A £21.5m regional development agency grant means the £28m Wave Hub project could soon be producing enough energy to power 7,500 homes.
Wave Hub will be sited 10 miles off St Ives on the Cornish coast and will test up to 40 prototype wave energy machines designed to harness the power of the sea.
The "hub" will resemble an "electric socket" on the seabed into which wave energy devices will be connected.Groups of wave energy machines connected to Wave Hub are expected to float on or just below the surface of the sea to assess how well they work and how much power they generate.
The hub will be connected to the National Grid by a 15-mile cable linked to a new electricity substation at Hayle.
It could generate 20 MW of electricity, around 3% of Cornwall's domestic electricity needs.
The funding was agreed this week by the South West of England Regional Development Agency. The South West RDA has applied to the UK government for planning permission to build the hub and a decision is expected next month.
The project could generate £76m over 25 years for the regional economy and create at least 170 jobs, the RDA says.
"Wave Hub has the potential to make an enormous contribution to tackling climate change and we believe it could transform the wave technology industry," said South West RDA spokesman Stephen Peacock.
Wave Hub could save 24,300 tonnes of carbon dioxide every year when displacing fossil fuels.
Three wave energy companies are already working with the RDA to use Wave Hub and a fourth will soon be selected.
