THE North-East has missed out in its bid to become home to a £1bn energy research centre.

The region was shortlisted in the running for the Energy Technologies Institute (ETI), a centre of excellence that is expected to attract more than £1bn of investment and lead to the creation of thousands of jobs.

Following a competitive bid process, it was announced yesterday morning that the project had been awarded to the Midlands.

The North-East consortium was made up of Newcastle, Durham and Northumbria universities, Teesside's Centre for Process Innovation, One NorthEast and the New and Renewable Energy Centre.

Its co-ordinator, Professor Paul Younger, said: "In our view, the decision taken today represents a missed opportunity to make the ETI project an immediate success.

"We passionately believe that our offer was the best, in terms of having the capacity to deliver the required outputs, facilities and expertise required by Government and industry."

The energy sector is currently estimated to be worth around £900m, positioning the region as the energy capital of the UK. It is also one of the most productive sectors in the region, employing about 30,000 people.

More than £6bn is being invested in novel energy projects in the region over the next few years. One NorthEast has invested more than £100m in recent years and has committed a further £100m of public funds to energy research and development over the next five years.

Its chairman, Margaret Fay, said: "We are determined to maintain the energy that the bidding process itself has generated and build on the tremendous opportunities that are in the pipeline for the renewables sector in the North-East, which promise significant new jobs and investment.

"One NorthEast and our partners identified the energy sector as one of three key areas for development over the next 20 years, with the potential to generate about £2bn for new economic growth for the region's economy - that potential remains, irrespective of today's outcome.

"Our involvement in the bidding process has put us in a far stronger position to achieve our aims. And we should remember that we got down to the final two - beating off competition from institutions like Oxford and Cambridge universities and all of Scotland and Wales - which is a tremendous achievement."

The region's bid was backed by a range of international industrial and academic figureheads.

North-East minister Nick Brown said: "This is disappointing. I will be looking very hard at how this decision was arrived at. The North-East bid looked very strong to me.

"Of course there are still opportunities for our region to be involved and I will make sure that those are fully explored as well."

Andrew Sugden, director of membership at the North East Chamber of Commerce, said: "This is a major missed opportunity by the Government to build on the tremendous foundations the North-East has created in new and renewable energy technology.

"Despite this decision, the North-East will continue to build upon the tremendous assets that exist within the region.