Wanlip sewage treatment works is to be upgraded by Severn Trent Water at a cost of £45 million.
Ofwat, the independent water regulator, has requested that the firm generates a form of clean energy by harnessing the methane that is created when sewage sludge breaks down at more of its sites.
The Wanlip site is currently using equipment built in the 1960s and this needs to be overhauled in order to allow Severn Trent Water to meet its renewable targets.
Dale Collison, project manager for the firm, said: "The replacement of the old Wanlip digestion plant is key to Severn Trent Water's strategy for efficiently dealing with sewage sludge and optimising renewable gas production in the eastern part of its region."
Ahead of a planning application submission in late May or early June this year, the company is hosting an open exhibition at Wanlip Village Hall from 16:00 to 20:00 BST on April 23rd 2012.