Government funding for the £100m switch from coal at Lynemouth Power station has been cleared by the European Commission.
Plans to convert a North East power station from coal to biomass have overcome a massive stumbling block after European politicians approved government funding.
German company RWE npower, which operates the Lynemouth Power station , has sought the £100m conversion in order to avoid penalties imposed under European clean air rules which come into force next year, and to safeguard the jobs of more than 130 staff there.
A bid for state-aid for the switch was approved by the government’s Department for Energy and Climate Change under the Final Investment Decision Enabling Investment Contract in 2013.
However the European Commission announced a probe into whether the funding complied with state-aid rules amid concerns it would amount to excessive financial support from a government renewable subsidy pot.
Yet, after a lengthy delay, the EC has now ruled that the funding can be given.
The news has been welcomed by Lynemouth Power Limited, a subsidiary of RWE npower, and local MP Ian Lavery.
Managing director Vaun Campbell said: “This is fantastic news for the Lynemouth project and the station’s 134 strong workforce.
“As a full coal-to-biomass conversion, this project is a win-win for all involved. The North East region and the local economy also benefits as supply chains and other infrastructure are created.
“Once operational the project generates 420MW, with 390MW export of low carbon electricity to the national grid, supporting the Government’s climate change targets.
“It has been a long journey with delays to the decision impacting the project but we can finally now move towards hopefully making an investment decision.”
Labour MP Mr Lavery added: “I am delighted that future of Lynemouth Power has now been secured with the EU State aid announcement.
“This has been a long running situation and despite assurances that things were moving quietly in the right direction, the management, workforce and local people shared my concerns at the length of time an announcement was taking.
“This is good news for the area and means that Lynemouth Power will continue to provide much needed quality employment in the area as well as contributing to the nation’s energy needs.”
Andree Stracke, chief commercial officer of RWE Supply & Trading GmbH, said: “We welcome this confirmation of the government support for biomass power generation, which provides a reliable base load to compliment other renewables such as wind and solar.
“We are working towards full conversion and power production from 100% biomass within 18 months.”
“Today’s confirmation is a win-win-situation for all stakeholders. It is fantastic news for the plant and its 135 employees, with positive impacts for the region. It supports the climate change goals of the UK government and will be important for UK’s security of supply. This project supports RWE’s strategy to convert the plant to preserve and boost the value of the operations.”
An RWE spokeswoman said the company would make a commercial decision on whether to proceed with the conversion early next year with an 18 month build time should it go-ahead.
The power station was acquired by RWE in 2012 and is currently capable of producing enough electricity to meet the needs of over 450.000 households.