Thanks for the comments The lighting will be a basic multi directional light (trying to simulate sunlight) that the user have some control off. Its going to be difficult to simulate real sunshine since I have to factor in atmospheric scattering etc as the sun will be emit different colours throughout the day. I am not sure if I have the time to do that but right now the idea is a single multidirectional light source moving at the user discretion through a predefined arc.

Thanks for the comments! I am looking at using DirectX API (and of course C++) to code the demo at the moment but I am also researching if OpenGL could be a more beneficial one.

I am hoping to implement a procedural type terrain that is generated in real time as that's what I did last year. As for the lighting, I will be focussing on just simulating a single source from the Sun at the moment. I will pre-determine the path of the Sun but I will let the user control the speed on the movement. So I guess it will be a sun style arc but there's a lot of other factors to consider to make it realistic such as atmospheric scattering and other emission properties. I am not sure if I have the time to implement that much detail into the lighting but at the moment it will be a single multi directional light source moving at an arc.

I have looked at some previous papers done on almost similiar topics and I reckon a video card of the same power as a Nvidia 8800 GT or better should be able to render it. I will try to optimize the code so it won't be resource heavy. That is also one of the aims I am hoping to achieve. A relatively cheap but stunning visual effect.

As for clouds, I might just make them static at the moment. They won't be procedural and most probably be generated from a single mesh. There also won't be any scattering or post processing effects on the cards but I do hope to include them in my demo. If I can't manage to include clouds, I will try to include reflections and refractions of the sun light on a water surface.

Wow, after actually reading what I type, it sounds like a tall order indeed! I hope I can achieve most if not all of my objectives.

Anyway, I'm greatly looking forward to seeing what might result from this investigation, as I genuinely regard real time lighting as one of the most exciting and impressive effects in a 3D simulation, as it really can alter the entire mood and emotional impact of a scene, and is a key immersive effect in almost any medium. Plus, it will generate a great response from people viewing it

In what graphics API will this be coded? Shall the terrain mesh be generated or pre-compiled? Perhaps a pre-generated one may be of a larger benefit, as you can compare different lighting implementations upon the same landscape for easier results. How much control shall there be of the light source; will it be a solar style model, where it can move around the sky in a realistic sun style arc, a free floating light emitter, or perhaps the ability to switch between the two? Hopefully the graphic cards in the labs can keep up with a real time simulation of this scope, and if not, the computers in the Master's lab certainly will :p

By the way, this is a great resource for online programming related material:
http://citeseer.ist.psu.edu/

Hope to see some eye melting results!