Brite Partnership North East has handed the contract to build the 44.1MWe plant at the former Firth Rixson Ickles Works off Sheffield Road, Templeborough, to construction specialists Interserve.
Denmark-based Babcock & Wilcox Vølund will operate the site when it becomes fully operational in Spring 2017, as part of the deal.
The Brite power plant will burn locally-sourced waste wood to provide enough electricity to power around 70,000 households.
Andy Jarman, commercial director at Reading-based Interserve, said: “The waste sector is a key growth area for Interserve. We recognise that projects of this type are highly technical and challenging, requiring key expertise to construct, operate and maintain.
“This is why we have formed a strategic partnership with Babcock & Wilcox Vølund.”
Work on the Brite plant is expected to start in the coming weeks.
Around 140 jobs are expected to be created by the facility, which includes a wood pellet manufacture plant on the neighbouring Shenker railway sidings.
The pellet manufacture facility will save thousands of tonnes of wood from landfill by transforming it into 350,000 tonnes of the eco friendly fuel each year.