SSE Generation has received permission from the UK Department of Energy and Climate Change to develop a 108MW multi-fuel project in West Yorkshire.
The facility, to be located within its existing Ferrybridge coal power station site, will utilise sustainable fuel sources including biomass, waste-derived fuels and waste wood to generate electricity and heat.
SSE's joint venture with Shanks is expected to provide processed waste-derived fuels for the facility from Barnsley, Rotherham and Doncaster councils.
The main construction work will commence next year while the project is due to be completed in 2015.
In addition, SSE in collaboration with Doosan Power Systems and Vattenfall is currently constructing a trial carbon capture facility at Ferrybridge Power Station.