The heavy Atlantic swell and some of the world's strongest tides are to be harnessed by a breakthrough scheme to generate clean marine energy off northern Scotland, with predictions it will rival the output of a nuclear power station.

The crown estate and Scottish government today unveiled a £4bn project to build 10 wave and tidal power sites around the Orkney islands and the Pentland Firth, with the potential to power up to 750,000 homes.

The devices deployed will include the Pelamis "sea snake", which uses the undulations of the sea surface to generate power, and the SeaGen tidal machine, which looks like an underwater wind turbine. In total, the machines will be able to produce up to 1.2GW of "green" energy, more than Dungeness B nuclear station in Kent.

The crown estate, which owns all the UK's seabed out to 12 nautical miles, said these projects were the world's first commercial wave and tidal power schemes. It is expected to announce new marine power sites in other parts of the UK later this year.

Alex Salmond, Scotland's first minister, said the announcement confirmed his prediction that the Pentland Firth region – where the north-east Atlantic meets the North Sea – would become the "Saudi Arabia" of marine energy.

The narrow sea channel has some of the most powerful currents and tidal surges in the world, with speeds up to 16 knots or 19mph recorded. The area also experiences some of the biggest waves in the UK.

Crown estate officials and the developers accepted these often dangerous waters posed significant engineering and safety challenges for the firms involved.

Salmond said some estimates suggested the waters could release up to 60GW of power – 10 times Scotland's annual electricity usage. Other studies suggest one-third of the UK's total electricity needs could be met by tidal power alone.

"This is a huge milestone on the way to making that dream a reality," Salmond said. "Today marks a major milestone in the global journey towards a low carbon future, with the commercial-scale deployment of marine renewables set to power our economies and help safeguard the planet for generations to come."

The schemes are expected to cost £4bn to install, and will require up to £1bn of extra investment – from public sources – to build new national grid connections, harbours and other infrastructure in Orkney and Caithness.

The 10 projects, several of which have already had investment from a £22m UK government marine energy fund, are evenly divided between wave and tidal power stations, with each type generating up to 600MW. The projects are being shared by three of the UK's largest power firms, E.ON, Scottish and Southern Energy (SSE), which already operates the UK's largest hydro schemes, and Scottish Power Renewables, a heavy investor in windfarms.

In most cases, the utility companies have formed joint ventures with four of the UK's leading marine energy firms, covering small areas of sea with up to 200 machines. They use a variety of techniques to capture the energy of the ocean.

Edinburgh-based company Pelamis Wave Power, whose sea-snake device is now being tested off the coast of Portugal, will have its own 50MW site in the Pentland Firth and share three other sites with SSE and Scottish Power on the west coast of Orkney's main island. Its new devices will each be 180 metres long and generate 750kW of electricity.

Also to use wave power is a more powerful version of Aquamarine's existing Oyster machine, in which a lever hinged at the ocean floor is pushed back and forth. It will be used for a 200MW station with SSE Renewables, and its 200 new 1MW machines are expected to start producing power by 2015.

OpenHydro, a large underwater turbine resembling a jet engine and bolted to the sea floor, is built by Cantick Head Tidal and will harness the firth's fierce tides at a 200MW site south of Orkney.

Another tidal machine, SeaGen, features two underwater propellers attached to a tall column anchored to the seabed. It will be installed by Marine Current Turbines off Orkney and at a 100MW site north-west of John O'Groats. SeaGen is currently on test at the "narrows" leading into Strangford Lough from the Irish Sea.

The marine announcement follows last month's confirmation that £75bn will be spent developing a much larger amount of offshore wind power – at least 25GW – at nine sites around the British Isles, including two off Scotland.

The several government projects are intended to increase the UK's renewable energy output, in a bid to cut the emissions of carbon dioxide from fossil fuel power stations and to increase the country's energy security, as North Sea oil and gas declines.

Orkney islands' council is now planning to invest more than £20m to upgrade its harbours and port facilities to cope with the huge influx in industrial equipment, ships and workers involved in these projects, which will industrialise large areas of the coastline.

The islands are widely admired for their tranquillity and scenery but Stephen Hagan, the council's leader, said he believed most residents were keen to see the investment.

With other island councils in Scotland facing huge local unrest over plans for major onshore windfarms, he does not expect significant opposition on environmental grounds.

"I do genuinely think that people in Orkney feel that we have to get the balance right between the long term sustainability of the place and the environment. I think they see the development of marine renewables as a much better option than onshore wind," he said.