Scottish first minister Alex Salmond yesterday formally launched the £10m Saltire Prize for the first team to develop a commercially viable wave or tidal technology capable of generating power for thousands of homes, claiming that the country had the potential to generate up to a quarter of Europe's marine energy over the coming decades.

Under the terms of the competition, which was first announced earlier this year, £10m will be awarded to the team that can demonstrate in Scottish waters a commercially viable wave or tidal energy technology capable of delivering a minimum electrical output of 100GWh over a continuous two-year period using only the power of the sea.

The winning installation will also be judged as delivering the best overall technology after consideration of cost, environmental sustainability and safety by a panel of experts including Scotland's chief scientific advisor Professor Anne Glover, environment campaigner Jonathan Porritt, and former chair of the Intergovernmental Panel on Climate Change Rajendra Kumar Pachauri.

Salmond said the aim of the prize was to help promote marine power research globally, as well as provide Scotland with a potentially valuable new source of energy.

"The Saltire Prize has the potential to unlock Scotland's vast marine energy wealth, putting our nation at the very forefront of the battle against climate change," he said. "Scotland has one quarter of Europe's tidal power potential; the Pentland Firth is our Saudi Arabia of renewable marine energy. The prize-winning solution will herald a historical breakthrough in renewable development and strengthen Scotland's place in the world as a leader in clean, green energy."

The prize is likely to attract considerable interest, not least because a number of firms claim to already be extremely close to delivering commercial-scale marine energy.

For example, despite a series of teething problems, Marine Current Turbines is now operating a tidal turbine in Northern Ireland that it claims has the potential to deliver power to a thousand homes, while wave power specialist Pelamis is pursuing plans to install a major wave farm in Scotland capable of generating power for an estimated 3,000 homes.

Meanwhile, tidal current power firm Atlantis Resources Corporation is working on plans for a tidal-powered datacentre in Scotland that it hopes to have up and running by 2011.

In related news, Atlantis also announced this week that it has inked a memorandum of understanding with Hong Kong-based utility CLP Group that will see the two companies co-operate on the development of commercial-scale tidal power projects across Asia-Pacific.

The company said that the partnership will bring its total electricity-generating project pipeline to more than 800MW, with potential sites currently under investigation in Australia, the UK and North America.