Bardsey Island is located at the western end of the Llŷn Peninsula in north-west Wales Separated from the mainland by a channel some 3 km wide, it is surrounded by reversing tidal streams of up to 4 ms⁻¹ at spring tides. These local hydrodynamic details and their consequences are unresolved by satellite altimetry, nor are they represented in regional tidal models. Here we look at the effects of the island in the strong tidal stream in terms of the formation and shedding of eddies, and the budgets for tidal energy dissipation. We show, using local observation and a satellite altimetry constrained product, that the island has a large impact on the tidal stream, and that even the latest altimetry database seriously under-represents the tidal stream due to the island not being resolved. The effect of the island leads to an underestimate of the current speed in the altimetry data in the channel of up to a factor of three, depending on tidal state, and the average tidal energy resource is underestimated by a factor 6. The observed tidal amplitudes are higher at the mainland than at the island, and there is a detectable phase lag in the tide across the island – this effect is not seen in the altimetry data. The underestimate of the tide in the altimetry data has consequences for tidal dissipation and wake effect computation and show that local observations are key to correctly estimate tidal energetics around small-scale coastal topography