The University of Michigan will install a new combustion turbine at the school's Central Power Plant in Ann Arbor.
Regents approved the $80 million project at Thursday's board meeting.
The school says the 15-megawatt turbine is expected to reduce greenhouse gas emissions by an estimated 100,000 tons per year.
It will be housed in a 12,000-square-foot addition to the power plant which provides heat and power to most central and medical campus buildings. The current cogeneration system uses steam to heat buildings and waste steam to generate electricity.
About 130 on-site construction jobs will be created by the project. Funding will come from utility resources.