The 60MW Tilbury Green Power facility is expected to generate 300 GWh of green electricity per year when it is commissioned in early 2017.
The two companies will each commit £35 million through a combination of equity and shareholder loans.
Stobart Biomass will provide 270,000 tonnes of waste wood fuel a year for the project, which will be sourced from the local catchment area and processed at an onsite facility.
Last month, GIB announced it will invest £50 million in a new fund targeting small-scale waste-to-energy projects, such as the £47 million Birmingham BioPower project.
GIB chief executive Shaun Kinsbury said: “The Tilbury project is well placed to capitalise on the UK’s largest regional waste wood market, generating green electricity and creating local employment from London’s waste resources. The project is also important for marking the first investment of the Irish electricity utility ESB in UK waste and biomass infrastructure.”
ESB chief executive Pat O’Doherty said the investment “demonstrates a continuing commitment to renewable electricity generation and further reducing the carbon mix” in its portfolio.
ESB’s Knottingley gas-fired power project was recently given development consent by the Department for Energy and Climate Change (Decc), following a six-month long examination.
A spokesperson for ESB told Utility Week: “The grant of a development consent order is an important milestone for the project and for ESB’s growth strategy in the UK.
“No decision has been made yet around the project’s participation in the UK Capacity Auction process and any decision in this regard will depend on market conditions in the UK.”
In the first capacity market auctions in December last year, more than 60 per cent of auction contracts were paid to operators of existing generation units, over those investing in new plants. Many generators may now need additional support to avoid having to shut down capacity.