An energy firm has announced plans to build a �375m plant to produce power for more than 500,000 Welsh homes.

Valleys Energy Ltd is seeking planning approval for a 460-megawatt power station near Onllwyn in the Dulais Valley in south Wales.

It is being billed as one of the most environmentally friendly power stations of its kind in the world.

The project is also expected to secure up to 1,000 jobs - as well as the future of Tower Colliery - and give Wales a head-start in the production of 'green' energy.

A former opencast site at Onllwyn, north of Neath, has been selected for the project because of the location's rail links for coal deliveries.

Several million tonnes of anthracite would be needed during the power station's projected 20-year lifespan.

Valleys Energy said the plant it wants to build - an integrated gas combined cycle power station - would generate electricity more efficiently and more cleanly than a conventional coal-fired power station.

'Green' fuel

Managing director Peter Whitton said the project could also help Wales win a share of the emerging hydrogen market - the supply of 'green' fuel for vehicles, as well as power for homes and industry.

He said: "We will use locally-produced coal, but instead of burning it we will turn it into clean gas to generate electricity.

"Pollutants will be removed during the process, creating clean hydrogen to drive an advanced gas turbine and generate electricity.

"This is a very environmentally friendly process and is more efficient and much cleaner than a conventional coal-fired power station, with very low emissions and no smoke or plumes from cooling towers.

"The station is being specifically designed so that in the future even the carbon dioxide can be captured for long-term storage."

The Dulais Valley has suffered from unemployment

But environmental campaigners want to see a reduction of carbon dioxide production as an immediate priority.

Welsh Assembly Government Minister for Economic Development, Andrew Davies, described the plans, which would create up to 120 jobs as well as securing hundreds more, as "a very interesting proposal".

He said: "South Wales is a net importer of energy and this project could help provide much more locally-produced power.

"It is also an imaginative use of clean coal and hydrogen technology which could have long-term benefits for the local economy."

Neath AM Gwenda Thomas welcomed the proposal which she hopes will bring jobs to her constituency.

'Coal technology'

She said: "It is vital that the residents and the community of Onllwyn, must be given all the information available about the project, and all the technical processes that will be involved in this scheme."

Tower Colliery's sales and marketing director Phil White added: "We welcome this announcement as it will help to bring coal back into focus, with the emphasis on clean coal technology."

Subject to planning approval from Neath Port Talbot council and approval by the UK Energy Secretary, Valleys Energy hopes to begin construction in 2004 and begin producing electricity from 2007.

Noel Crowley, leader of Neath Port Talbot Council, said: "This is something that is desperately needed and welcome provided it provides jobs for local people and it's going to be green.

I think this is a golden opportunity provided all the worries can be met by the developers Noel Crowley, Neath Port Talbot Council

"But we will want to be reassured that all promises made are upheld.

"The Valleys haven't jobs since the coal mines closed and we need this to provide some security.

"I think this is a golden opportunity provided all the worries can be met by the developers."

And local resident Tom Marsden added: "I think it will be tremendous if it lives up to expectations, employs local people and doesn't damage the environment."