The £400 million project by developer Prenergy Power will be fuelled using woodchips to generate electricity at Port Talbot, south Wales. These are likely to be sustainably sourced from the US and Canada and will contribute around 70 per cent of the Welsh Assembly's 2010 renewable power target.
Energy secretary John Hutton said the 350MW scheme would generate enough electricity for half the homes in Wales. He added: "It joins eight major renewables projects already approved in the past 12 months. It is another important step towards a low-carbon economy."
But the scheme has been criticised by residents. They complained that the nearest home is only 250m from the plant and the area would face noise pollution and respiratory problems.
They have also argued that the plant would produce nearly 2,000 tonnes of waste ash that 17 lorries would have to remove each day.
The project is due to be complete by 2010. It is the latest in a series of renewable consents recently backed by the Department for Business, Enterprise and Regulatory Reform, including the Wave Hub marine energy project off the coast of Cornwall.