Ireland has Europe's most "energetic" wave resource and it could meet the ESB's total generating capacity if properly harnessed, according to the Marine Institute.
To develop this technology, a prototype wave energy generator will be deployed off Spiddal, Co Galway. It is part of a joint renewable energy initiative involving the Marine Institute and Sustainable Energy Ireland (SEI).
These State agencies have secured foreshore licence approval from the Department of Communications, Marine and Natural Resources to examine the performance of the generator and other designs on the 37-hectare (92-acres) marine site, some 2.4km (1.5 miles) east southeast of Spiddal pier.
The generator was built in Harland and Wolff shipyard, in Belfast, at a cost of more than €1 million for a private company, Wavebob Ltd, headed by William Dick. It has already undergone prototype testing at University College Cork's hydraulics and maritime research centre wave tank, and was transported by ship to Galway this week.
The Marine Institute and SEI have invested €300,000 in university-based research and €850,000 in industry-based research on the technology.
In Galway yesterday, Eoin Sweeney of the Marine Institute said Spiddal had been selected as a "benign" site to bring the prototype to full production.
Previous testing with another generator took place on the Shannon estuary off Carrigaholt, he confirmed.
The generator works like a "giant earring" driven by the Atlantic waves - these measure up to three metres (9.8ft) off the west coast and higher in storm conditions. As part of a 15-year plan, the State agencies hope to generate 200 megawatts of renewable ocean energy by 2020, involving some 1,900 jobs.
Commercial generators are expected to become available between 2010 and 2015, and Ireland's wave energy resource should be sufficient for 55 per cent of the all-island Irish electricity demand by 2010, said Graham Brennan of SEI.
If successful, wave energy could help Ireland to meet its EU target of 13.2 per cent of electricity from renewable energy sources by the year 2020.
Mr Brennan said wave energy generators could be located offshore, beyond visual range. Challenges include technology lifespan in a highly corrosive environment, he added.