Marine power has the potential to provide up to 20% of current electricity demand in the United Kingdom, as well as help the country reach its climate targets and support thousands of jobs, the Department of Energy and Climate Change said.
"This scheme will help move marine power to the next stage of development, the demonstration of a number of wave and tidal devices in array formation out at sea," Energy and Climate Change Minister Greg Barker said in a statement.
"Marine power has huge potential and the UK is already leading the way for the rest of the world to follow," the statement added.
Companies and organisations across the UK will be able to bid for a share of the £20 million (€24 million) prize that was first announced last summer. Winning bids will be announced by the government towards the end of the year.
Lobby group RenewableUK has estimated that at least £120 million (€145 million) is needed for the UK industry to reach full-scale deployment.
Every pound of public funding in the UK has unlocked £6 (€7.2) of private investment, but more is needed, according to the lobby group.
The technology, like other renewables such as solar and biomass, needs government funding to reach commercial scale and then subsidies after that as it grows to be more cost efficient.
Wave and tidal energy could provide 15% of Europe's energy needs by 2050, according to the European Ocean Energy Association (EU-OEA).