US-based company Valero Energy is set to begin a £127m project that would create a combined heat and power (CHP) cogeneration unit at its Pembroke refinery in Wales.

The CHP cogeneration unit is reported to be the first project that has obtained planning permission as a Development of National Significance process under the Planning (Wales) Act 2015.

The project will see the construction of a new 45MW unit that will be supplying the power to the refinery, and also helps the company to improve the energy efficiency and also control future electricity costs.

Valero vice-president and Refinery general manager Ed Tomp said: “This project is important to maintaining the refinery’s long-term viability. The decision to approve our CHP Unit plans by Valero management caps a year of tremendous effort to obtain approval for this major investment in the Welsh economy.

“We appreciate the Welsh Government’s support and planning permission, it is a testament to our collaborative approach with the Welsh Government, regulators, and the public.”

Wales First Minister Carwyn Jones has welcomed the news of the new 45MW CHP power unit in the region.

“This project is a huge boost to the economy of south-west Wales, on a similar scale to transformative projects such the Aston Martin site in St Athan and the Wales International Convention Centre,” she said.

“The Welsh Government has been working closely with Valero in supporting this investment, which will allow the company to grow and compete successfully in a global marketplace, ensuring sustainability of employment well into the future. This is great news for the site’s 1000 plus employees and contractors, and a huge boost to the Welsh economy as we celebrate St David’s Day.”