Approval has been given for a marine energy trial in Cook Strait, which the project's backers believe has the potential to provide more than the country's current generation capacity.
Neptune Power has been granted resource consent for an experimental turbine capable of producing 1MW of power in 80m of water 4.5km off the south coast of Wellington.
Chris Bathurst, a director of the two-year-old Christchurch company, said installation of the tidal stream turbine could begin next summer.
"When we first started this people said it wasn't technically possible. Then they said the fishermen would never allow it."
But Bathurst said when the plan was outlined in meetings with stakeholders, including fishing groups and Forest & Bird, objections were overcome.
Greater Wellington Regional Council's approval of the trial last week was "big news", he said.
Bathurst, an engineer, and Neptune co-director David Beach, a physicist, have been working on the project for three years.
Bathurst's calculations suggest there is enough tidal movement in Cook Strait to generate 12GW of power, more than one-and-a-half times New Zealand's present generation capacity.
But tapping that energy would cost billions of dollars.
Neptune isn't disclosing financial details of the project, except to say technology providers and electricity network companies will be given first options to invest.
Bathurst would like up to a third of the value of the venture to be open to public investment.
An "awful lot of people" had already expressed interest, including a potential investor from China who emailed Bathurst within hours of resource consent being granted. Neptune is confident of the economics of the Cook Strait project, and will use the experimental turbine to study effects on marine life and the general seabed ecology.
A condition of the resource consent, granted for 10 years, is that Neptune submit an annual report to the council based on its observations. With the turbine in 80m of water, lack of sunlight will mean marine growth won't be an issue.
Neptune has been talking to lines company Vector about making use of the trial turbine's power - enough for about 500 homes.
* Installation of a $10m tidal stream turbine in Cook Strait could begin next summer.
* Cook Strait has the potential to generate 1.5 times NZ's total existing generation capacity, Neptune Power says.