The new-build community will be supplied with a more energy efficient energy supply through a district heating network based on combined heat and power (CHP) technology which generates a source of heat and hot water at the same time as producing electricity.

The energy centre and pipeline network provides a constant supply of heat and hot water to homes, meaning there is no need for individual gas boilers. This will reduce carbon emissions by up to 35 per cent and deliver significant energy cost savings for residents.

Jeremy Bungey, Head of Community Energy at E.ON, said: "The beauty of district heating schemes like this is that it builds energy efficiency into the very foundations of new homes, making Scotswood a prime example of an energy efficient community.

"We have similar partnerships throughout the country to fund and deliver community energy programmes in areas that are in most need of investment and regeneration. Through our first community energy project in the North East, we're helping to make decentralised energy a more viable and accessible form of heating and hot water."

Duncan Bowman, Development Director NTWDC, the organisation redeveloping Scotswood, said: "An energy centre serving a site of this scale will be the first of its kind in the north, demonstrating the ambition and environmental responsibility being applied to this project. This is another important step forward in the transformation of this neighbourhood into a vibrant and sustainable community where households will enjoy reduced fuel bills."

"We are really pleased to be partnering with E.ON to improve the quality of life for residents and this is another fantastic example of how the collaboration of the public and private sectors can do that."

Construction of the energy centre, on the site of the old abattoir on Whitehouse Road, is expected to begin in the spring. Once commissioned it will be capable of providing hot water and heating to all 1,800 homes on the 66 hectare site. In addition it will ensure all houses reach level 4 of the Government's Code for Sustainable Homes.

The first phase of the development will be powered by boilers with the longer term aim to transform the centre into combined heat and power plant once around 600 homes are completed, meaning at that stage Scotswood will have its own neighbourhood electricity generating plant.

Local residents' groups have been briefed about and welcome the energy centre. Cllr. Hazel Stephenson said: "It's a tremendous idea, environmentally friendly and providing low cost heating for residents. It's another reason for people to join us here in the Scotswood community."

NTWDC is a public/private joint venture partnership comprising Newcastle City Council and developers Barratt, Keepmoat and Yuill. Over the next 15 years it plans to invest £265 million in a site bordered by Armstrong Road to the north, Whitehouse Road to the south, Atkinson Road to the east and Roberts Street/Muswell Hill to the west.