Numerical models have been widely used for the resource characterization and assessment of tidal instream energy. The accurate assessment of tidal stream energy resources at a feasibility or project-design scale requires detailed hydrodynamic model simulations or high-quality field measurements. This study applied a three-dimensional finite-volume community ocean model (FVCOM) to simulate the tidal hydrodynamics in the Passamaquoddy–Cobscook Bay archipelago, with a focus on the Western Passage, to assist tidal energy resource assessment. IEC Technical specifications were considered in the model configurations and simulations. The model was calibrated and validated with field measurements. Energy fluxes and power densities along selected cross sections were calculated to evaluate the feasibility of the tidal energy development at several hotspots that feature strong currents. When taking both the high current speed and water depth into account, the model results showed that the Western Passage has great potential for the deployment of tidal energy farms. The maximum extractable power in the Western Passage was estimated using the Garrett and Cummins method. Different criteria and methods recommended by the IEC for resource characterization were evaluated and discussed using a sensitivity analysis of energy extraction for a hypothetical tidal turbine farm in the Western Passage.