Denmark’s PKA, which runs three labour-market pension funds, is making its first investment in a biomass power plant, buying a 50% stake in a facility to be built in the north east of England, which is expected to be completed by 2020.

PKA said it was paying DKK1.3bn (€175m) for the stake, with investment bank Macquarie Capital to acquire the other 50% of the asset.

The seller is UK independent power plant developer MGT Power.

Peter Damgaard Jensen, chief executive at the DKK250bn pensions administrator, said: “The investment in the Teesside Renewable Energy Plant is in line with PKA’s strategy of supporting the mitigation of climate change whilst creating a good return for our 275,000 members.”

PKA has invested in several green projects in recent years, and the power station in England will provide many British households with a greener alternative to fossil fuels, he said.

The plant, which will be built near Middlesbrough, will have total capacity of 299MW and should generate enough electricity to cover the consumption of around 600,000 households.

It will fire on sustainable biomass in the form of wood pellets and wood chips.

PKA said it has invested around DKK18bn in climate-related projects, including wind farms, green bonds and the Danish Climate Investment Fund.

It aims to have 10% of total investments in this type of asset by 2020.

In April, PKA announced it was investing around DKK350m in two natural gas power plants and a portfolio of onshore wind turbines in Ireland and Northern Ireland, alongside infrastructure manager I Squared Capital.

Back in February, it said it was joining the Lego Group’s parent company to take a stake in a Dong Energy wind farm scheme in the UK.