The £20m grant given to the group’s specialist company Energy Works is one of the largest from the European Regional Development Fund for a UK project.

The £150m power plant will be located in the heart of the city by the banks of the River Hull.

The facility will turn domestic waste into gas which will then be burnt to create energy.

Spencer Group is now moving forward with detailed implementation plans and expects to achieve full financial closure on the project later this year, enabling construction to begin.

Chief executive and founder Charlie Spencer said: “We are delighted that the Government and the European Commission have recognised that Energy Works is an innovative, green and clean development which can be replicated elsewhere.

“This grant is a key element of the funding model and enables the project to move forward.“

Once built the development will produce sufficient electricity to power 25,000 homes and cut waste sent to landfill by local authorities in Hull and the East Riding of Yorkshire by 90%.

A key component of the scheme is its partnership with the University of Hull. Energy Works will encourage the dissemination of knowledge regarding renewable energy through its Energy Academy on the site.

The Energy Academy will provide two positions to the University for postgraduate study of renewable energy.