A £10m prize for taming the stormy Scottish seas by building a working marine energy station was opened for entries today. The global competition, funded by the Scottish government, aims to replicate the success of bounties such as the Ansari X prize which in 2004 led to the first private spaceflight.

The Scottish energy minister, Jim Mather, said the £10m Saltire prize was the world's most valuable government-funded prize for technology innovation, but critics complained that it was a wasteful "vanity project".

The status of the competition was boosted by the disclosure that the Crown Estate, the agency that owns the UK's seabed out to 12 nautical miles, will enable the shortlisted entries to be tested at sites off the west coast of Scotland.

Mather also clarified the rules for the prize: the winning entry, harnessing the power of tides or waves, will have to generate 100GWh of electricity over a two-year trial period sometime between 2012 and 2017, enough to power 10,000 homes.

The prize was first proposed in Washington DC by Alex Salmond, Scotland's first minister and Scottish National party leader, in April 2008, to boost investment and expertise in marine renewables and to promote the significant potential of Scottish coastal waters. So far, there have been 140 registrations of interest.

The competition will be open to existing designs and established marine energy firms, including the Edinburgh-based firms behind the "sea snake" wave machine, Pelamis, and the "oyster" wave machine, Aquamarine power. New entrants to the industry will have to fund their new designs independently.

Salmond and the Crown Estate announced last week that 10 tidal and wave power schemes had been chosen for deployment around the Orkney Islands and the Pentland Firth in what they described as the world's first fully fledged commercial marine energy programme. Scotland's coastal waters have the potential to generate up to 25% of Europe's marine energy, experts suggest.

The Saltire prize has been endorsed by National Geographic, but opposition parties today dismissed it as a publicity-stunt, a view privately shared by some senior renewables industry figures.

Liam McArthur, the Scottish Liberal Democrat's energy spokesman, said this was the latest in a string of Saltire prize announcements. With each one, the deadline had lengthened, and he likened it to the Labour government's costly and much-delayed Millennium Dome in Greenwich.

"The pomp and bombast remains constant," he said. "The only thing that changes is the date, which keeps moving back. The first minister claims that he was the first to recognise that the Pentland Firth could be the Saudi Arabia of tidal energy, but it is increasingly clear that his Saltire prize is becoming the Millennium Dome of marine energy."

Iain Gray, the Scottish Labour leader, said the "repeated delays are turning into a real embarrassment for the SNP government. Today's announcement means Alex Salmond will have his free pensioners' bus pass before the prize is awarded."

One senior industry figure said the prize was, in technological and industrial terms, unnecessary. Any worthwhile marine energy design would be worth many millions to private and corporate investors, and then be exported worldwide, without the £10m.

Funding for marine energy was now flowing, he added. The UK government had its £22m scheme for marine power research, while Salmond himself launched a new version of the Scottish government's innovation fund last Saturday, pledging £12m to support marine power research.

"They don't need £10m of taxpayers' money," the industry executive said. "You're giving people a bonus they don't need. Basically it's a publicity stunt for Salmond to be at the front of the marine energy debate, though to be fair, it does raise the profile of Scotland's potential in this area."

However, Max Carcas, of Pelamis, said although this fund was the "icing on the cake" for developers, it helped increase awareness of the industry worldwide and was comparable to other science prizes such as the Ansari X prize, and the Pentagon's Grand Challenge to build vehicles that drive themselves.

Pelamis would use the prize as a spur to develop new technologies to test, he said. "It's not a substitute for energy policy but it does put a nice spotlight on achieving that goal; that's what these prizes are designed to do," he said.

Martin McAdam, chief executive of Aquamarine, said publicising marine energy was crucial, as was accelerating investment in the industry. "We need to bring capital into the industry and anything which promotes the industry and brings positive publicity is a good thing. The announcement of the Saltire prize has brought huge international publicity," he said.

• This article was amended on 24 March 2010. The winner of the Saltire prize will have to generate 100 gigawatt hours over a two-year period, not 100GW