Under the 25-year, £750m PFI deal, Shanks will build the new facility to process 230,000 tonnes of municipal waste each year.
The new plant will produce a refuse derived fuel for processing at a multi fuel plant being built at the SSE Ferrybridge power station and a digestate for land remediation and will generate heat and power for the whole South Kirkby plant with excess power exported to the national grid.
The project is expected to start in the Spring and will provide around 250 construction jobs.