"The energy in waves is the densest of any natural sources of energy. It's pretty much always there and it doesn't go away like sun and wind do," John Bell, the Chief Finance Officer from station developer Energetech told Reuters.

Lying anchored just 100 metres (yards) off a popular surf beach near Wollongong, a city of around 200,000 people just south of Sydney, the 485-tonne plant will power 500 homes along the local grid.

Electricity is generated when waves wash into a funnel facing the ocean, driving air through a pipe and into a turbine capable of pumping 500kw of clean power each day into the local grid.

The A$6 million (US$4.7 million) floating plant, built to withstand a 1-in-100 year storm, can also desalinate 2,000 litres of drinking water each day for almost as many homes as it powers.

The station is also popular with local surfers, having created a nearby sandbar with a small surf break, despite the difficulty of getting to it from Port Kembla's port.

Bell said the plant was the prototype for a larger installation of 10 stations to be built on the wave-battered southern Australian coast near Portland, in Victoria.

"We'll have a queue to roll these things out, because the fact we can do both electrical energy and desalinated water is quite compelling," he said.

Interest in building similar plants has come from Hawaii, Spain, South Africa, Mexico, Chile and both US coasts, with Energetech having just completed a round of venture capital raising, mainly in Europe.

"Our production units will be producing one million litres of water each day and we can produce at very low cost," Bell said.

The costs of power from the plant ranged below 10 cents per kilowatt of electricity and under A$1 per 1,000 litres of water.

The Portland plants, floating like an ocean-bound wind farm, would produce 10 megawatts, enough for around 15,000 homes.

The turbine at the heart of the station employs new techology which allows it to spin in the same direction, irrespective of wind direction in the tunnel.