The MeyGen tidal project is expected to provide clean, sustainable, predictable power for 175,000 homes in Scotland while supporting more than 100 jobs.
The agreement, which is expected to cost more than £50m over its lifetime, will provide revenues for the power generated and exported to the grid under the project’s first phase through to 2025.
Additionally, the PPA includes additional benefits paid to renewable generators such as five Renewable Obligation Certificates (ROCs) per megawatt hour (MWh).
Owned by tidal power company Atlantis Resources, the MeyGen project will reduce carbon emissions, and provide significant, long-term supply chain benefits to the UK economy.
The first phase of the project includes installation of four 1.5MW wind turbines, which will be eventually increased up to 269 turbines, as well as the construction of all onshore infrastructure to support the project, including the onshore power conversion centre and grid connection.
The project construction is slated to commence later in 2014, following which the first electricity will be delivered to the grid by 2016.
MeyGen chief executive Dan Pearson said: "The agreement with SmartestEnergy will secure the long-term revenues which will demonstrate the commercial viability of the project and also highlight the wider potential of tidal stream generation to become a significant industry."
SmartestEnergy Glasgow-based generation sales manager Iain Robertson said: "This is a landmark deal for the marine renewables sector in Scotland and underlines the commercial potential of the industry that developers are now starting to exploit."
The funding package of £51m for the initial phase of the project is being provided by the Scottish government; Highlands and Islands Enterprise (HIE); the UK government, and the Crown Estate.
