MeyGen has agreed a ten-year power purchase agreement (PPA) with SmartestEnergy, an independent energy company, for its tidal stream project located in Pentland Firth, the UK.
The deal could be worth more than £50m during its lifetime.
Recently, Atlantis Resources, the developer of MeyGen, secured a major funding package in order to take the project’s construction forward.
During the first phase of the project, about four turbines, each producing 1.5MW, will be installed on the seabed.
Ultimately, the project is likely to have about 269 turbines, which could generate enough electricity for nearly 200,000 households.
Construction of the MeyGen project is likely to begin in the fourth-quarter of this year with first power to the grid and revenues expected to be earned in the first-half of fiscal 2016.
The PPA with SmartestEnergy will provide revenues for the power produced and exported to the grid under phase one of the project through to 2025.
In addition, the deal also comprises extra benefits paid to renewable generators including five Renewable Obligation Certificates (ROCs) for each megawatt hour (MWh).
MeyGen CEO Dan Pearson said: "This is an important step forward for MeyGen and its backers. The agreement with SmartestEnergy 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.
"As SmartestEnergy is a key player in the independent generation sector in Scotland we were delighted to be able to work with the company’s team here to finalise this agreement."
SmartestEnergy Glasgow-based generation sales manager Iain Robertson 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."
The funding package for the project, which is valued at around £51m, has been sourced from the Scottish Government; Highlands and Islands Enterprise (HIE); the UK Government, and the Crown Estate.
Recently, MeyGen announced that it had signed a 398MW, 25-year seabed lease with The Crown Estate, making this the largest marine energy lease to be awarded by the Estate.
SmartestEnergy purchases power from over 150 renewable energy projects in Scotland.
Image: The MeyGen project is expected to generate enough electricity for nearly 200,000 households. Photo: courtesy of SmartestEnergy Ltd.