The ESB has confirmed it has received a letter from the Minister for Communications, Marine and Natural Resources giving the go-ahead for it to build a €300m power station in Aghada, Co Cork.
However, it is understood the letter from Noel Dempsey includes a series of conditions which may cause significant difficulties for the State-owned power producer.
Ireland's use of electricity is surging and the country badly needs new power plants.
The Government has been trying to promote competition within the sector, which is dominated by the ESB.
The minister has given the green light for a new plant for the State company, but he stipulated that all power must be sold to rival electricity operators such as Airtricity and Viridian.
The idea is that this would stimulate more competition.
The minister has also asked that the new plant be ring-fenced as a separate company within the ESB.
The State-owned organisation is likely to seek clarification about the conditions being imposed by the Government.
The minister is due to confirm his decision to grant permission for the plant later today.
