Cornwall's north coast is to be used as a test-bed for the expansion of wave power in the UK.
The Wave Hub could be in place by 2006
The Wave Hub would link wave power machines with the national grid.
The South West Regional Development Agency (SWRDA) is spending £500,000 on a study into whether the Wave Hub is viable, where it would be best located and the economic benefits of the project to the South West.
If the results are positive, the Wave Hub could be positioned about nine miles off the north Cornwall coast in two years time.
The world's first offshore tidal energy turbine was built into the seabed about a kilometre and a half (one mile) offshore from Lynmouth in Devon last year.
The Wave Hub will consist of an underwater cable to enable wave power companies to test how well groups of wave machines produce power before they move on to producing them on a commercial basis.
Tim German, manager of the Cornwall Sustainable Energy Partnership, said: "We are starting to realise how we can capitalise on these big resources and to see if there is any way we can bring it onshore to help, not just Cornwall, but the whole of the UK."
Dominic Vincent, environment manager of the SWRDA, said: "We already know that the wave and tidal energy industry is very supportive of Wave Hub and if the results of this study are good, Wave Hub could be in the water by 2006.
"This would put the South West on the map for wave and tidal energy."