A Scottish company will deploy sausage-shaped tubes off Portugal to create the world’s first commercial wave power plant, providing electricity to 1,500 homes from 2006, a partner in the Scottish firm said on Friday.

Ocean Power Delivery (OPD) will build the wave farm about three miles off Portugal’s northern coast, near Povoa de Varzim, OPD’s Norwegian backer Norsk Hydro said.

OPD will deliver three wave power generation units with capacity of 2.25 megawatts to Portuguese renewable energy group Enersis for million, but the project could be expanded significantly, Norsk Hydro said.

OPD’s Pelamis P-750 wage energy converter is an elongated metal unit that looks like a big semi-submerged sausage, with hinged segments that rock with the sea, up and down and side to side, pumping fluid to hydraulic motors that drive generators.

The power produced by the generators is fed into underwater cables and brought to land.

A letter of intent for a further 30 Pelamis wave machines for a total of 20 megawatts before the end of 2006 was also signed, subject to satisfactory performance by the initial installation, Hydro said.

“If all goes well, many additional sites producing up to a total several hundred MW could be developed along the coast,” Norsk Hydro said.

“We see this order as just the first step in developing the Portuguese market, which is anticipated to be worth up to a billion euros over the next 10 years,” OPD Managing Director Richard Yemm said in the statement.

OPD is also in talks with Scottish Power, which has shown interest in installing a wave farm in the United Kingdom, Hydro said.

The European Union requires 22 percent of electricity consumption to come from renewable energy sources — such as solar, wind and wave — by 2010. Renewables currently meet about six percent of European demand, Hydro said.