The 20 million-pound Wave Hub, led by the South West of England Regional Development Agency, will act as a giant extension cable linking up to four wave energy devices to the power grid.

The Hub is set to become the focus of wave power research as Britain increasingly looks to its coastal waters for emissions-free electricity.

The government hopes wave and offshore wind energy can help meet the UK's growing demand for power without increasing carbon dioxide emissions.

The project still needs to get planning approval and a decision is expected by the end of the year.

"The project has still to get through a robust consent process before getting into the water, and to finalise the device developers who will connect to it," Energy Minister Malcolm Wicks said on awarding the grant.

"But if successful, it... could provide three per cent of Cornwall's electricity needs. That is up to 20 MW of renewable and secure emission free energy powering 7,500 homes," he added.

If approved, the Hub is set to start up in 2008 and would enable companies to test new wave power designs before putting them into commercial production. The power they produce during testing would still feed into Britain's electricty grid.