pioneering project will use tidal streams - fast-moving currents created by rising and falling tides - to turn an array of large turbines situated on the sea floor.  If given the go ahead, the multi-million pound scheme would be capable of generating enough electricity to power up to 5,000 homes.

'The waters off the coast of Wales have some of the greatest potential for marine-generated energy in Europe and this project will help us to harness the power of the tides and turn that potential into the clean, renewable energy we need to help fight the effects of climate change' said Amaan Lafayette, marine development manager at E.ON UK.

'If it gets the go ahead, this scheme will be one of the largest tidal stream projects of its kind in the world, and represents a fantastic opportunity to establish Wales as a global leader in marine energy development.'

Early feasibility studies have been completed and a full environmental impact assessment will now be carried out.  If approved, it is anticipated that the plant would be operational by 2010 or 2011.

E.ON plans to spend £1bn on green projects in the UK over the next five years and is currently developing the Robin Rigg offshore wind farm in the Solway Firth. It has also recently finished building the UK's largest dedicated biomass power station at Steven's Croft in Lockerbie.