The front page of this morning's Dominion reports that Meridian Energy is looking at installing wave power generators under Cook Strait, and that this is reportedly capable of supplying all the country's electricity needs. I'm not sure about the latter - it would depend on how much energy you can get out of a turbine and how much shallow water we have which is subject to strong undersea currents - but the core idea is sound enough. Water is just like wind, only thicker; it moves, and that movement can be captured and turned into electricity with a turbine.
I'm not sure about the ecological effects. The turbines spin quite slowly, so they're not going to be directly killing fish. The real problem is likely to be noise, and possibly some minor pollution from lubricants leaking. On the plus side, you can't fish where there are turbines, so there may be some ecological benefits. The best way to investigate this is probably to build a test facility and see.
The biggest problem is the price; Meridian estimates that undersea wave energy will cost around 12 cents a kilwatthour, compared to around half that for wind or gas. But that's really Meridian's problem, and if they think they can make a profit generating electricity at that cost, then all power to them.