The 1,020MW gas-fired CHP station at Seal Sands in Teeside will be constructed by Thor Cogeneration.
Stockton Borough Council approved the scheme for the 40 acre site back in April 2007 and the license to generate was also approved last year, but the company has had to wait to get full approval from the Department for Business, Enterprise and Regulatory Reform (BERR).
Local industry will be able to harness and use the heat produced from electricity generation at this power station.
Martin Green, Thor Cogeneration director, said: “We very much welcome the decision which is a critical consent required for the construction of the heat and power plant and has involved a great deal of work and consultation with local stakeholders in the project and with BERR.
“We will now be finalising the financial and contractual arrangements for the project and we would expect land preparation to commence very soon with the full construction commencing in 2009 and power being supplied into the grid in the early part of 2012.”
Mr Wicks said: 'To secure our energy supplies, and power our homes it is important industry brings forward new energy infrastructure to maintain a diverse energy mix. It's also important that as we face the challenges of climate change we move towards more efficient energy production and this power station is an example of that.'
Creating a CHP facility at Seal Sands was recommended in a report completed for Greenpace earlier this year by consultancy Poyry.
The report said if large scale CHP was installed at nine industrial sites across the UK - including Seal Sands - they could potentially generate 14GW of thermal and electrical power.
Greenpeace argues this would substantially reduce energy demand, cut the need for gas imports and combat demands for new nuclear power stations.
Doug Parr, from Greenpeace, said: 'We are very supportive of this. It is a positive step forward, but what is missing is a sense of drive from the government to make sure it happens.'
Thor Cogeneration says the station will require around 20 per cent less gas per MW hour of electricity generated than many of the country’s existing gas-fired stations and will produce up to 60 per cent less carbon emissions than current coal-fired plants.
A combined cycle operation comprising two gas fired generators is planned. The surplus heat from these units will be used to produce steam to drive a further generator, with additional steam also being exported to local industry.
Paul Verrill, project manager, said: “It fits well with the Government’s recent energy review which concluded that while the drive to develop alternative and renewable energy sources continues, a new generation of cleaner, super-efficient gas fired power stations is likely to remain necessary in the short to medium term.
“This new plant will provide greener, reliable energy at a time when many existing power generation assets around the UK, particularly the ageing coal and nuclear fleet, are reaching the end of their operating life.”
Thor Cogeneration is a venture established by the new business development team of the Stockton-on-Tees based px Group.