Plans to convert a Northumberland power station to a biomass facility have taken a major step forward after a government funding boost.
Bosses at Lynemouth Power Station have been told the project is eligible for funding from the Department for Climate Change (DECC).
The news was last night welcomed by bosses as well as the local MP, who said it promised to safeguard more than 100 jobs.
The 400MW coal-fired power station was originally run by Rio Tinto Alcan and employed 130 staff.
However, it faced closure until a deal was agreed to sell to Lynemouth Power, a subsidiary of RWE npower last Christmas.
The new owner has until the end of next year to undertake a £100m conversion of the plant to biomass (wood) or face closure under European emissions regulations.
If the conversion takes place Lynemouth will be able to sell the electricity it generates at £100 per MW/h – which is twice the current wholesale price.
Last week, the site was selected by the government as one of the projects it favours for a biomass conversion.
Yesterday, DECC confirmed the project meets the minimum criteria for an investment contract under the Final Investment Decision (FID) Enabling Scheme, part of the government’s proposed ‘Contract for Differences’ (CfD) mechanism aimed at supporting major low carbon energy projects.
Lynemouth Power was classed as “provisionally affordable.”
As a result, the company yesterday received a draft investment contract.
It will need to confirm its commitment to the contract process by submitting a binding application in March 2014. Bob Huntingdon, managing director of Lynemouth Power Limited, said: “This is a good step forward for Lynemouth Power, but there are a number of steps remaining before we can make a final investment decision.
“We are aiming to take an investment decision on the station’s conversion to biomass early next year, but today is a positive step in the right direction.” Berwick Liberal Democrat MP Sir Alan Beith welcomed the announcement, having had several discussions with Ed Davey the Secretary of State for Energy and Climate Change about the importance of supporting the power station’s conversion to protect jobs and boost the local economy, as well as cutting carbon emissions.
North East Lib Dem MEP Fiona Hall has also been making the case for supporting the development at Lynemouth.
Sir Alan said: “I am absolutely delighted that Lynemouth Power has been awarded an investment contract under the Government’s enabling for renewables scheme.
“A huge amount of effort has gone in to developing a long term future for the power station and this is the next step in making sure we have an energy generation plant which continues to provide power and jobs well into the future.
“I am glad I have been able to help.”
The power station was built to serve an adjoining aluminium smelter by aluminium company Alcan, which later became Rio Tinto Alcan, in 1972.
The smelter shut down in May 2012 with the loss of hundreds of posts.
Since it closed, the station - one of the smallest coal fired sites operating in the UK - has been providing electricity solely to the National Grid.