The loan will be used by the company to design, construct and operate the plant, which will have a production capacity of 280MW heat and 130MW electricity.
The facility will not only provide heat to Stockholm’s existing district heating system but also provides power to the city’s public grid.
EIB vice-president responsible for lending in Sweden Jonathan Taylor said EIB supports the renewable energy use and raises energy efficiency.
"We therefore particularly welcome this agreement with Fortum Värme, as the new biomass plant will enable significant energy savings and contribute to climate neutral production of district heating in Stockholm," Taylor added.
"The project will also, importantly, contribute to growth and employment in the European Union by supporting the forest management and biomass equipment industry in Europe."
EBI is also providing finance for the biomass handling facilities and the refurbishment of port facilities related to the plant.
Fortum Varme chief executive Anders Egelrud said, "When the plant is in operation, 90% of our heat and electricity production will be based on renewable and recovered energy. By 2030 at the latest, this ratio is expected to be 100%."
With construction scheduled to be completed by 2016, the facility would create 35 new permanent jobs for operation and maintenance.
