The world’s first deep-sea tidal-energy farm will be built off the Welsh coast next year to provide electricity for 5,000 homes.

Eight underwater turbines, each 25 metres long and 15 metres high, are to be installed on the sea bottom off St David’s peninsula in Pembrokeshire, South Wales. Construction is due to start next summer and the proposed tidal energy turbines, described as “a wind farm under the sea”, should be operational by 2010.

The project has won the backing of the Department for Business, Enterprise and Regulatory Reform (BERR), which has contributed £2.5 million of the £10 million development costs.

The ebb and flow of tidal waters will provide the force to turn the blades of the turbines, which will each have a one megawatt capacity. Tidal energy is perceived as having the potential to provide a reliable source of green energy because it is predictable and guaranteed, unlike wind turbines, which are dependent on the weather.

The project off the Welsh coast is being developed in partnership between the power company E.ON and Lunar Energy and is one of several tidal energy schemes being considered in British waters.

Although tidal energy has been considered technically possible for years it was largely ignored because other sources were simpler. Rising oil prices and the search for alternative supplies to fill the possible “energy gap” that could threaten power shortages in Britain within a decade have, however, encouraged electricity suppliers to reassess its potential.

Global warming has contributed to the interest in tidal energy because it can generate electricity without the huge emissions of carbon dioxide put into the atmosphere by burning fossil fuels. Studies have suggested that around Britain’s coastline there is sufficient accessible tidal energy to supply at least 5 per cent of Britain’s total electricity consumption. It could be worth £1 billion each year.

Deep-sea tidal farms, as opposed to shallow water projects such as the Severn barrage, have attracted interest because 93 per cent of Britain’s tidal energy resources are at depths of 30 metres or more, with 63 per cent being at 40 metres or more.

Tidal energy has the further advantage, especially over wind energy, of being predictable, even if it cannot be generated 24 hours a day. The project off the Pembrokeshire coast will be an advert for British technology and could be copied around the world.

William Law, executive chairman of Lunar Energy, said: “There is a huge resource in the ocean to be captured. The potential for the world is quite high.”

A thorough environmental assessment still has to be carried out but the energy companies are confident that the impact on wildlife will be minimal. The turbines revolve slowly enough for fish and other creatures to avoid being damaged by the blades.

The Department for Business said: “This is the first multi-device tidal energy farm in the UK to be announced by a major utility. The technology has been developed with help of more than £2 million funding from BERR. We have world leading expertise in the UK, principally because of our strong offshore oil and gas industry, and a sizeable marine energy resource. It has been estimated that the UK’s tidal-stream resource could provide up to 5 per cent of the UK’s electricity.”

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