A tidal energy company says its prototype underwater power system has passed all of its tests, clearing the way for a commercial unit to be connected to the region’s electricity grid by year’s end.

Ocean Renewable Power Co. says the unit that finished testing in December produced grid-compatible electricity and appeared to cause no harm to marine life. The company plans to install a larger unit off eastern Maine that will deliver power to Bangor Hydro Electric Co.’s grid.

The 150-kilowatt unit will power as many as 60 homes, and the company intends to install more of the units in coming years, increasing capacity to 3.2 megawatts by the end of 2014.

“We think that within our next five years, we’re going to be competitive with any renewable power options, and possibly compete with fossil fuel sources,” said company President Chris Sauer.

Ocean Renewable says its prototype produced electricity on a prolonged and consistent basis, while unattended. Underwater video cameras and sensors indicate there was no harm to fish, which appeared to go out of their way to avoid the unit, the company said.

The Ocean Renewable unit self-starts when the current reaches 2 knots and produces increasing amounts of electricity as the tidal currents reach 6 knots. All told, the unit produces power for 20 to 21 hours a day as the tide comes in and goes out, the company said.

Ocean Renewable needs approval from the Federal Energy Regulatory Commission to proceed with its plans. The company expects to file its final application for its commercial turbine off Eastport within four to six weeks, Sauer said.

Ocean Renewable holds permits for three sites in the area, one of the world’s best tidal sites, where twice a day the tide rises and falls 20 feet.

Another tidal power company, New York-based Verdant Power, hopes this year to put new underwater turbines in New York City’s East River, where they would connect to the grid.

Ocean Renewable and Verdant are among the companies that are racing to harness tidal power. They’re considered to be the most advanced tidal power developers in the United States but are trying to catch up with those in Europe.

“It’s a whole new field with daily discoveries. That’s what makes it exciting,” said William “Trey” Taylor, president of Verdant Power.

Tidal power is appealing because water’s greater density, compared with wind, means fewer turbines are needed to create the same amount of power. And tides, unlike the wind, are predictable.

But perhaps the greatest advantage is that the underwater equipment is hidden, unlike wind turbines, so there are no complaints about aesthetics.

Verdant’s design looks a lot like a wind turbine. Ocean Renewable uses rotating foils that have the appearance of a manual reel mower.

Both companies are making rapid advances compared with the early development of wind power. But they still face formidable challenges. One is that regulations don’t exist; another is that tidal power efforts haven’t drawn large amounts of investment, observers say.

“Currently, the biggest obstacle to development of the tidal power industry is lack of funding for further development of the technology and for permitting and licensing of demonstration projects,” said Paul Jacobson, water power manager for the Electric Power Research Institute.

Nonetheless, tidal power companies see great potential. Ocean Renewable officials think there’s potential for as much as 100 megawatts of tidal power in the Eastport-Lubec area. And Taylor said there’s lot more potential in neighboring Canada, where he said the Bay of Fundy’s tremendous tides carry the daily equivalent energy of four hurricanes.

Ocean Renewable and Fundy Tidal Inc. of Westport, Nova Scotia, have formed a partnership to develop a tidal energy project in the Bay of Fundy off southeastern Nova Scotia.

Next year, the companies plan to begin producing tidal-generated electricity at Petit Passage using Ocean Renewable’s underwater turbine system, the companies announced this month. The Petit Passage is about 50 miles from Ocean Renewable’s three sites off Eastport.