The fist stage of what could open Wales up to being a major player in marine energy generation is underway with plans for a Wave Dragon that will snake its way into waters off Milford Haven inside two years.

Developers KP Renewables and Wave Dragon Limited have entered into a joint-development agreement and submitted an application for £5m in funding for the first stage of the scheme to the Welsh European Funding Office.

The first stage would involve the deployment of a 7MW Wave Dragon unit off the coast of West Wales, near Milford Haven, by spring 2007. The unit is projected to provide sufficient electricity to power up to 6,000 homes.

If the first unit deployed proves successful, the second stage would feature up to 11 Wave Dragon units at a deeper water, more energetic site, with a total capacity of 77MW. These units should be deployed during 2008 and 2009 and are projected to provide sufficient electricity for up to 60,000 homes.

Andrew Davies, Minister for Economic Development and Transport said, "Wales has a significant marine energy resource and the Wave Dragon project has the potential to harness that power to provide clean, renewable energy."

"Our vision is to make Wales a showcase for clean energy production and energy efficiency and our marine assets offer new opportunities for the production of renewable energy and help us meet our targets by 2020. It also offers us the opportunity to develop the supply chain for these emerging technologies, and bring further economic benefits to Wales."

A Wave Dragon unit is an offshore floating device that works by channelling waves into a reservoir that is above sea level. The water is then released through a number of turbines and generates electricity in the same way as hydro power plants. The technology has been developed and tested over the past eight years in tanks in Denmark and Ireland.

The Danish prototype is believed to be the first offshore device in the world to deliver power to a national electricity grid.

If the second stage of the development is undertaken, the directors of KPR anticipate that the construction phase could create up to 1,000 jobs with around 20 permanent operational jobs.

Dr James Watkins, CEO of KPR stated that, "We believe that the UK’s wave energy potential is even greater than the potential for the UK’s wind energy industry. Having already developed a promising pipeline of wind energy opportunities, we felt the need for a strong presence in wave power, which is a crucial component of the UK renewables mix."

"After a thorough review of the available wave technologies in the market, we chose Wave Dragon because we believe it is the only wave energy technology which is scaleable and can be delivered in large modules allowing us to develop operational power plants on a scale similar to conventional size power plants; i.e. from 70 to 500MW."