Scheduled to enter service by the end of 2018, the PLN870m (€200m) plant will provide district heating to approximately 70,000 households in Zabrze and Bytom.
To be primarily fuelled by refuse derived fuel (RDF) and coal, the new plant can also use biomass and a mixture of fuels to generate power.
The residential and industrial waste for RDF is sourced locally for the new plant, which will replace the existing purely coal-fired, outdated units in Zabrze and Bytom.
Additionally, the facility, which will have a production capacity including 145MW of heat and 75MW of electricity, will significantly enhance the efficiency of operations while reducing CO2 and other emissions in the area.
The plant is expected to have an annual production capacity of approximately 730 and 550GWh of heat and electricity respectively.
The project construction is due to commence this summer and is subject to the local environmental impact assessment process and other negotiations.
Fortum Heat, Electricity Sales and Solutions division executive vice-president Markus Rauramo said: "Efficient combined heat and power production is one of Fortum’s three strategic core competences.
"With our experience in efficient energy production and focus on tackling climate change, we want to contribute to the ongoing transformation of the Polish energy sector."