Finavera Renewables, the Irish alternative energy company involved in a reverse takeover with Canadian group Cascade Minerals, has won a €1.4 million grant from the European Commission to help construct a wave energy power plant off the coast of Portugal.

If the project - Europe's first using Finavera's Aquabuoy technology - is successful, Finavera hopes to replicate it off the southwest coast of Ireland. Finavera obtained the commercially viable Aquabuoy technology through the acquisition of US group AquaEnergy in June.

The proposed power plant, which will be developed in conjunction with several Portuguese partners, will be situated in 60 metres of water about 10km off the coast between the cities of Lisbon and Porto. It will start out as a 2 megawatt conversion power plant and if successful will be increased in size to 100 megawatts, producing enough electricity to power more than 50,000 homes. Estimates show the Portuguese coastline contains enough exploitable wave energy to contribute as much as 20 per cent of the country's total electricity consumption, equal to more than €5 billion. However, according to Jason Bak, chief executive of Finavera, the waves off the southwest coast of Ireland have the potential to create higher quantities of power.

"We believe that wave power generation will, in the medium term, like wind and solar power, be a commercially viable power source," Mr Bak said.