Discussing the proposed development of the renewable energy source, npower chief executive Andy Duff said the plant was "a critical step" for the supplier's clean energy plans.
He explained: "This pilot is a critical step in our plans to move towards cleaner coal power stations which, alongside investment in other low-carbon energy initiatives, will ensure we can continue to meet the country's energy needs, whilst significantly reducing CO2 emissions."
News of the investment has been released after npower's sister company, RWE power, made an agreement with BASF and The Linde Group over the development of new carbon capture process technology.
The energy supplier is one of the UK's leading gas and electricity providers.
Click here to run an energy price comparison, and see if you could be paying less for your gas and electricity.