The Vermont Public Service Board approved the project on Friday. The renewable natural gas facility will be located on the Goodrich family dairy farm in Salisbury.
The board says Middlebury College expects to use 75 percent of the facility's output to help achieve its carbon neutrality and campus sustainability goals.
VGS will buy some or all of the remaining natural gas.
The facility will include an anaerobic digester tank system and gas upgrade and purification system.
Middlebury College and the towns of Salisbury and Middlebury filed letters supporting the project.