The station will be built at a papermaking factory and will replace the company's existing coal-fired system, significantly reducing carbon emissions.

The new facility should be operational by 2011 and will generating six per cent of Scotland's renewable generation targets, enough electricity to light a city the size of Dundee, 

RWE npower Cogen already owns 11 CHP plants in the UK, but this will be its first to use biomass.

The Scottish Government will contribute £8.1m to the construction costs for the facility, which will create over 300 construction jobs and secure 500.