Every week the council collects food waste through the orange caddy collection system.
The food waste collected by Denbighshire is taken to an anaerobic composting facility near St Asaph and turned into a valuable soil fertilizer that is used by North Wales farmers.
The process also produces green energy for around 2,000 homes.
This six-month trial will involve installing the microchips for 630 properties in four communities (in parts of Corwen, Ruthin, Prestatyn and Rhyl) and is part of the council’s campaign to improve recycling rates, ahead of major changes to waste and recycling services in the county in 2021.
The information collected will inform the council which properties have put out their caddy and which ones have not.
It will help the council to gather monitoring data quickly and efficiently so it is able to visit people who are not using the orange caddy system over long periods and offer support to encourage them to recycle.
The council already collects this information manually but it is time consuming and releasing this time would allow staff to talk to people who need more support to recycle. The data it receives manually can also be inaccurate as it is not always possible to know which house a caddy belongs to.
The council is working with a company called Schaefer who have developed the software and have offered the trial free of charge so the council can explore the benefits of the new system and gain an understanding of feedback from residents, as well as see how well the software works.
If the system helps increase recycling rates the council says it will consider expanding the trial areas in January.
Tony Ward, Denbighshire’s Head of Highways, Facilities and Environmental Services, said: “Despite people in Denbighshire being amongst the highest recyclers in the UK, a quarter of the waste we throw away in our black bins is food waste.
"To hit the recycling targets set by Welsh Government we need to make sure all our food waste is recycled and not wasted.
“Over the next six months we are launching a range of projects aimed at getting people to recycle food waste for the first time, as well as encouraging active recyclers to recycle even more.
“This is a ground-breaking project and we will be following the results of this initiative with great interest, to see whether it makes a difference to recycling rates and the public’s response to the scheme."