The Government granted development consent yesterday to plans to build a 910MW combined cycle gas turbine power station, with carbon capture and compression plant alongside.
The scheme will see a total investment of around £2.2bn.
The plant would also be linked to the shared CO2 and hydrogen pipelines being developed as part of the Zero Carbon Humber and East Coast Cluster proposals.
Joint venture developers SSE Thermal and Equinor have awarded a front end engineering design contract to a consortium comprising Aker Solutions, Siemens Energy and Doosan Babcock, with Aker Carbon Capture supporting on the carbon capture technology.
Over the next 12 months, the consortium will deliver a detailed plan for the proposed plant in North Lincolnshire.
When complete in 2027, Keadby 3 could remove 1.5 million tonnes of carbon from the atmosphere around 5% of the UK total.
At the same time as granting development consent for Keadby, the Government also gave the go-ahead for more controversial plans for a £165m new coal mine scheme in West Cumbria.
The Woodhouse Colliery scheme will be a new underground mine located on a brownfield site near Whitehaven extracting coking coal for the steel industry.