Massachusetts-based Clean Energy Future LLC and the city of Oregon announced plans Wednesday for a second natural-gas fired plant in the city expected to cost $900 million.

Construction will begin on the 955-megawatt Oregon Energy Center in early 2018. The new plant is expected to create up to 1,000 construction jobs for local union contractors, and be fully functional by 2020.

OEC’s output will be able to generate enough electricity to serve 900,000 homes in Ohio. It is the 12th natural-gas facility of its kind in Ohio, and Clean Energy Future’s fifth in the northern half of the state.

Along with the first Oregon plant, the company also developed the Fremont Energy Center, and two plants in Lordstown, Ohio, outside Youngstown.

“We’ve been studying the Oregon energy picture for about seven years,” CEF President Bill Siderewicz said. “We noticed there was a tremendous need in both northwest and northeast Ohio.”

The plant will become neighbors with the existing Oregon Clean Energy Center, which is slated to open in May.

The OEC will be located at the end of Parkway Road, just south of the train tracks.

In 2013, CEF officials said doubling the first plant’s output was possible in the future. Mr. Siderewicz said after determining the market was large enough for a second plant, the firm went ahead with plans.

“It puts people to work, it brings us lower-priced energy, and achieves things for us to keep this region competitive for many years,” Oregon City Administrator Mike Beazley said. “We end up with great outcomes that work for all of us.”

Many coal-fired power plants closed or lowered production throughout the country because of pollution concerns and regulations. Natural gas plants emit about half the amount of carbon dioxide and produce electricity for $0.025 per kilowatt hour — about 30 percent less than coal.

FirstEnergy’s coal-fired Bayshore Power Plant in Oregon has informed the city it plans to shut down by 2020.

The new center in Oregon will purchase water from Toledo for $1.4 million annually. Mr. Beazley expects the plant to be a major sewer customer for Oregon and provide millions in tax revenue.

Additionally, water flow can be switched either direction between Toledo and Oregon in case of emergencies.

“We have this great asset called fresh drinking water,” Toledo Mayor Paula Hicks- Hudson said. “It’s probably bar-none to anyone in the country, and I say that proudly. We have been able to prove that with this asset, we can drive development and a better place for all our communities to work in partnership.”

Mr. Beazley said both plants are exploring options for harvesting natural gas, including from the Oregon Lateral Pipeline, and should have agreements in place within a few months. Each were designed to use gas from the Columbia Gas Maumee Gate on Mingo Drive. Neither is dependent on the proposed Nexus Pipeline, but a future linkage is likely upon approval to lower costs.

About 1.8 million homes could receive electricity from the two plants. FirstEnergy Corp.’s Davis-Besse nuclear plant in Oak Harbor powers about 450,000 homes.

Mr. Siderewicz said the OEC will employ 20 to 25 people full-time, with salaries averaging $100,000. Fluor Corp. is providing engineering services for the new facility and has agreed to match University of Toledo math and engineering students with summer internship opportunities.

“It just makes so much sense because across the river, there are hundreds of engineering students who are looking for an avenue to grow their own careers,” Mr. Siderewicz said. “So we’re going to go from textbook to understanding how things really work, and then bring them to the plant and see how that gets implemented.”