The methane digester will be built on a Williamsburg County hog farm and the electricity generated will be used by customers of Santee Cooper, the state-owned utility.
Environmental Fabrics is building the methane digester that officials say will produce enough electricity to power 90 South Carolina homes.
The company, based just outside Columbia, has installed more than 600 methane digesters around the world, 250 of them in the United States.
The digester expected to be operational at the Burrows Hall Farm by early this summer is the first in South Carolina, although Santee Cooper is already capturing methane from landfills to generate power.
The utility has 197 megawatts of renewable generation either online or under contract, said Marc Tye, Santee Cooper's vice president of conservation and renewable energy.
"Our electricity includes power generated from landfill biogas, forest-waste biomass, solar and wind, and now we can add agricultural biogas to the lineup," he said.
Once the methane plant is operational, it will be owned by Environmental Fabrics which will sell the power to the utility.
The operation uses bacteria in a process called anaerobic digestion to recover methane from heating and mixing hog manure in an earthen, insulated covered lagoon. Excess liquid from the process is used for organic fertilizer.
Officials say the project holds promise for other agricultural applications and helps the environment by keeping methane out of the air.
The Environmental Protection Agency says methane can remain in the atmosphere as long as 15 years and is 20 times more effective at trapping heat than carbon dioxide.
Four years ago, Duffy Connolly, the owner of Burrows Hall Farm, approached Santee Cooper with an idea of a device to capture the methane from his farm.
Clemson University's South Carolina Institute for Energy Studies evaluated more than 20 companies for the project. The work was done using a South Carolina Department of Agriculture grant administered through the South Carolina Energy Office.