The Merritt Green Energy Project is one step closer to becoming a reality.

"We've been shortlisted by B.C. Hydro for Merritt," says Fred Scott, vice-president of business development for Western Bio-Energy, which is leading the project.

Under Western Bio-Energy's proposal, the project would entail a biomass power plant with a maximum capacity of 33 megawatts in the Tolko lumber yard. About half of that capacity would be available to the Nicola Valley, enough to power 29,000 homes.

B.C. Hydro shortlisted the project on Jan. 20, according to Scott. The next step will be negotiating an electrical purchase agreement with the Crown corporation, he says.

If an agreement is reached by April 30, B.C. Hydro's scheduled deadline, construction could start as early as September this year, says Scott.

"This really represents a heck of a shot in the arm for Merritt.

"The project is still $130 million in capital costs."

About 60 per cent of those capital costs would be spent in the Nicola Valley, Scott notes.

The plant is expected to be operational by July 2013.

Scott says the Merritt Green Energy Project will hold community consultation meetings starting later this month and commission studies on the project's impact on the area immediately.