Around 8:00, a barge transporting the hybrid system was buffeted by heavy seas and the bottom component, a waterwheel and fell into the sea. It sank some 25 kilometres northwest from Moji port in Fukuoka prefecture on the island of Kyushu.
Under test conditions of 16m/s the machine produced 900kW.
The company has been unable to retrieve the component and a ceremony planned for 17 October has been indefinitely postponed.
"In order to start the field test as early as possible in the beginning of 2014, Modec is making every effort to investigate the cause of the trouble," said a Modec spokesman.
The Modec-developed 'Savonius Keel and Wind Turbine Darrieus' (Skwid) was the world's first hybrid turbine capable of maximizing the harvesting of ocean energy from wind and current, according to the company.
The system works by having a Savonius current turbine harness energy produced by the ocean currents. A gearbox then transmits the increased rotation to the omnidirectional turbine, and power is generated from the wind, from the current, or from both.