The company, named Aegir Wave Power Limited and located in Edinburgh, is initially aiming to generate 20 megawatts (MW) of power, potentially using 25 of the second-generation Pelamis P2 wave power converters. The electricity generated will be enough to power about 9,000 homes, but both companies want to expand the project.
Vattenfall has opened a new office in Scotland.
"Vattenfall intends to make electricity clean by 2050 and halve its carbon emissions by 2030. This means we must invest in the green energy technologies of today and tomorrow," said Dr. Helmar Rendez, head of Group Function Strategies at Vattenfall, which incorporates the research and development arm of the European energy company.
"The partnership with Pelamis allows us to work on developing a site that will prove very productive when we make wave power a commercial reality. We are pleased to tie up with Pelamis and take this project forward, as we have big hopes for the future of wave power and see Scotland as a good place to do this."
Aegir is now looking for a suitable site off the west coast of the Shetland Islands. If planning permission can be achieved quickly and the planned subsea cable between the islands and mainland of Scotland is constructed, the first phase will be installed by 2014.
Neels Kriek, the new Pelamis chief executive, said: "We are delighted to be working with Vattenfall on this groundbreaking project, which we hope will be one of many for our Scottish-built P-2 Pelamis machine. We also anticipate this project being a leading candidate for the Scottish Government's Saltire Prize for commercially proven wave power technology."
The Aegir project will overshadow RWE npower's 4-MW Siadar Wave Energy Project on the Isle of Lewis, the largest of the Western Isles off Scotland's northwest coast. The Siadar project is currently the world's largest commercial-scale wave energy project, and RWE recently appointed VolkerStevin Marine as the preferred contractor.
Scotland's First Minister Alex Salmond welcomed the venture. "It is clear that Scotland is now seen as the natural home for those who wish to develop and succeed in the marine renewable sector," he said. "The Scottish Government is committed to developing a world-class wave and tidal energy sector and to maintain our position as a global leader in the development and deployment of these technologies. That's why we have launched the Saltire Prize, which is capturing the imagination of green energy developers around the globe."