MGT Teesside, a subsidiary of MGT Power, has selected Abengoa and Japan-based Toshiba as preferred bidders, to construct the 299MW Tees Renewable Energy Plant in Middlesbrough, UK.

Planned to be built at the Port of Teesside, the facility will use wood pellets and chips to produce electricity and steam.

The engineering and construction contract is estimated to be valued at over €600m, Abengoa said.

The company will manage engineering, design and construction activities for the project, which is expected to create up to 1,100 jobs during construction phase.

Upon commissioning in 2016, the project will generate around 2.4TWh of electricity a year, to serve around 600,000 homes in the UK.

While reducing around 1.2 million tons of CO2 emissions annually, the facility will represent the UK’s contribution to the EU’s renewable energy target of 20% by 2020.