The European Community's specific RTD programme in the field of Non-Nuclear Energy (JOULE/THERMIE) is supporting the design of the second Osprey wave generator. The first Osprey generator, sited in the sea of the north coast of Scotland, was destroyed by massive swell in summer 1995. Osprey was designed to generate 2MW of power. It cost ECU 5 million and took some five years to develop. The research team managed to salvage the generator and turbines and have put the lessons learned into the design of the second Osprey generator. Just 18 months later, the team has completed the design of the new generator, working in a European consortium supported by the JOULE component of the programme. The new generator should be built and ready to launch early in 1998. The researchers have made extensive use of models in an ocean simulation tank and have improved the ballast system to make the generator more stable. The researchers have also added a wind generator on top of Osprey II, which will increase the power output by 25%. This development means that the costs of power from Osprey may be reduced to the level of costs from fossil fuel. A major aim of the JOULE research on wave power is to produce cost-effective power generation. Osprey II represents a substantial step towards this goal. In addition, a study on the effects of siting the generator at sea has shown that it could have a beneficial effect on the ocean environment by acting as a reef and attracting organisms and fish.