Thursday, June 25, 2009

Financing Methods for UK Government Biogas Plants

I am frequently being asked to include more information in the blog and at the web site ( about financing and contracting routes for the larger waste feedstock Anaerobic Digestion Plants. So here is some guidance based the Defra WIP compiled programme information a few years back.

Development of any Advanced Biological Treatment (ABT) Plant will involve capital expenditure of several million pounds. There are a number of potential funding sources for Local Authorities planning to develop such facilities, including:

Capital Grants: general grants may be available from national economic initiatives and EU structural funds;

Prudential Borrowing: the Local Government Act 2003 provides for a new 'prudential' system of capital finance controls;

PFI Credits and Private Sector Financing:
under the Private Finance Initiative a waste authority can obtain an annual subsidy from central government through a Special Grant;

Other Private-Sector Financing: A contractor may be willing to enter a contract to provide a new facility and operate it. The contractor's charges for this may be expressed as gate fees; and

Existing sources of local authority funding:

for example National Non-Domestic Rate payments (distributed by central government), credit (borrowing) approvals, local tax raising powers (council tax), income from rents, fees, charges and asset sales (capital receipts). In practice there will be limited opportunity to take advantage of these.

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