Biomass power generation has been the Cinderella of alternative energy technologies. Compared with the clean energy potential of the natural elements of wind and wave, generating power by burning wood seemed hopelessly old-fashioned. Yesterday, however, biomass took centre stage with the announcement that a new £100m plant in Markinch is to be jointly financed by the energy company RWE npower Cogen, the papermaker Tullis Russell, and the Scottish Government.

Biomass power generation has been the Cinderella of alternative energy technologies. Compared with the clean energy potential of the natural elements of wind and wave, generating power by burning wood seemed hopelessly old-fashioned. Yesterday, however, biomass took centre stage with the announcement that a new £100m plant in Markinch is to be jointly financed by the energy company RWE npower Cogen, the papermaker Tullis Russell, and the Scottish Government.

The economics of the 45-megawatt combined heat and power plant are that two-thirds of its output will provide electricity for the grid and the remaining third, steam and electricity for a paper-making plant at present supplied by coal. The announcement came hard on the heels of a warning that gas bills could rise by 65%, because the cost of gas is linked to the price of oil, and that electricity bills are also set to rise sharply because gas is used for power generation.

All this makes alternative energy sources more attractive, but only if they can produce a thermal base load. In that respect, biomass plants are significant. They are immune from the chief disadvantage of wind power, instability of supply. Equally, the main disadvantage of biofuels, that they replace edible crops and therefore increase the price of food, does not apply.

The SNP Government's targets of producing 31% of electricity demand from renewable sources by 2011 and 50% by 2020 has been criticised as unrealistic because of the unpredictable nature of the supply. If biomass is to provide a significant part of the answer to that, it would require considerable investment. The Markinch plant, for example, is to receive £8.1m in grants from the Scottish Government.

Plants such as the Markinch one, which will be fired by waste wood, have the additional advantage of producing power from material which would otherwise go to landfill. There are, of course, qualifications: to be most effective, they must be able to source their raw material locally and be of the right scale to do that. Nevertheless, Scotland, with a significant forestry industry, has an abundant (although not limitless) supply of the raw material and has been slower than it should in turning it to advantage.

There is still some way to go before it can be demonstrated that the SNP's policy of no new nuclear power stations will not result in an energy gap in which Scotland faces the unhappy prospect of becoming an energy importer, but if the new plant provides the economic and environmental benefits it promises, it should encourage further converts to the cause of green energy.

Self-sufficiency will depend on the timescale for developing alternative technologies. The current coal, gas and nuclear power stations have a remaining life of about 20 years, but replacements will require years of planning and building, however they are fuelled. New technologies, such as carbon capture and storage, could make fossil fuels near carbon-neutral and Scotland may yet be chosen for the demonstration plant, but that will be a long-term prospect. In the meantime, the oil price just might have the eventual benefit of concentrating effort on carbon-neutral alternatives.