As part of the £25m project, 20 turbines will be anchored off Anglesey and when fully operational should generate enough electricity to power 8,000 homes.
Initially 30 jobs will be created but if the system works well, the Swedish company behind it, Minesto, believes hundreds more could follow.
The Welsh government is keen to promote wave and tidal energy and find ways of bringing skilled jobs to places like Anglesey.
Welsh first minister Carwyn Jones said: “This will not only help create greener and more efficient sources of energy, but will also create jobs and vital opportunities for growth in north Wales.”
Minesto has been testing the kite turbine system in Strangford Loch in Northern Ireland. It has chosen for the permanent Welsh site a southern corner of a stretch of water called Holyhead Deep.
Weighing seven tonnes and operating at least 15 metres below the water surface, each kite carries a turbine below it. The kite is tethered by a cable to the sea floor and then “flies” in the tidal stream. It swoops round in a figure-of-eight shape to increase the speed of the water flowing through the turbine.
This means the kite can generate renewable electricity in tidal streams that would be too slow to drive the first-generation tidal devices, the company said.