The developer of a tidal array, which is claimed will be the largest in the world, has raised £50 million for the project.
Atlantis Resources’ 398MW MeyGen project, which will include a total of up to 269 turbines, will generate enough electricity to power 175,000 homes.
The company said it will start construction on first stage of the project later this year, which will see four 1.5MW turbines installed on the seabed in the Pentland Firth.
A total of 61 turbines – enough to power around 42,000 homes – will be installed by 2016 in the initial phase.
The project has received £20.5 million from the Scottish Government, £10 million from The Crown Estate and another £10 million from the UK Department of Energy and Climate Change (DECC).
Energy Secretary Ed Davey said: “This innovative and exciting project puts Scotland and the UK on the map as a global leader in marine technology – meaning jobs, better energy security and the potential to export this technology to the world.
“The project also shows what can be done when the UK and Scottish Governments work together to provide a lasting benefit for the people of Scotland.”