A £2.5M hydroelectric station at a reservoir will generate enough power to meet the annual needs of about 1,000 homes.

Work on the station at Selset Reservoir, near Barnard Castle, is due to begin in the next couple of months.

The scheme will be operated through a partnership between Northumbrian Water and RWE npower renewables.

The scheme at Selset, one of five reservoirs in Teesdale, will generate up to 750 kilowatts of electricity – about 4,000 megawatt hours a year.

The power generated will be fed into the National Grid.

It will add to Northumbrian Water’s hydro power plant at Kielder Water, Northern Europe’s largest man-made reservoir, which is also operated in partnership with RWE npower renewables.

Richard Bell, Durham County Councillor for the Barnard Castle West Ward, said the scheme was not before time.

“I think something like this is long overdue,” he said.

“When I have shown people who have travelled in Scandinavia round Teesdale there is puzzlement as to why we are not trapping this energy.”

“We have a number of reservoirs in Teesdale and I would hope that, if Selset proves to be a success, it will kickstart similar schemes at the other sites.”

Work on the Selset hydroelectric project will require improvement of an access road and construction of a small building about the size of a double garage, which will house the turbine and generator.

It will be built in the style of a Teesdale farm building in stone with a pitched roof.

The water level of Selset reservoir, which when full holds 15,320 million litres, will be lowered to improve safety while construction work is being carried out. Tim James, project manager at RWE npower renewables, said: “We have a number of hydroelectric projects in Wales and Scotland and this is the first we have constructed in England.

“It will make a useful contribution to UK renewable energy targets.”

Dr Colin Price, of Northumbrian Water, said: “We believe that creating renewable energy is the responsible way forward, for the business, our customers and the environment.”