The 43 million scheme planned by Combined Power and Heat (Highlands) at Invergordon was refused permission by Highland Council last August, but after an appeal, a government Reporter backed the project earlier this year.
Ross Estates Company, the owner of Mr Fayed's Balnagown Castle, challenged that decision, and ministers say the plans will now be reconsidered.
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Hide AdMr Fayed said: "I am very pleased our appeal has been upheld. I should like to thank the local community for the strong support they have shown, and the result today is a triumph for them and the area."
Tina McCaffery, of Invergordon Community Action for Recycling and the Environment, said: "We would like to express our deepest heartfelt thanks to Mohamed al-Fayed and his team at Ross Estates, who worked tirelessly on the appeal and without whom we would not have had the resources to have progressed this important case this far.
"The decision to concede the appeal is a very important one for the community."