A £50 million biomass storage and handling facility is to be built in Selby, North Yorkshire.
Energy firm Drax has chosen Shepherd Construction to handle the development, which will allow it to significantly reduce the existing power station's annual carbon dioxide emissions by combining coal with plant-based materials.
The project will allow the firm to generate 20 per cent of the station's energy output using biomass.
Dorothy Thompson, Drax's chief executive, said that the company is looking to develop into a biomass-fuelled generator of power – a situation that is "win, win, win" for supply security, the environment and cost.
Mark Perkins, chief executive of Shepherd's Built Environment Division, said his team worked closely with Drax to create "integrated technical solutions" and that local people would benefit from the jobs created.
"The project will also generate wider opportunities for local people in terms of employment and skills training, and we will be maximising opportunities for local businesses," he said.
Drax is currently seeking planning permission to build the White Rose Carbon Capture and Storage Project in Selby, which will be created by in partnership comprising Drax, Alstom and BOC.