An area off the coast of Scotland has been selected for what could be the "world's first" offshore power station, a company said yesterday.

The strong tide and sheltered location at Kyle Rhea, the narrow straits between the Isle of Skye and the Scottish mainland, was chosen for the system.

Sheffield-based company Pulse Tidal has started a year-long environmental study ahead of an application to Marine Scotland for a licence to start producing the first 1.2MW of renewable electricity in 2012.

The device will produce enough electricity to power around 900 homes.

The power produced could be increased to 9.6MW by stringing eight devices together, if a licence and planning permission is granted.

The company has to apply for planning permission from the Highland Council to build its first commercial generator at the site.

Tidal streams move horizontal blades up and down to drive the generator in the system which sits on the seabed totally submerged.

Pulse chief executive officer Bob Smith said: "If tidal energy is to play a major part in the renewables sector then the technology has to deliver low-cost electricity.

"Pulse has developed a system that has minimal installation and maintenance costs because it works close to shore.

"It is also completely below water with minimal environmental impact.

"Scotland is keen to be the world leader in renewable energy, so we are excited about working there."

He continued: "However, we are still in the early stages of our plan and we are listening carefully to the views of all concerned parties, locally and nationally. We are taking each step very carefully.

"We have to look at how this might impact on people's lives, their livelihoods, tourism, wildlife and the ecology and ensure that it is economically viable."

Pulse successfully tested a trial device in the Humber estuary in Yorkshire and the company has received an €8 million (£6.8 million) EU grant to develop its first commercial generator.