A mill which will generate gas from grass will be built in Somerset.
It is expected to generate enough energy to power up to 2,500 homes.
It is the third Green Gas Mill Ecotricity is developing in the UK since the company launched its first project in Gloucestershire in April.
Earlier this week the company announced a second plant to be built in Hampshire, which will power 5,000 homes.
Dale Vince, Ecotricity founder said: “We are at the beginning of a revolution in gas, not from fracking but from farms – there’s a whole new industry waiting to be created here, meaning more jobs and plenty of economic benefits.
“We can’t continue using gas from fossil fuels, we are running out and causing climate change – the great thing about green gas, like green electricity, is we can still live the way we’re used to but we can do so in a sustainable way.”