Work on a new biomass power station has stopped because of "ongoing uncertainty" in the country's energy policy.
Renewable energy developer RES said it was ceasing work on the 100MW project at the Port of Blyth in Northumberland, as the investment case had been "critically undermined" by the government's "inconsistent support" for biomass energy over the past two years.
The company blamed the withdrawal of a partner last year due to uncertainty over UK energy policy for the move, which will result in the loss of about 300 construction jobs and 50 full-time posts. The company said the plant would have provided a "magnet" for growth in the north east.
Chief operating officer Gordon MacDougall said: "Despite the support the project enjoys locally due to the significant benefits it would bring to the local and regional economy, the North Blyth Biomass Power Station currently faces insurmountable investment barriers due to uncertain government energy policy.
"It's bitterly disappointing for RES that we are unable to bring this exciting project forward, and deliver the significant boost it would have represented for the Blyth and Northumberland economy. However, the gradual erosion of support for dedicated biomass leaves us with no other option.
"This is a reminder to government that, without a consistent approach to energy policy, investors and developers will be deterred from delivering the billions of pounds needed to ensure the nation's energy infrastructure is able to keep the lights on and secure cost effective electricity for British homes and businesses."
Construction of the £250m plant was set to begin in 2014 and take around two and a half years, said RES, but biomass technology has been "increasingly marginalised" by the government in a series of policies over the past two years, in particular the lowering of a cap on dedicated biomass under the Renewables Obligation from 4,000MW in 2011 to 400MW in 2013.
The firm claims this is a radical downsizing of the government’s initial ambition that comes long after the industry had invested significant sums in developing projects on the back of DECC ambitions.
Chief executive of industry body the Renewable Energy Association Dr Nina Skorupska said: "This is a bitter blow for RES, for the Northumberland economy, for our energy security and for climate change objectives. The government used to have a clear policy of supporting the most affordable low-carbon technologies, which saw biomass projects attract healthy investment.
"However, recent government actions have eroded investor confidence in the biomass sector. The result is project cancellations totalling hundreds of megawatts and millions of pounds of inward investment.
"This row-back on biomass leaves a huge hole in the government's plans to keep the lights on with low-carbon technology. It is also a missed opportunity for cost-effective emissions savings and thousands of new jobs.
"The government now must move swiftly to protect both existing and future investment, by giving a strong, clear and positive message that the UK is still open for business for biomass."