The work, which will begin in December, with completion scheduled for late Autumn 2020, will help the firm process more sludge and use it to generate energy.
Existing anaerobic digestion (AD) at the site will be extended and upgraded. The AD process produces biogas which is used to fuel Combined Heat and Power engines, heating water and generating electricity.
This electricity will be used to power the site and any surplus electricity will be transferred to the electricity grid.
Yorkshire Water is also looking at alternative uses of the biogas, such as injecting in to the gas grid to provide renewable energy to homes and businesses.