The company (TSX:CPX) will jointly build, own and operate the 800-megawatt Shepard Energy Centre alongside city-owned utility Enmax Corp.
The project's budget is about $1.4 billion and Capital Power is investing about $860 million once interest during construction is included.
The companies say the plant will emit less than half of the carbon dioxide per megawatt that a conventional coal-fired plant would.
Construction began on the Shepard Energy Centre in July 2011 and is on track to be completed in the first quarter of 2015.
Capital Power also says it's developing another natural gas-fired facility that is expected to go online between 2017 and 2020.