The world's first wave energy farm off the coast of Cornwall is being given £4.5m in government funding.
The wave project could be operational in 2008
The £20m Wave Hub project could see electricity generated within the next few years.
The hub will act as an offshore electrical "socket" connected to the national grid by an underwater cable.
Sited 10 miles (16km) off St Ives Bay, energy devices connected to the hub, would generate enough power to meet 3% of Cornwall's energy needs.
Ministers said on Thursday that if the project is approved, the government would provide almost 25% of the estimated £20m cost.
Energy Minister Malcolm Wicks said as an island nation, the UK had an invaluable resource in terms of marine energy.
He said: "We are leading the world in developing the infrastructure to harness the power of the seas.
"The project has still to get through a robust consent process before getting into the water, and to finalise the device developers who will connect to it.
"But if successful, it will be a shining example of UK innovation."
The Wave Hub is being backed by the South West Regional Development Agency (SWRDA).
Chief executive Jane Henderson said the minister's announcement was another significant milestone for the project and recognised the important contribution it would make to the development of marine renewable energy.
She said: "We are now awaiting the outcome of our consent application. If that is granted, we expect the Wave Hub to come into operation in 2008."
The power station will involve up to 20 sets of machines, with pumps, pistons and turbines, generating electricity for 14,000 homes.
In July, some surfers voiced concerns that the wave devices could take energy from the waves and reduce wave heights, putting the surfing industry in Cornwall at risk.
However, the wave energy project is supported by the environmental campaign group Surfers Against Sewage.