The facility is the first of its kind in the North East and will generate low-carbon energy for up to 350 local homes and businesses.
Gateshead's District Energy Centre is capable of capturing waste heat created during the energy generation process and recycling it to keep buildings nearby warm.
In addition, the network has been designed to ensure the Energy Centre will be able to meet all the energy needs of future developments planned for Gateshead town centre, underpinning the redevelopment of the Baltic Business Quarter, plus the Gateshead Quays area and major housing developments.
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A pair of 2MW gas-powered combined heat and power (CHP) plants are used to generate enough electricity to power 5,000 homes, with the waste heat from the engines being recovered to provide hot water for heating.
Speaking during a tour of the facility, Energy Minister Jesse Norman said: "This investment in local energy supplies is intended to deliver low carbon energy at competitive prices for local customers. It is a great example of the kind of local initiatives our new Industrial Strategy is looking to support.
"Through our ambitious Industrial Strategy Green Paper, the Government is working hard to promote growth across the North East and the rest of the UK, and to ensure the supply of secure, affordable and low-carbon energy for businesses and households."
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