"It will be built at the Isis Central Sugar Mill and produce enough electricity annually to power 7,000 homes as well as improve the reliability and quality of electricity supply to Childers and surrounding areas," said premier Peter Beattie.

"Construction of the 25MW cogeneration plant will begin almost immediately and the plant is expected to be fully operational by May 2006.

"Importantly, this project will provide an additional revenue stream for local cane growers who own the mill and will help safeguard them against fluctuations that can be experienced in the sugar industry.

"It will also help reduce greenhouse gas emissions by about 50,000 tonnes every year, which is equivalent to taking more than 10,000 cars off the road.

Energy Minister Stephen Robertson said the power plant will utilise excess steam produced through the combustion of sugar cane residue (bagasse) at the Isis Mill to drive its power turbine.

"The plant is expected to generate about 65,000MW of electricity in a season, with 30% used to run the sugar mill, and the remainder exported to the electricity grid."

"In addition, Ergon will also invest a further $6 million to upgrade the Childers-zone electricity substation and convert part of the local power network from 11 kilovolt (KV) to 66KV."

"This additional infrastructure upgrade will improve the reliability and quality of electricity supply to Childers and surrounding areas," Robertson said.

Ergon Energy retail head Kate Skilleter said the energy produced would provide about 15% of Ergon Energy's renewable energy requirements over the next 20 years.