Designed by St Andrews University, the facility will use wood from sustainable local sources to generate power and heat. It will pump hot water to heat and cool laboratories and student residences.
The project, which is backed by Amber Infrastructure, is expected to generate more than 225 jobs during the construction phase.
Scotland Deputy First Minister John Swinne said: "The project will deliver significant carbon savings, as well as financial savings to the University.
"The Scottish Government is using all the levers at its disposal, including through European Funding initiatives, to help regenerate areas and maximize employment opportunities that help achieve sustainable economic growth."
The green energy centre is part of the university’s efforts to become the first carbon-neutral university for energy in the UK.
Amber Infrastructure Scotland origination head Cameron Cook said: "The Guardbridge project is a ground breaking initiative that will deliver significant economic activity within the area and substantial environmental benefits in the form of carbon dioxide savings."
