The 15-year contract, which guarantees a supply of food waste to the facility for about 60% of its capacity, is with a consortium of three councils in the area as part of the first of the Welsh government's sponsored organic waste projects.
(NOTE: This is a serious video about Alkane Energy - just be patient and try not to wince too much over the opening sequence!)
The joint venture is to be called NEAT Biogas. TEG will hold 70% of the equity of the joint venture, while Alkane will hold the remaining 30%.
Under the contract, NEAT is planning to construct and operate a new 20,000 tonnes per annum anaerobic digestion (AD) plant to process the food waste supplied by the councils, together with additional third party food waste.
Full year revenues for NEAT are expected to generate 2m, while the facility is expected to produce enough renewable energy to power around 2,000 homes in the area each year.
The AD facility is expected to begin operations in the first half of 2013.
Commenting for Alkane, Chief Executive Neil O'Brien said: "The Alkane/TEG collaboration deal is proving its worth combining our heritage in waste management and energy generation. There is a strong match of the skills of the two teams and we continue to work on a number of other AD projects."
Alkane's share price was up 0.63% to 19.88p at 12:33.
TEG's share price was up 1.25% to 10.12p at 12:33.