Eon has announced plans to build a new underground gas storage facility in UK in an attempt to combat soaring energy prices and dwindling gas reserves.
The energy group - which owns Powergen and Central Networks in the Midlands - said it submitted a scoping application for the new facility near Aldbrough in East Yorkshire.
Dr Paul Golby, chief executive of Eon UK, said: "There is an urgent need for more gas storage in the UK as production from the North Sea declines. As we have seen from the recent Energy Review, a diverse energy mix is vital to secure supplies and gas storage facilities have a vital role to play in ensuring we have enough gas for our customers and our power stations that help keep the country's lights on.
"We are once again about to go into a winter which will be challenging for energy companies."
Dr Golby added that the UK needed gas storage facilities to ensure security of supply and help stabilise energy prices.
"Our proposed facility is of strategic importance and would be able to store an amount of gas equivalent to that used by the whole of the UK on a cold winter's day."
Eon, which announced a massive hike in energy prices at Powergen yesterday, hopes to make a full planning application in the autumn, after East Riding of Yorkshire Council outlines the scope for an environmental impact assessment of the site.
If the scheme gets the green light construction is expected to start late in 2007 and be completed by 2012.
Dr Golby said: "Going forward, it's essential that gas storage projects, like the one we're proposing, are seen as nationally important and progressed transparently with local planners who are free to deal with the local issues and the views of the community."
Eon's announcement came as the the Government offered £4.5 million to help fund the world's first wave energy farm off the UK coast.
The project, ten miles off the Cornish coast, aims to build an electrical "socket" on the seabed and connect to the National Grid via an under-water cable.
Energy devices would be connected to the so-called Wave Hub, which would generate enough power to meet three per cent of Cornwall's energy needs.
Ministers said that if the project is approved, the Government will provide almost a quarter of the estimated £20 million cost.
Energy Minister Malcolm Wicks said: "As an island nation the UK has an invaluable resource in terms of marine energy and we are leading the world in developing the infrastructure to harness the power of the seas.
"The project has still to get through a robust consent process before getting into the water, and to finalise the device developers who will connect to it. But if successful, it will be a shining example of UK innovation."
Jane Henderson, chief executive of the South West of England Regional Development Agency, said the announcement was a "significant milestone" for the Wave Hub project and recognised its contribution to the development of marine energy.
"We are awaiting the out-come of our consents application. If that is granted, we expect Wave Hub to come into operation in 2008," she added.