Marine Energy experts are warning Scotland's reputation as a world leader in wave power could suffer under a new method of charging projects for transmitting to the National Grid.
Scottish Renewables said the Government must intervene to stop new charges being introduced. Regulator Ofgem said it is still consulting on the issue.
The Orkney Waters and the Pentland Firth are home to Scotland's first Marine Energy Park but operators say new charges to connect their projects to the National Grid could stop them in their tracks.
Industry body Scottish Renewables estimates of annual transmission charges have increased from £56m last year to £170m by the year 2020.
Niall Stuart, of Scottish Renewables, said: “It just doesn’t make sense. Not just Scotland’s, but Europe’s best wave and tidal resources are in the Pentland Firth and Orkney waters and what these new figures show is that when we connect the projects there they will be paying £170m every year to connect the grid.
“Whereas a similar sized amount of projects off the south-west coast of England, the UK’s only other marine energy park, would actually be subsidised by £2m a year.”
A major Marine energy conference in Inverness on Tuesday heard providers say they are being penalised for the remoteness of where their projects are sited and the rules must be looked at afresh.
Neil Kermode, of European Marine Energy Centre, said: “The rules that we are working under were written really for the old days of fossil generators, not the days for harvesting renewable energy.
“It’s a shame they don’t fit with the rules but that’s because the rules are wrong. We need to get to a stage where we are positively incentivising people to make the most of Scotland’s resources. They’re there, they are in the islands, anything that gets in the way has to be changed.”
In a statement a spokeswoman for Ofgem said the potential changes to existing charging methods need to be further developed and Ofgem has directed the renewables industry to undertake this work.
A spokesman for the department for energy and climate change said it supports Ofgem's proposals and believe it should benefit Scottish based renewables, including the islands.
Energy secretary Ed Davey will visit Orkney and Shetland next month, when he will meet with developers on the issue.