SOUTHAMPTON'S flagship combined heat and power plant project has suffered yet another setback.

The company charged by Solent Sustainable Energy to build the plant at a site in Southampton docks has pulled out of the £50m scheme after doubts emerged about the reliability of foreign companies supplying oil to power the plant.

Bosses at Solent Sustainable Energy - the not-for-profit company created by council chiefs to oversee the building of the plant - have been forced back to the drawing board to find new contractors - and an alternative energy source for the power station.

They are considering using oil seed rape or waste oil such as chip fat to power the plant - as well as finding alternative suppliers of palm oil for the station.

Another alternative could be to scrap plans to build the plant at Southampton docks and instead provide power from March-wood's state-of-the-art recycling depot.

Speaking exclusively to the Daily Echo, chairman of Solent Sustainable Energy Michael King insisted that the plant would go ahead as planned and was still on course for completion in autumn next year.

He said: "We are still in negotiations with various commercial partners. Our options are still very much open. We are negotiating with another company whose identity we can't reveal for reasons of commercial confidentiality.

Opportunity "The situation that has been created by the withdrawal of the other firm has opened up an opportunity that is even better than the one before, more than that, we can't say."

The flagship scheme, which should one day provide cheap heat and hot water for 3,0000 council homes in Millbrook, Maybush and Redbridge, is due for completion in autumn next year.

Planning permission was eventually granted for the plant to be built at the docks after nearly seven years of wrangling over where the plant should be sited.

City environment chiefs hoped that the plant, the first of its kind in the country would provide cheap heat and power for thousands of homes, as well as schools and council buildings.

The entire project looked like being stillborn when the original proposals to build the structure at Nursling were thrown out by Test Valley councillors and later by a government inspector after a public inquiry.

A revised version of the scheme was drawn up by energy bosses for the plant at Redbridge Lane in Nursling off the M271.

This idea ran into fresh difficulties because of soaring energy prices - forcing bosses to scrap the idea of powering the plant with gas in favour of cheaper palm oil.

This scheme came under fire from green campaigners who feared that using the oil would threaten the endangered orangutan's rainforest habitat.

Energy chiefs later said that the palm oil would come from environmentally friendly sources.