The 15-year contract was secured from Mayo Renewable Power. The facility, which is expected to be operational in mid-2017, will deliver enough energy for 68,000 homes.
Under the deal, Veolia will operate the plant, manage the adjacent fuel processing facility and supply the total biomass fuel requirement.
The biomass facility will use similar technology to that applied at Veolia’s biomass plants at Merritt and Fort St James in British Colombia, Canada.
The plant is being built by John Sisk & Son with support from Arup Engineers, RKD Architects and Bruce Shaw Quantity Surveyors.
Veolia UK and Ireland senior executive vice president Estelle Brachlianoff said: "This project marks a significant step on Ireland’s path towards developing sustainable energy solutions.
"We are looking forward to collaborating with our project partners to deliver best in class energy management for the successful delivery of this milestone project."
Ireland is planning to generate about 40% of its electricity from renewable energy sources by 2020.
Veolia, which has been operating in Ireland since 1990, employs 500 people across its water, waste and energy business sectors.
Image: The biomass fuelled power plant is being built near the town of Killala, in north County Mayo, Ireland. Photo: courtesy of Veolia.