The partnership plans to look for a site to the west of Shetland
One of Europe's biggest energy companies has teamed up with an Edinburgh firm to develop the first wave power project off Shetland.
The joint scheme between Sweden's Vattenfall and Pelamis, based in the capital, has been set up to explore wave power development opportunities.
The joint venture called Aegir said it was working towards installing a project up to 20 megawatts in scale.
If planning consent is granted, the first phase would be installed by 2014.
Dr Helmar Rendez of Vattenfall said: "Vattenfall intends to make electricity clean by 2050 and halve its carbon emissions by 2030.
"This means we must invest in the green energy technologies of today and tomorrow."
Neels Kriek, chief executive of Pelamis Wave Power, said he hoped the ground-breaking project would be one of many for the P-2 Pelamis machine.
He added: "We also anticipate this project being a leading candidate for the Scottish government's saltire prize for commercially proven wave power technology."
First minister Alex Salmond welcomed the announcement.
Mr Salmond said: "It is clear that Scotland is now seen as the natural home for those who wish to develop and succeed in the marine renewable sector.
"The Scottish Government is committed to developing a world-class wave and tidal energy sector and to maintain our position as a global leader in the development and deployment of these technologies.
"Investment in renewable energy is driving Scotland's economic recovery, with projects up and down the country supporting highly skilled, low carbon jobs and we are leading the way by developing the technology and capacity in renewables, carbon capture and energy efficiency to reduce the effects of global warming."
Dr Richard Dixon Director of WWF Scotland said: "Plans to develop Pelamis wave power machines in Shetland is an important step on the path to making Scotland's energy 100% renewable.
"To finally see Pelamis used commercially in the shores around Scotland, the home of its creation, is long overdue."