The 'Brite' power plant will be fired with locally sourced waste wood and have a capacity of 45MW. It will be built in Templeborough, Rotherham.
Interserve will build it; Babcock & Wilcox Vølund will operate and maintain it. Interserve's portion of the project is worth £50m.
Work on the Brite plant is expected to start in the coming weeks, with the facility expected to be fully operational in the second quarter of 2017.
Stobart Group has signed a 20-year deal to supply the plant with 260,000 tonnes a year of waste wood.
Brite Partnership is also planning to build a timber debarking and chipping plant nearby in Northfield.
Interserve commercial director Andy Jarman 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 who will operate and maintain the Brite plant from 2017."