Tidal energy company Nova Innovation has announced it is working with renewable energy organization YnNi Llŷn to explore the development of a tidal energy project in Wales. The project is located at Bardsey Sound, off the Llyn Peninsula in north Wales.

In a release on Sunday, Nova Innovation said that the Crown Estate had awarded it an Agreement for Lease (AfL), which would allow them to undertake site surveys and studies and fully explore the potential of the project. The Crown Estate is a specialist real estate business, managing a property portfolio of more than £12 billion ($15.68 billion).

Nova added that a full Environmental Impact Assessment, or EIA, would also be undertaken as part of the consenting process. YnNi Llŷn would both support Nova and explore "opportunities for local use of the electricity generated."

"This is an exciting opportunity for Nova and for Wales to show that tidal energy has a role to play in the U.K.'s energy mix and can help regenerate coastal communities," Joseph Kidd, commercial manager at Nova Innovation, said in a statement.

The potential of tidal energy is significant. In 2013, the U.K. government said that wave and tidal stream energy had the potential to meet as much as 20 percent of the U.K.'s "current electricity demand." It added that the U.K. was estimated to be home to roughly 50 percent of Europe's tidal energy resource.

"The project will provide significant opportunities for the local supply chain and help support the economic development of the local area," Nova Innovation's Kidd added. "Nova and YnNi Llŷn will be working together to make sure the local community is properly engaged, and that opportunities for maximizing community benefit are fully explored."

Nova described the AfL as being the "first stage" in the process which would allow development activity and consenting to formally start on the project. Nova added that the assessment of the project's feasibility and viability, as well as the EIA, would take around one year to complete.

Once all assessments were completed, a marine licence application would be submitted to Marine Resources Wales, the regulator. It would take a further year for the regulator to assess the application and reach a decision, with members of the public offered the chance to "formally comment on the proposals."