A hydro-electric power station on the River Calder will generate enough electricity for 800 homes.
Work has started on a £5.3m electricity scheme in Kirkthorpe which will be the biggest hydro-electric power station of its kind in Yorkshire.
Wakefield Council granted permission for Barn Energy to build and run the scheme, which is expected to be operational for the next 100 years.
Barn Energy’s subsidiary company Kirkthorpe Hydropower Ltd is working on the new power station on the Calder, four miles east of the city.
It is Barn Energy’s second hydro-electric project in Yorkshire after a similar scheme on the River Don at Thrybergh near Rotherham became operational last October.
And the company is planning to build another hydro-electric plant on the river Aire near Knottingley.
Chief executive Mark Simon said “Yorkshire is leading the way with low-head hydro power in this country, and helping to drive a new wave of investment into the country’s infrastructure.
“We wish to build our next hydro scheme at the Brotherton Weir on the River Aire near Knottingley and close to the landmark Ferrybridge coal-fired power station.
“Getting it built is however dependent on our efforts to secure grant or low-cost finance for the £6.5m project.”
Barn Energy said it worked with angling groups to design the Kirkthorpe project so salmon, eels and other fish could pass safety through its weir.
It will generate 2.3m units of carbon-free electricity every year.
Denise Jeffery, Wakefield Council’s cabinet member for economic growth and skills, said: “The Kirkthorpe scheme will help to massively reduce carbon emissions in the Wakefield district.
“By ensuring that more renewable energy is available we can help protect the local environment and provide reliable, clean energy for future generations.”
The Kirkthorpe scheme is being built on land owned by Wakefield Council and it will take water from the Canal and River Trust’s Aire and Calder Navigation.