Abengoa and Toshiba have been selected as preferred bidders to construct a 299MW biomass combined heat and power (CHP) plant in the UK.

The plant, owned by MGT Power’s subsidiary MGT Teesside, will be built in the Port of Teesside, Middlesbrough.

The engineering and construction deal is expected to be worth more than €600m. Abengoa will undertake the engineering, design and construction of the facility as part of the deal.

Australian investment bank Macquarie Group is arranging financing for the plant, which is expected to start electricity generation in 2018.

The project, which is being backed by the UK Government’s Contract for Difference scheme, will be fuelled by wood pellets and chips from certified sustainable forestry sources in the US and Europe.

After completion, the facility will generate enough renewable energy for about 600,000 homes in the UK.

Abengoa said the plant will help in reducing the UK’s carbon footprint and promoting the country’s energy transition to renewable and energy efficient sources.

The company noted that the facility will also help in ensuring the supply of energy to the country’s consumers and reducing greenhouse gas emissions.