The Asian Development Bank (ADB) is providing a $170m loan for the construction of a natural gas fired power plant in Nong Saeng, Udon Thani province, northeastern Thailand.
The 1,600MW plant will be equipped with combined cycle technology and developed and operated by a subsidiary of Japan-based J-Power.
It is expected to avoid an estimated five million tonnes of carbon dioxide emissions a year and the state-owned Electricity Generating Authority will purchase the power under a 25-year agreement.
Japan's Mitsubishi Heavy Industries will build the plant's facilities, while Thai energy firm PTT Public Company will supply gas for the project.
The project will also receive more than a combined $1bn in loans from the Kasikorn bank, Siam Commercial Bank, Japan Bank for International Cooperation and Mizuho Corporate Bank
The plant is expected to be running by 2014.