Wollongong City Council says it may be able to reduce its greenhouse gas emissions by half by the year 2030 once a gas-to-power facility at the Whytes Gully tip is operational.
The council on Monday voted to lease a 750sq m part of the Whytes Gully site to the contractor, for five years with options for up to 25.
It has not yet been decided which company would run the facility, but it's understood the council is in negotiations with at least one potential operator.
This follows an attempted tender process in 2018 also including Shellharbour and Shoalhaven councils, which drew unsuccessful bids from two Queensland-based companies, LGi (Land Fill Gas Industries) and iGas.
The councils found both tenderers had "deficiencies in meeting the terms of the proposed contract specification, and therefore present an unacceptable risk to council".
Rather than re-tendering, Wollongong decided to directly negotiate with one or both of the companies.
Gas emanating from the landfill would be captured and used to make electricity at the facility.
"It is feasible to achieve reductions of 50 per cent by 2030 by implementing landfill gas management systems," a report to Monday's meeting said.
Council's Waste Services division will build a site-wide landfill gas extraction system.
While the report does not specify the company involved, the earlier tender had found iGas's submission was "significantly deficient" in terms of meeting council's needs.
The more likely contractor is LGi, but there were significant contractual matters that remained to be negotiated.
It is feasible to achieve reductions of 50 per cent by 2030WCC report
The land would be rented to the company for $10 a year, but a significantly higher financial windfall would come from taking a share of the profits from electricity, carbon credits and renewable energy certificates.
With methane generated from waste as it degrades, the Whytes Gully tip is responsible for 85 per cent of council's carbon emissions total, which it has committed to reduce under the Global Covenant of Mayors for Climate and Energy.
A 2015 review by consultants Golder Associates found the gas-to-power system was technically feasible, would cut emissions by half, and would generate about $180,000 a year for council.