Severn Trent is building three new biomethane plants to turn sewage sludge and other feedstock into gas that can be injected into the grid.
Two sites in Stoke and Nottingham are already up and running with a third at Spondon due to come online next year.
Severn Trent currently produces the equivalent of 38% of the energy it uses and the new biogas plants are part of its plan to self-generate half the energy it uses by 2020.
According to renewable energy development engineer Martyn Lightfoot, they will also help keep bills down for customers.
“These new plants will help us save around £3m a year on our energy bills, and that saving will be passed on to our customers,” said Lightfoot.
Each plant will produce up to 500m³ an hour of biomethane from 1,000m³ of biogas. The green gas generated at all three sites would be enough to heat more than 8,000 homes for a year, according to the firm.
To make it suitable for grid injection, the gas is washed at high pressure, then ‘squashed’ so it is at the same pressure as natural gas and then it is tested for quality and an odour is added so it smells like normal gas.