What is Anaerobic Digester Finance?
An anaerobic digester (AD) plant converts organic feedstocks - slurry, food waste, energy crops, crop residues - into biogas, which can be used to generate electricity and heat (via a CHP engine) or upgraded to biomethane and injected into the gas grid. The digestate by-product is a high-value organic fertiliser.
The capital cost of a farm AD plant varies enormously based on scale and configuration, but typical on-farm systems range from £300,000 to £3 million+. Finance is therefore almost always required, and the income streams generated - electricity, heat, biomethane, digestate - are central to the lender's affordability assessment.
Finance Structures for AD Projects
HP / Finance Lease
For smaller, more straightforward AD installations. The digester tanks, CHP unit and ancillary equipment are financed as individual assets. Suitable for on-farm digesters up to around £500,000.
Project Finance
For larger AD plants where the project's income streams are the primary repayment source. A Special Purpose Vehicle (SPV) is often used. Loan-to-cost ratios of 60–75% are typical.
Sale & Leaseback
For farms that have recently built an AD plant using cash or a short-term facility. The completed plant is sold to a funder and leased back, releasing capital. Subject to age and valuation.
Lender Rates for AD Finance - October 2026
| Lender / Structure | Rate From | Max LTC | Max Term | Notes |
|---|---|---|---|---|
| Close Brothers (HP) | 6.8% APR | 70% | 10 yrs | Asset-by-asset basis |
| Specialist Project Funder | 7.5%+ | 75% | 15 yrs | Income-based structure |
| Aldermore (HP/Lease) | 7.0% APR | 70% | 10 yrs | Established farms |
| Development Bank of Wales | 6.5% | 80% | 15 yrs | Wales only |
Step-by-Step: Arranging AD Finance
- 1Initial feasibility - establish feedstock supply, grid/gas connection, planning viability and projected income.
- 2Professional reports - commission a feasibility study, feedstock analysis and (if gas-to-grid) biomethane yield assessment.
- 3Planning application - submit and secure planning permission. This is a prerequisite for formal finance.
- 4Enquiry to Doulton Bridging Finance - we will assess the project, identify suitable lenders and present your case professionally.
- 5Indicative terms - we obtain terms from multiple lenders and present a comparison.
- 6Full application - once you select a lender, we package the full application including all project documentation.
- 7Formal offer and drawdown - formal facility letter issued, legal charges registered, funds drawn as project milestones are met.