Energy firm Energiekontor UK submitted plans for the scheme, proposed for a site next to the Louth Canal near the village of Fulstow, in May 2014.
The appeal was recovered in December 2015 after East Lindsey District Council failed to determine the application.
Inspector Jessica Graham concluded that the harm caused to the significance of designated heritage assets would be outweighed by the scheme’s public benefits.
However, she judged that overall adverse impacts would significantly and demonstrably outweigh its benefits.
The secretary of state agreed with the inspector that the proposal would not lead to substantial harm to the significance of the grade II listed Thoresby Warehouse and other heritage assets nearby.
However, he nevertheless gave significant weight to the heritage impacts.
He also gave significant weight to the scheme’s adverse impact on the character and appearance of the site and a substantial area surrounding it.