Farmers wanting to set up small-scale anaerobic digestion (AD) plants can soon apply for up to £400,000 though a new government-funded loan scheme.

The ‘On Farm AD Fund’, which is worth £3 million, was announced yesterday (10 October) by Environment Secretary Owen Paterson. It relates to the recycling process which sees microorganisms break down biodegradable material in the absence of oxygen, to produce energy and a bio-fertiliser output.

Administered by the Waste and Resources Action Programme (WRAP), funding will be available to farmers in England‘who have access to slurries or manures; and who wish to build AD plants producing up to 250 kilowatts of power.’ Applicants to the new scheme will be required to ‘demonstrate that economic and/or environmental benefit can be realised with the addition of an AD plant on the farm’.

The initiative consists of two stages: a ‘business plant grant’ (up to the value of £10,000) will be available for farmers to investigate the environmental and economic potential of having a facility on site. Depending on feasibility, farmers can then apply for a capital loan of up to £400,000 to fund up to half of the overall cost of implementing the technology.

Challenges to adopting AD

The announcement follows a recent finding that in 2012 the UK recycled 7.6 million tonnes of organic waste. The ASORI report, produced by WRAP, suggested that AD is driving growth in the sector with around 1.7 million tonnes of organic waste treated through AD facilities.

However, the development of AD on farms has been stalled due to several barriers. These include:

• access to finance;
• availability of reference sites for technologies and case studies;
• demonstration of the benefits of AD; and
• the potential high cost of technology.

Defra has said that it hopes the ‘On Farm AD Fund’, which will also provide ‘case studies and demonstration information’ to farmers, will help overcome these challenges.

Further, it is hoped that by adopting AD technology to convert waste into energy, farmers can: reduce their energy bills, gain an additional source of income (if surplus energy is exported to the grid), reduce their greenhouse gas emissions, and replace the use of bought-in artificial fertilisers with the bio-fertilisers produced by the AD process.

Boosting the Rural Economy

Announcing the new fund, Environment Secretary Owen Paterson said: “Dealing with waste and recycling properly is good for the environment and can boost economic growth and create jobs.

“This funding provides an opportunity for farmers across the country to consider whether AD technology is right for their farms, in order to cut waste, reduce greenhouse gas emissions and recycle valuable nutrients back to the land. Farmers who would have otherwise struggled to get finance to set up a small scale AD plant will be able to apply for a loan for up to 50 per cent the cost.”

Liz Goodwin, CEO of WRAP, added: “The use of small-scale anaerobic digestion on farms to treat manures and slurries has a number of economic and environmental benefits and is an excellent example of the circular economy in action.”

“However, access to finance for on-farm AD has been difficult, especially for small-scale operations. Currently there is no targeted financial support available to increase this capacity. The On Farm AD Fund has been designed to both attract funding into the sector, and to provide support and materials for farmers to help them access finance in the future.”

Loans will be available from early 2014. WRAP expects applicants to have developed a business plan in advance of submitting an application and will be releasing a template next month. While funding is only available to farms in England, alternative support is available in other nations.

Find out more about the On Farm AD Fund.