Severn Trent says its new thermal hydrolysis plant (THP) is "starting to take shape" at the Minworth sewage treatment works in near Birmingham.
The £60m (€67m) facility aims to "change the way" the company treats waste before generating power, while also making the process "considerably more efficient".
The process works by treating sewage sludge, using heat and pressure in a similar way to a pressure cooker and will be in place by 2018.
The THP plant heats sludge to 170°C before putting it under pressure. This combination sterilises and shatters the cell structure of the bacteria in the sludge.
The treated sludge is then fed into huge digesters which biodegrade the solid matter within the sludge and produce biogas which will also be upgraded to biomethane.