Energy sustainability has become one of the most concerned issues around the world, and tidal stream power is one of the promising types of renewable energy with merits of high predictability, relatively low cost, and low environmental impact. Numerical models based on the shallow water equations (SWE) have been applied to assess the energy distribution and environmental impact. In existing SWE models, the effect induced by tidal stream turbines on the fluid is usually represented by bed friction, which is only applicable for far‐field studies. In the current study, a Blade Element Momentum (BEM) model has been developed and integrated into a three‐dimensional (3D) SWE model to improve the accuracy for assessing tidal current energy distributions. Using the BEM approach, state variables can be obtained for a blade element of a turbine rotor. These state variables can be used to calculate the local thrust coefficient, which is introduced for representing the effect of rotors in the 3D SWE models. A 3D SWE model has been refined, by incorporating the proposed BEM model, to simulate the density distribution of a tidal turbine farm. The refined SWE model has been validated against measurements from a flume experiment of turbine arrays. The model performs generally well in predicting the distribution of velocity deficit and the recovery of wakes. In a field‐scale application to a planned tidal power test site, the model was used to predicting the flow field for both a single turbine scenario and a turbine array scenario.