The new biomass plant, which would convert woodchip and other natural materials into energy, has been earmarked for Imperial Dock near Ocean Terminal.
But local campaigners are worried that the size of the development will become a blot on the landscape and lead to a redesign of plans to develop the waterfront.
Plans for the development have been drawn up by Forth Energy, a firm comprising Forth Ports and Scottish & Southern Energy.
The Leith site is just one of four earmarked by the company for biomass developments in the coming years as Scotland aims to increase the amount of energy generated from renewable sources.
The plant would generate up to 200 megawatts of electricity for the local network and heat to local users from the use of around 1.3 million tonnes per year of biomass fuel.
While the majority of the fuel is expected to be woodchip, around 10-30 per cent will be drawn from purpose-grown energy crops, agricultural residues and recovered biomass materials, such as paper and cardboard.
However, according to a scoping report set to be examined by the Scottish Government, the development would be within 400 metres of existing housing developments.
It would also be taller than city landmarks such as the Scott Monument, which stands at around 61m tall (200 feet).
Alastair Tibbitt, a spokesman for environmental organisation Greener Leith, said: "Firstly, the most obvious thing that we've noticed is that the proposals do not seem to follow the previously agreed masterplan or outline planning permission for the docks at all.
"The site where the power plant is set to go is, as we understand it, earmarked by Forth Ports for residential use. So it would seem that these new proposals represent a serious shift away from the original plans.
"The proposed plant itself is big. It will be 65m high with a 100m chimney stack. This means you'll be able to see if from, well, everywhere."
And local councillor Gordon Munro said he had concerns the plant had been drawn up for a site that had been due to include a park.
He said: "That's one of the major open spaces planned for the area. What this development does is bring the industrial edge of the site forward.
"As far as I can see, this is a major redesign of what was proposed for the redevelopment of the Leith docks as a whole."
A spokesman for Forth Energy said: "Our aim is to establish four renewable energy plants in Dundee, Leith, Grangemouth and Rosyth that will produce up to 500MW of electricity, enough to power more than 1,000,000 homes.
"The siting of the Leith development follows a re-evaluation of our land assets and the renewable energy plant will operate within an industrial zone within the port.
"We are at an early stage in the consenting process and will be consulting widely with the local community and other stakeholders about the proposed renewable energy plants early in 2010."