Just a day after the long-anticipated UK government energy review highlighted the need for a new generation of nuclear power, Scottish and Southern Energy (SSE) is to build a gas-fired plant near Southampton.

The Perth-headquartered utility has entered into an agreement with Ireland’s ESB International to acquire 50% of the shares in Marchwood Power, a company set to construct a new gas-fired power station with an installed capacity of around 850MW.

Construction work is expected to start early in 2007, with the power station being fully commissioned before the winter of 2009/10. Upon completion, the station will be jointly operated by SSE and ESBI and in a typical year will meet the electricity requirements of around one million homes, SSE said in a statement.

When operational, SSE will supply all of the fuel for the power station and take from it all of the electricity generated. The total project cost is estimated to be around GBP400 million, with SSE committing an equity investment of around GBP40 million.

Ian Marchant, chief executive of SSE, said: There is a clear consensus that the UK will need a significant amount of new electricity generation capacity over the next 15 years.

This agreement is a major step forward in our ambitions to invest further in gas-fired generation plant, which will complement our other investments in gas, in coal-fired plant and in renewables. It will help SSE retain its position as the largest non-nuclear generator in the UK, and the generator with the most diverse portfolio of power stations.