It says the facility will be able to power itself.
A regional sludge hub is required to ensure the waste water produced by treatment plants is treated in an environmentally sustainable manner.
Irish water also say that the process can be used to generate bio-gas which will then power the plant itself.
Mullingar, Portlaoise and Tullamore are part of a group of sites identified as possible locations.
Wastewater Infrastructure Manager with Irish Water, Paul Fallon, says different criteria will be used to choose the best site:
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