The UK Department of Energy and Climate Change (DECC) has approved a proposal by developer Marine Current Turbines to build a tidal farm in Kyle Rhea, Scotland, through EU funding.
The proposal will be sent to the European Investment Bank, which will perform due diligence on the application for nine months.
The proposed 8MW tidal farm will feature four turbines and will be built by 2014, subject to public consultation, planning consent and financing.
The £40m ($65.43m) facility can generate electricity for up to 8,000 homes.
The facility is expected to receive funds under the EU's NER scheme, which is a fund worth around €4.5bn ($6.48bn).