The Scottish government has awarded £3.4m to help build what is being described as the world’s most powerful floating tidal turbine.

Scottish engineering company Orbital Marine Power (Orbital) has been awarded the money as the first recipient of the Scottish government’s £10m Saltire Tidal Energy Challenge Fund.

The funding will be used to deliver the next generation O2 2MW Floating Tidal Energy Turbine, said to be capable of powering more than 1,700 homes per year.

Scotland’s energy minister Paul Wheelhouse said: “We have established a world lead in marine renewable technologies and this project represents a significant step forward in technological development. We are delighted this landmark turbine, designed by an innovative Scottish company, will also be built in Scotland. We believe tidal energy technology can not only play an important role in our own future energy system, but it has substantial export potential and this fund will help move tidal technologies closer to commercial deployment.”

The 72 metre long O2, capable of generating more than 2MW from tidal stream resources, will be built in Scotland and installed at the European Marine Energy Centre in Orkney. Its turbine rotors can be turned 360° to allow power to be extracted from both tidal directions.

The device will be manufactured by Scottish company Texo Group at their new quayside facilities in Dundee. Key components will be delivered by Gray Fabrication in Cupar using material from Liberty Steel in Motherwell.

Orbital’s CEO, Andrew Scott, said: “We greatly appreciate the Scottish government’s ongoing commitment and support for tidal stream energy, and this award will enable us to deliver a truly exciting and transformational project and continue the proud tradition of Scottish innovation and engineering. The O2 project will demonstrate how this emerging industrial sector has the ability to deliver new jobs and open up diversification opportunities for the UK’s supply chain in a growing global market whilst pioneering solutions for a zero carbon future.”