A man-made island housing a hydroelectric plant and generating enough electricity to supply two million Dutch homes is planned for the North Sea by 2020.

It would act as back-up to wind farms by ensuring that electricity is still generated when the wind drops and would provide extra peak-time capacity. If successful, similar islands could be be built to supply other countries, especially those such as Britain that will increasingly come to depend on wind energy. The proposed site, called energy island, is expected to be built 15-20 miles (24-32km) off the Dutch coast, in waters about 20m (65ft) deep, and will be 3.7 miles (6km) long and up to 2.5 miles (4km) across.

Huge dykes would be constructed to hold back the sea and the centre of the island would be dug down to 40 metres (130ft) below sea level. Pipes in dykes would allow sea water to pour in, generating electricity in the same way as some dams. The water would then be pumped out. The electricity generated by the water pouring in is matched or exceeded by that needed to pump it out. The island should make a profit because it consumes electricity at a cheaper rate than it generates it.

Kema, the Dutch company behind the €3-3.5 billion (£2.5 billion) plan, is carrying out a feasibility study to pinpoint the best location. The Dutch Government is among potential investors. The project with a capacity of 1,500MW - similar to two large power plants - should help the Netherlands to reach its renewable energy target and its aim of reducing carbon dioxide emissions by 30 per cent by 2020.

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