Planning permission for the Avonmouth facility had already been secured by Viridor, which is owned by Pennon.
The commitment means construction is now expected to get underway in 2020/21. Once completed, the plant will have a capacity of 320,000 tonnes per annum and will deliver 33MW of electricity, equating to circa 260,000MWh per year.
Chris Loughlin, Pennon Group Chief Executive, said: "Following a review, we have taken the decision to commit to a £252 million ERF at Avonmouth, expanding our portfolio to twelve plants. This is a significant investment in the UK's environmental infrastructure and will add to the already expected significant increase in EBITDA from our ERF portfolio once all facilities are fully operational."
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In addition, Pennon revealed commissioning has begun at parts of the delayed £154m Glasgow Recycling and Renewable Energy Centre.
Interserve started building the project in 2013 and the scheme was due to begin operations earlier this year. However, a number of technical problems and issues resulted in Viridor serving the contractor with a notice of termination earlier this month.
In a statement, Pennon said: "Whilst contractor delays and underperformance are delaying the full completion of Glasgow ERF, commissioning of parts of the facility have begun and the project will now be completed by an experienced team assembled by Viridor."
(LM/MH)
