Its 100%-owned MeyGen operating subsidiary has signed the 10-year Power Purchase Agreement (PPA) with Japanese-owned power trading firm Smartest Energy for its tidal stream project in the Pentland Firth, off Caithness in Scotland.
The agreement could be worth more than £50m over its lifetime and comes just weeks after Atlantis Resources, the developer behind MeyGen, announced it had secured a major funding package to take the project forward.
Under the first phase of the project, four 1.5 megawatt (MW) turbines will be installed on the seabed. Eventually the scheme could have up to 269 turbines, generating enough power for almost 200,000 homes.
The deal with Smartest Energy will provide revenues for the power generated and exported to the grid under the first phase of the project through to 2025. The agreement also covers additional benefits paid to renewable generators including five Renewable Obligation Certificates (ROCs) per megawatt hour (MWh).
Dan Pearson, Chief Executive of MeyGen, said: “This is an important step forward for MeyGen and its backers. The agreement with Smartest Energy will secure the long-term revenues which will demonstrate the commercial viability of the project and also highlight the wider potential of tidal stream generation to become a significant industry.
Iain Robertson, Glasgow-based Generation Sales Manager for Smartest Energy, said: “This is a landmark deal for the marine renewables sector in Scotland and underlines the commercial potential of the industry that developers are now starting to exploit.
“Given the innovative nature of the MeyGen project and the involvement of many different public and private sector funders, structuring the agreement was quite complex and time-consuming but everyone involved worked hard to secure a positive outcome.”
Construction on MeyGen is expected to commence in Q4 2014 with first power to the grid and revenues being earned in H1 2016.
The funding package for the project, valued at around £51m, is coming from backers including the Scottish government; the UK government, and the British Crown Estate.
MeyGen recently signed a 398MW, 25-year seabed lease with the Crown Estate – the largest marine energy lease to be awarded by the body.