ON the day a £5m pot to help Tees Valley industries become more energy efficient was unveiled it emerged a major Teesside industrial site is to receive power from green gas.

Business Secretary Lord Mandelson yesterday announced local companies, particularly those in the process industries, are to receive grants, through regional development agency One North East, to invest in technology and energy management systems that reduce their power consumption and CO2 emissions.

It is hoped the £5m scheme will make firms less susceptible to dramatic swings in energy prices.

Minister for the North-East, Nick Brown, said: “The region is building a reputation for itself in the low-carbon sector and we know that energy costs are set to rise.

“This has the potential to save hundreds of thousands of pounds in energy costs for the region, which will be particularly welcome.”

Margaret Fay, chairwoman of One North East, said: “As the Tees Valley has a large number of energy intensive businesses, focusing on helping them to invest in energy efficiency will significantly improve sustainability, particularly for process industry companies and their supply chains, ensuring they remain productive, competitive and keep the area at the forefront of the process industry in the UK.”

Grants will typically be given to support capital investments of £250,000 or more that lead to a significant reduction in energy use.

Yesterday’s announcement formed part of a £64.4m package split between the nine English regional development agencies for projects in their areas.

Yorkshire Forward will use its £6m funding for the regeneration of Huddersfield Waterfront Quarter.

In a separate development Egdon Resources yesterday announced it was to sell all the output from a new onshore natural gas field, in Kirkleatham, near Redcar, to Wilton Power Station operator Sembcorp.

It will be piped underground and used for Sembcorp’s new £36m gas turbine, which provides energy to companies on the site.

Egdon was granted planning consent to develop the site in August and it is hoped the first gas could be piped by the end of this year.

Egdon resources managing director Mark Abbott said: “Obviously most people’s focus is offshore where the majority is located, but there are a number of smaller gas fields onshore in the UK.”

Until it starts being piped it will be unclear how much gas is available at the site but estimates put it between about 18 months and five years’ worth.

Stockton-based engineering firm K Home International has been appointed by Egdon to oversee the development of the site.

Mr Abbott added: “It is obviously a very clean burning fuel and one of the reasons in the UK we have seen a transition from coal and oil power stations to gas is that there has been a major shift to lowcarbon emissions.”

Sembcorp spokesman Terry Waldron added: “The gas turbine is combined heat and power and using natural gas is generally regarded as a cleaner way of producing energy.”