It will cost $10 million and is designed to produce 10 percent of the electricity needs of the Livingston campus in Piscataway.
The university will receive a $4.9 million rebate through the state Board of Public Utilities' Clean Energy Program to cover part of the cost.
Rutgers says the facility will reduce the university's carbon dioxide emissions by more than 1,200 tons a year.
Ground was broken for the project this week, and the facility is expected to be up and running by May.
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