The nation's second waste-to-energy plant will be built in East Rockingham.
The project is expected to create about 350 jobs and will turn Perth household and other waste into renewable power.
The $511 million facility will treat about 300,000 tonnes a year of residual waste left after recycling efforts from municipal, commercial and industrial sources.
It will generate enough renewable energy to power more than 36,000 homes, and reduce emissions by more than 300,000 tonnes of CO2-e a year - the equivalent of taking about 64,000 cars off the road.
Acting Premier Roger Cook said the project also supports businesses to grow and prosper.
"This is a project that ticks all the boxes - it creates jobs for local workers, reduces landfill and generates energy that can be used to power our homes and industry," he said.
Construction of the plant will commence in January 2020 and will open in late 2022.
The plant is expected to employ about 300 workers, including apprentices, during construction and up to 50 operations staff on an ongoing basis once complete.