The energy giant plans to invest around €110 million (£93.7m) in the project at UPM’s site in Hürth and expects to create more than 30 new jobs.
The plant is designed to have an electrical output of 20MW and a thermal firing capacity of 87MW and in addition to supplying heat to the Hürth paper mill, it will feed renewable energy into the grid.
Winfried Schaur, Executive Vice President, UPM Communication Papers said: “The new supply would significantly reduce UPM Hürth’s CO2 footprint. The project supports the long-term phase out of coal-fired power generation in Germany.
“The new plant ensures a stable and economically predictable supply of heat to the site and would make our production cycle in Hürth, which is already based on 100% recovered paper, even more sustainable.”
The plant is scheduled to start operations in the first quarter of 2022.
E.ON Board Member Karsten Wildberger added: “Together with UPM, we will demonstrate that it’s possible to supply an energy-intensive industrial company with an economical and reliable CO2-neutral energy supply.
“We will be contributing our experience and mature technology to the partnership. UPM and E.ON will thus set an example of climate-friendly energy supply for industry that goes far beyond the paper industry.”
The two companies are already co-operating at UPM’s site in Plattling, Bavaria, where E.ON supplies the paper mill with a highly efficient gas and steam power plant.