Orecon's device uses air pressure to drive a turbine
A £21m project to harness the power of the seas around Cornwall has had to be dramatically scaled back because of the recession.
Bodmin-based Orecon has only received about £3m of the funding needed to build a full-size wave energy machine 10 miles off Hayle.
Instead Orecon will build a one-third size model to test its theories off the coast at Falmouth.
A number of other wave energy devices are planned off Hayle in 2011.
The devices at Hayle will be linked to the mainland through a socket, or Wave Hub.
Orecon joined the Wave Hub scheme in March after another wave energy firm, Oceanlinx, dropped out.
David Crisp, managing director of Orecon, said: "We are hearing from the government and everyone what a fantastic economic opportunity renewable is and how we have got to invest in renewables.
"But unfortunately when you trying to raise money like us there is no money to be had.
"Frustration is the name of the game."
The Wave Hub project is part financed by the government, the South West Regional Development Agency (RDA) and the EU.
Construction is due to start in May 2010 and be completed by August 2010.