If given consent, the Wave Hub scheme that has been spearheaded by the South West of England Regional Development Agency (RDA) will act as a giant extension cable connecting up to four innovative wave energy devices to the national grid.
Commenting on the grant, minister for energy Malcolm Wicks said: 'As an island nation the UK has an invaluable resource in terms of marine energy and we are leading the world in developing the infrastructure to harness the power of the seas.
'We said in the energy review that we will be consulting later this year on how we can make the production of marine energy under the renewables obligation more valuable for developers but we have again underlined the government's ongoing commitment with the injection of up to£4.5 million into the Wave Hub.
'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. But, if successful, it will be a shining example of UK innovation that could provide 3% of Cornwall's electricity needs. That is up 20MW of renewable and secure emission-free energy powering 7,500 homes.'
Jane Henderson, chief executive of the South West of England Regional Development Agency, added: 'Today's announcement is another significant milestone for the Wave Hub project and recognises the important contribution it will make to the development of marine renewable energy, not just in south west England but in the UK as a whole. We are now awaiting the outcome of our consents application. If that is granted, we expect Wave Hub to come into operation in 2008.'
The Government's consultation on the Wave Hub consent application with the relevant stakeholders is due to close on 1 September and a decision is expected by the end of the year.