The 50MW plant will also improve the integration of renewable energy resources, such as solar and wind power.
Hawaii Electric will develop, own, and operate the plant, which will be built on approximately eight acres of land at Schofield Barracks.
Hawaiian Electric president and CEO Alan Oshima said: “By working together, we are taking another step towards a more secure and renewable energy future for Hawaii.”
The energy generated from the plant will be supplied to the island's electric grid and it will feature modern, flexible and efficient generators.
The generators will have the ability to quick start up, shut down, or change their output in response to sudden changes in solar and wind energy resources.
The plant, which will run on a mixture of biofuels and conventional fuels, is expected to be operational by spring 2018.
US Army Garrison-Hawaii commander Col. Stephen Dawson said: “In keeping with the Army's commitment to protecting the environment, we know this plant will provide the energy we need while, at the same time, being good stewards of our natural resources.”
In case of emergency, the plant will be capable to isolate itself to Army bases, if necessary, to offer reliable power to the Army's facilities in Central Oahu, including Schofield Barracks, Wheeler Army Airfield, and Field Station Kunia.
Army installations, energy and environment assistant secretary Katherine Hammack said: “Secure and reliable access to power mitigates risk and allows the Army here in Hawaii to carry out critical missions and support surrounding communities.”
In June, Hawaiian Electric said that it wants to seek projects that can be in service by the end of 2020 to help lower and stabilize energy costs for all electric customers on Oahu.