THE company building the world's largest biodiesel plant last night confirmed it had agreed a deal with a major power generating company - doubling the size of the biofuels market.

Biofuels Corporation, which is building the plant at Seal Sands, Teesside, declined to name the blue-chip utility group, but said it made the scope for biodiesel much wider.

The power generating company will use Biofuels' diesel in its gas turbines.

But at an extraordinary meeting of the company's board yesterday, chairman Field Walton said the completion of the Seal Sands facility would be delayed.

Engineering support company Unasys, of Stockton, which is commissioning the plant, has advised Biofuels to delay the start of production to ensure there are no teething troubles.

Biofuels chief executive Sean Sutcliffe told The Northern Echo: "We want to make absolutely sure that when we flick the switch to start production, it is going to work.

"In the overall scheme of things, we are trying to build a long-term business with a reputation for delivering reliable results, so we need to make 100 per cent sure everything is right."

Mr Sutcliffe said the plant was being commissioned and would start producing biodiesel between next month and December - later than the original target of this month.

After signing the latest deal with the power company, which is still subject to regulatory approval, Biofuels now has customers for 80 per cent of its output.

Mr Walton said: "We are particularly pleased with this recent award, from a blue-chip utility and power generating company, since the power sector is a major potential new market.

"We believe that this is the first use of biodiesel by this sector in the UK and that the power generating market could ultimately be at least as large as the transport sector."

Mr Sutcliffe said the transport market in biodiesel was potentially worth about £450m and, by expanding into the energy sector, Biofuels had doubled the biodiesel market to £900m.

The company also confirmed yesterday that it had received strong interest from other potential customers that would take demand to more than the initial plant could produce - creating demand for more factories. Biofuels has previously stated that it was hoping to build another two plants, expected to be on Teesside.

Mr Walton said: "The board also believes that the business is well-positioned to take advantage of the ongoing level of high oil prices and support for renewable energy products."

"Against this background, the company continues to see strong and growing demand for biodiesel, both in the UK and Continental European markets. The company is particularly well-placed to serve major energy companies."