"Little operational capacity is currently in-place as the majority of technologies still in the development stage," the company said in a new study, 'The Refocus Marine Renewable Energy Report’.

“[But] the first orders for multiple-unit farms are now being placed with the developers of market-leading technologies. By 2007 annual installations could exceed 10MW per annum – a small beginning but a very real achievement."

Waves and tidal currents contain massive amounts of energy and the prize awaiting a commercially successful technology is considerable, the study said.

The UK, Portugal and Spain were leaders in the sector, but Australia was also in the running, according to the report's author, Adam Westwood

"Australia is home to some excellent wave energy technology,” he said.

In early May, Seapower Pacific sank the CETO wave energy generator off Fremantle, Western Australia. It was installed on the seafloor where it is intended to harness and convert energy from ocean waves into electricity and produce desalinated water as a by-product.

Dennis Kelly, managing director of Seapower Pacific, said CETO was a breakthrough in renewable energy technology at the right time, given the pressing world-wide demand to produce power and water from clean, alternative, available sources.

"Unlike other wave energy technologies that require undersea grids and costly marine qualified plant, CETO requires only a small diameter pipe to carry high pressure seawater ashore at 7000kpa (1000psi) to either a turbine to produce electricity, or to a reverse osmosis filter to produce fresh water," Kelly said.

"The prototype is expected to generate up to 100 kilowatts of electricity, enough for 100 homes. In desalination mode the prototype is expected to produce about 300,000 litres of fresh water per day."

Unlike other methods, which pipe water ashore before harnessing its power and lose substantial amounts of energy in the process, CETO captures the power of the water on site. As waves move over the top of the unit, they press down on a disc that transmits the force to pumps inside, which deliver pressurised water to the shore.

CETO's other main advantage comes from its location on the seabed. Most other methods of wave powered electricity generation involve placing devices on the surface of the sea, where they are exposed to the damaging effects of stormy weather and could pose a threat to shipping.

The fully submerged generators could also be used in areas of natural beauty, where offshore wind turbines or surface-level wave converters would be considered eyesores, said CETO inventor Alan Burns.

Wind-generated waves off the West Australian coast have a very high concentration of energy, according to Burns.

"CETO brings together technology developed over 25 years to convert this reliable source of energy into electricity and fresh water and we hope it proves to be the interim step to commercial production," he said.

Meanwhile in New South Wales, Energetech Australia is planning to install a wave energy generator off Port Kembla, just south of Wollongong.

This will be the first wave energy projecct to use a parabolic wall to focus wave energyand the first to use the new Energetech turbine, the company said.

The parabolic wave focuser is used to focus all of wave’s energy into one point rather than leaving it spread out along the crest of the wave – this allows it to be more readily harnessed, according to Energetech.

The waves are funnelled through a collector where they push air through a chamber to drive a turbine.

The system’s turbine uses a sensor system that measures the pressure exerted on the ocean floor by each wave as it approaches or enters the capture chamber. This identifies the height, duration and shape of each wave and various a parameters are adjusted according to this information.

The plant is expected to produce one gigawatt of electricity per year and power generated will be sold to Integral Energy under a long-term agreement.

But the systerm has had a hiccup. It was towed 200 metres offshore and installed on June 5, but Energetech found that the mooring position and installation were unsatisfactory.

“As a result of an engineering review it was decided to bring the unit back into the port for a relatively short period of time whilst these modifications are implemented,” Energetech said.

“Realising that new technologies always require some level of adjustment the company is confident that the final installation will proceed in the near future.”

But during the time at the site, computer data obtained suggested that the chamber and design concept were working successfully, according to Energetech.

In Europe, a Portuguese consortium signed a deal in May with Britain's Ocean Power Delivery (OPD) to construct the first phase of a wave-energy farm off the coast of Portugal.

The initial stage of the project will consist of three "Pelamis" P-750 machines that will be moored near Povoa de Varzim, 5km off the northern Portuguese coast.

The 120m-long, 750-ton "Pelamis" structures are made of cylindrical sections with hinged joints, the joints using wave energy to power hydraulic motors that drive electrical generators to provide electricity. The electricity is fed down a single umbilical cable to the seabed where it can be junctioned with others and linked to a shore-based receiving station.

"This is a significant milestone for our company and for wave energy," said OPD managing director Richard Yemm.

"We see this order as just the first step in developing the Portuguese market, which has the potential to be worth up to €1 billion over the next 10 years."

The €8 million ($A13.3 million) project is expected to provide energy for over 1500 Portuguese households with its 2.25MW capacity, and provide a saving of over 6000 tons of carbon dioxide emissions per year over a comparable traditional power plant.

A letter of intent has been issued for the order another 30 Pelamis machines, providing over 20MW of power, by the end of 2006 if the initial phase proves successful.