LONDON (Reuters) - Atlantis Resources Corp is to test the world's biggest tidal turbine in the rough waters off the Orkney Islands next year in preparation for Scotland's plan to use ocean energy for half a million homes by 2020.

Tim Cornelius, chief executive officer at Atlantis, said the company was investing about £15 million ($25 million) to build and test the turbine, which has rotors that are 18 metres in diameter, the height of five-storey building.

The AK-1000 turbine, which has a capacity of one megawatt (MW) — in line with other pioneering marine energy converters — will be deployed at the European Marine Energy Centre (EMEC) test site in Orkney.

"We are finalising the tender for manufacturers. We are making this in the UK for the first time," Cornelius told Reuters in an interview. Previous smaller versions were made elsewhere.

"We will be committing at least £15 million just for this testing regime in EMEC." Atlantis is working with Norway's state-owned utility Statkraft to win a bid in Britain's Pentland Firth marine energy project, the world's first industrial scale wave and tidal energy programme, which is intended to reach at least 700 MW of capacity by 2020.

The Crown Estate, which owns the seabed within 12 nautical miles off Britain's coast, plans to sign lease agreements for the Pentland Firth programme with developers by April.

While there are around 100 companies around the world working on marine energy, including wave power, only a handful have installed their devices at sea. Others are running tests in tanks or on computers.

Last year, Britain's Marine Current Turbines Ltd (MCT) became the world's first company to install a commercial-size turbine, SeaGen, with a capacity of 1.2 MW, at Strangford Lough in Northern Ireland.

In March, Statkraft invested 45 million crowns ($8 million) in Atlantis, joining Morgan Stanley to become a minority shareholder in the company that since 2007 has been testing small tidal turbines — one for 150 kilowatts and another for 400 KW

"We took everything we learnt over the last 10 years...to create AK-1000, which we believe to be the best for the North Sea," Cornelius said by telephone from Singapore.

"This one is built for the harsh marine environment we will get as we go into the North Sea in Orkney. This is one of the harshest environments in the world," Cornelius said.

Atlantis, which started up in Australia but now has its headquarters in London, has invested more than $50 million over the last 10 years in designing, developing and testing tidal turbines.