E.ON has stepped up its push into the biomass energy space, announcing that it has submitted a planning application to build a new £60m biomass power station in Sheffield.

The new facility is designed to provide power for around 40,000 homes through the burning of recycled wood, forestry waste and specially grown crops such as willow and elephant grass.

E.ON said that by burning biomass as opposed to traditional fossil fuels the plant would save around 80,000 tonnes of carbon dioxide a year from being emitted.

Project Manager Dr Nilton Chan, said the plans underlined the company's commitment to tackling climate change, adding that it would invest £1bn a year in building a cleaner energy portfolio based on nuclear power, clean coal and gas plants and renewables.

Should the project receive planning approval E.ON start construction next year and deliver its first energy from the plant in 2011.

The move is the latest in a line of biomass energy investments from E.ON, which will today officially open the UK's largest wood fired power station near Lokerbie in Scotland. The £90m is expected to provide enough power to meet the demands of around 70,000 homes.

The energy giant has also recently reiterated calls for local community groups to apply for funding to support green and biomass energy projects through its SOURCE fund.

E.ON has just awarded a £20,000 grant to green education charity the Magdalen Project to cover the cost of installing a carbon neutral woodchip fired biomass boiler at its centre in Chard.

Jane Branscombe, community relations manager with E.ON, said the new boiler would be able to feature in the charities sustainability education courses and would also cut the centre's energy bills and reduce its carbon emissions by approximately 56 tonnes a year.

E.ON said there was still time for other local community groups to apply for funding through the SOURCE scheme which is expected to run until the end of the year. The next deadline for grant applications is 25 April.