The UK subsidiary of Hammerfest Strøm is to construct and test a 1MW tidal power device at the European Marine Energy Centre (EMEC) in Orkney.
The tidal turbine, known as HS1000, is expected to be fully operational in Orkney by 2011. Hammerfest Strøm UK has already completed the design and pre-engineering and is now tendering for fabrication and installation.
After a test period the company will work with ScottishPower Renewables, which plans to install the device as part of a 10MW tidal power array in the Sound of Islay by 2012.
The project is claimed to be the largest demonstration tidal power project in the world.
The UK subsidiary of Hammerfest Strøm received a £3.9m grant from the Carbon Trust to construct and test the device, and its Norwegian parent has engaged KPMG to assist in raising an additional £12m for further prototype development.
The design of the HS1000 device is based on a 300kW prototype that has been operating in Kvalsundet in Norway for five years.