PERTH, Dec 1 Asia Pulse - A timber-fuelled power station will cut greenhouse gas emissions and offer power to 45,000 West Australian homes, its developers say.

Two WA companies, Perth BioEnergy Holdings Pty Ltd (PBH) and Perpetual's Diversified Infrastructure Fund (PDIF), announced today it had signed an agreement to build a 45,000 megawatt power station at Neerabup, north of Perth.

The station, known as the Perth BioEnergy Project, will use mature timber residue, which includes everything from the tree but the trunk, to create fuel for the station.

PDIF head of infrastructure Brett Lazarides said the station would deliver more power to Perth and have significant environmental benefits.

"Coal and gas is not renewable in the sense of the timeframe it takes for creation of those fuel resources, whereas a softwood plantation forest ... are mature in 20 to 25/30 years," Mr Lazarides said.

"Once they get to that maturity you can harvest them and they continue to regenerate so you can effectively harvest them in a way that the forest never gets completely diminished.

"In that way it is much shorter timeframe than the hundreds of years and millions of years it takes to create coal."

Construction will start mid next year and once operational, expected to be in 2008, the station will deliver power to 45,000 Perth homes.

PBH and PDIF have signed an agreement with WA's Forest Products Commission which will guarantee them access to all plantation residues within a 100km radius of Perth for the next 25 years.