When completed in late 2020, the power station will have installed capacity of 8MW and convert waste gas extracted during mining operations into electricity to power the mine.
EDL CEO James Harman said the company supported its customers in the mining industry to achieve greenhouse gas abatement and cost savings with its waste coal mine gas power stations.
"We are delighted to provide Centennial Coal with this reliable, sustainable energy solution and look forward to a long, collaborative partnership," he said.
Centennial deputy CEO Peter Parry said as well as fuelling nearly 40% of NSW's coal-fired electricity, Centennial is also a significant energy consumer to power its mines.
"EDL, by converting the methane gas we extract during the process of mining to generate electricity to meet our energy needs, provides a practical and cost-effective arrangement that also reduces our emissions," he said.