US company World Eco Energy has signed a preliminary agreement to invest $1.175 billion to generate electricity in Iran. The plan is to turn solid waste into power.

Representatives from the American company and the Chaharmahal-Bakhtiari Province Governor General, Malek-Mohammad Qorbanpour, signed the deal, the Tehran Times reported.

It is expected the project will create 650 immediate jobs, with another 2,000 emerging over the next two to three years, Oorbanpour told the IRNA news agency. Local companies will also be investing the same amount of money into the project.

The Governor General went on to add that 80 percent of the workforce will be employed locally, while World Eco Energy will provide machinery, equipment and technical expertise.

The project aims to create around 250 megawatts per day, which will be generated by burning 1,500 tons of solid waste. Despite being rich in oil and gas, Iran is looking to diversify its energy sector by developing renewable energy. Last year, the country announced plans to construct three new wind farms, each with a power capacity of 350 megawatts.

The electricity generation project is scheduled to start in September 2014, AFP reported.

The deal marks a further thawing of relations between the US and Iran. Tehran has made steps since the New Year to curb its nuclear program, which has brought the country relief from tough sanctions implemented by the US.

Iran cut enriched uranium stockpile by 80% – IAEA

In April, the US Treasury awarded American-based Boeing and GE a license to sell spare parts to Iran to help the country’s ailing aviation industry. Iran needed new plane parts, as its jets have passed their service life and need proper replacements. Over the past two decades, Iran has had more than 200 aviation accidents, which led to more than 2,000 deaths, IRNA reported.

All business activity between the US and Iran was officially halted after the 1979 US hostage crisis, which was followed by US sanctions.