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Announcing the agreement, WA energy minister Eric Ripper said it was part of a plan to modernise power generation throughout the State.
Work would get under way in March next year to construct the new power stations at Marble Bar, Nullagine, Menzies, Laverton and Gascoyne Junction.
Ripper said Western Power would purchase the electricity and distribute it to more than 530 customers in the towns while StateWest Power would own and operate the power stations.
"The new power stations will provide a more efficient and reliable electricity supply by replacing Western Power's ageing generating plant," he said.
"Western Power will also be upgrading the networks in each town to connect to the new power stations."
The Minister said the new power stations would use modern diesel generating technology which was cleaner, quieter and more fuel-efficient.
StateWest Power, a subsidiary of Wesfarmers, is an independent power producer specialising in electricity supply to mining operations and regional towns.
The Remote Towns Power Project follows similar projects conducted in the West Kimberley and Mid-West regions, as well as the towns of Esperance and Exmouth, to upgrade power supplies.
Representatives from Western Power and StateWest Power will visit each of the towns this month to brief local communities, including the shires and development commissions.
