The UK government has provided £10m worth of grant funding to the Meygen project to build the world's largest tidal array in the world. Other funders include the Scottish Government and The Crown Estate.
Once the project is completed, it is tipped to provide enough electricity for 175,000 homes and 100 'green jobs' when completed.
"This innovative and exciting project puts Scotland and the UK on the map as a global leader in marine technology – meaning jobs, better energy security and the potential to export this technology to the world," said Energy Secretary Ed Davey.
"The project also shows what can be done when the UK and Scottish Governments work together to provide a lasting benefit for the people of Scotland."
Tidal arrays extract energy from moving masses of water.
The UK has around 50% of Europe's tidal energy resource as Britain's geographic location means that it is easier to harness wave and tidal stream energy.
The UK government estimated that it could meet 20% of the UK's electricity demand as renewable energy generation is expected to play a major role in replacing one-fifth of the UK's aging coal and gas fired power plants which are due to be brought off-line by 2020.
Davey's department said "the project is an exemplar of how the UK and Scottish Governments, as well as other agencies and organisations, have worked closely together to create lasting benefit for Scotland and the UK."
His comments come less than one month before Scots vote in the referendum over whether the country should stay pay of the 307-year old union with the rest of the UK.
Meanwhile, Scotland's government revealed that it has granted permission for the owners of the former oil and gas industry fabrication yard at Ardersier to resurrect the site to be turned into wind farms,.
It is tipped to create 2,500 jobs.