Increase in the penetration level of renewable resources results in the development of new approaches to assess the impacts of these variable resources on the power network. Large‐scale barrage‐type tidal generation units can integrate to the power network for reliability improvement. For reliability analysis of a power system containing these plants, a reliability model is developed. This model is considered the components' failure and also the output power variation arisen from the change of the tidal height should be developed. For this purpose, a multi‐state reliability model considering variation of tidal height that affects components failure rate and also the value of generated power is developed. The failure rate of components including transformer, turbine, cable, generator and electrical converter is dependent on the tidal height and turbine velocity. The paper is focused on the developing a thermal model for each component. Based on the temperature rise of the components, the associated variable failure rate is calculated from the Arrhenius law. The multi‐state reliability model of barrage‐type tidal energy conversion system considering variable failure rate of components is utilized to study the generation power systems adequacy based on the analytical and Monte Carlo approaches. This model is also utilized for reliability assessment of composite power system containing barrage‐type tidal power plants. Considering variable failure rate of components results in a more accurate reliability model for tidal power plant. Based on this model, the effects of different tidal patterns on the reliability indices can accurately be studied.