Lead procurer Hartlepool Borough Council has started the hunt for a firm to design, build, commission and operate the energy from waste plant.
The facility will be built on a 10 hectare brownfield site at Grangetown owned by the South Tees Development Corporation.
It comes with the benefit of outline planning permission and ground condition investigations are presently being undertaken ahead of work starting.
It is expected to bring about 300 construction jobs to the north east during the four-year construction phase.
The total value of the contract, which involves an initial contract of 29 years, and a possible 11-year extension, is expected to be worth £2.1bn.
The councils, which include Darlington Borough Council, Durham County Council, Middlesbrough Council, Newcastle City Council, Redcar and Cleveland Borough Council and Stockton-on-Tees Borough Council, hoped to have a partner in place by December 2021.
At this stage, the successful bidder will be required to formally select an engineering, procurement and construction contractor partner.
The successful contractor will be required to accept and manage all contract waste from 1 April 2026. The councils will incorporate a special purpose vehicle project company during the procurement process to act as the contracting entity.
Once in operation, the plant will have capacity to process at least 450 000 tonnes of waste per annum, generating electricity for more than 32,000 homes.
Further details on the specification and other requirements can be found in the procurement documents.
A spokesperson for the project said: “By joining forces the seven councils can create a new facility using the latest technology, reducing the amount of waste that is sent to landfill, which is better for the environment.
“The commercial opportunity this proposed plant also presents could mean that we can generate significant income, thereby offsetting costs for the taxpayer.”