Auckland-based power company Crest Energy is seeking consent for a 200-turbine, 200-megawatt scheme, costing about $600 million, at the entrance to Kaipara Harbour.
The scheme would be the first of its kind in New Zealand, and could power 250,000 homes.
The Environment Court has given a positive recommendation to Conservation Minister Tim Groser, while requesting work to address lingering environmental concerns.
The progress encourages David Tucker, of Dunedin, who argues a similar scheme should be considered for Otago Harbour.
Mr Tucker, a semi-retired consultative engineer and former Dunedin City Council consultant, said Otago Harbour could be as effective as a source of renewable energy.
He envisaged turbines on the sea floor at the mouth of Otago Harbour, driven by the tide to generate power, or a barrage from Port Chalmers to Portobello - or both.
The barrage would take advantage of a natural bottleneck between Port Chalmers and Portobello, linking Goat and Quarantine Islands, trapping water in the upper harbour during high tide and releasing it at low tide.
Water flowing in both directions could drive turbines inside the barrage, but the barrier could also provide protection from sea level rise, he said.
He planned to discuss his ideas with Aurora Energy Ltd, a Dunedin City Council-owned company, and believed feasibility studies should be considered.
Sustainable Dunedin co-chair Dr Jocelyn Harris agreed, saying she supported investment in tidal power schemes and other forms of renewable energy.
"We have to start thinking about things as creatively and widely as possible, and we have to start thinking about it fast."
Aurora chief executive Grady Cameron, of Dunedin, said tidal and wave power generation technology was in its infancy, but developments were being closely watched by his company.
It was possible a development could feature on Otago Harbour as technology improved and costs made schemes more economic.
"It [tidal] is probably 10 to 15 years behind where we are with wind power.
It's very much in its infancy.
"At this stage, I don't think there's one technology that's really proven itself," he said.
TrustPower community relations manager Graeme Purches agreed, saying tidal technology was still "experimental", with technical challenges still to be resolved and few examples of operational schemes globally.
"The cost of the output of that generation at this point in time is not viable. There's too many better alternatives, in our view."
Crest Energy director Anthony Hopkins, of Auckland, said there were no plans to expand the company's operations to include other New Zealand harbours, although he agreed improved technology could make smaller projects more feasible.
The company had considered 57 harbours around New Zealand before drawing up a shortlist of five.
Otago Harbour did not feature on that shortlist, he said.
Kaipara Harbour was the country's largest harbour, he said, while the second largest, Manukau Harbour, was about half the size of Kaipara Harbour.
It was hoped approval for the Kaipara project would come this year, but construction was unlikely to begin for a further two years.
