Sutton Council hopes property developers in neighbouring boroughs will be queuing up to pay it to heat their new homes after launching its own energy company.

The Sutton Decentralised Energy Network (SDEN) will use heat from the planned Beddington incinerator to provide low-carbon energy for up to 19,000 homes, the authority claimed.

Negotiations are underway with Barratt Homes, the developer of 725 new homes on the Felnex site.

The authority said the scheme will prevent more than 5,000 tonnes of carbon dioxide being released into the atmosphere.

Councillor Jayne McCoy said: "The SDEN will offer developers in south London a sustainable alternative to fossil fuels for the provision of heat and hot water.

"There are lots of potential benefits including lower construction costs, lower green taxes, better resilience, no ongoing plant maintenance and increased lettable floor space."

Opposition leader Coun Tim Crowley said: "If they are not careful, costs could spiral out of control and in a situation where we haven’t got much money they could end up throwing good money after bad at this."

The plans are backed by the Government and the Greater London Authority.