Environmental & Waste

Anaerobic digestion

Digesting organic feedstock (food waste, farm slurry, energy crops) into biogas, then upgrading it to grid biomethane or burning it in a CHP engine. This is a production + incentive business rather than a network: produce green gas, earn the gas price plus a green incentive and a gate fee for the waste, against the cost of feedstock. Pick a real project below and trace it through the plant, the model and a working returns model.

In focus ·
Example

Drag the sliders to see what earns the money: the capacity of biomethane produced, the incentive-rich price on each unit, and how hard the plant runs.

120 GWh/yr
Capacity
Production
Biomethane + gate
recurring revenue p.a.
EBITDA p.a.

01

What it is & how it works

02

How it earns

Model A · production × incentive

A subsidy-backed processor

Anaerobic digestion is a production + incentive business, not a regulated network. The plant digests organic feedstock into biogas, upgrades it to biomethane (or burns it in a CHP engine), and is paid the gas or power value plus a green incentive (the UK's GGSS/RHI, US LCFS/RIN/45Z credits, Brazil's RenovaBio, or rural-energy subsidy) that does most of the work in the price. On top it earns a gate fee for accepting waste feedstock and a little from digestate fertiliser. Against that sits the dominant cost: the feedstock itself and the parasitic power to run the plant. The engine is therefore production × an incentive-rich price, with a contracted, incentive-backed floor underneath. It is genuinely incentive-dependent (drop the incentive and the economics get thin), and feedstock cost and supply are the operational risk. It scales: every new digester adds another incentive-backed production stream.

03

What it costs, and how it's financed

Revenue → operating costs → EBITDAMargin

The capital · digesters + upgrading
Who funds the buildallocation

    History & framework · key milestones
      04

      Cash flows & returns

      Build & grant

      m
      m
      %
      %

      Revenue regime & tax

      m
      m
      %
      ×

      Financing & hold

      ×
      %
      %
      y
      Unlevered IRR
      asset / project return
      Levered IRR
      return to equity
      Equity multiple
      MOIC over hold
      Payback
      project, undiscounted
      Cash-flow profile, equity invested   returned
      Show the year-by-year schedule
      05

      What drives the return

        See also the Anaerobic-digestion simulator, a deeper interactive plant model, and the Cash-flow & DCF model.