Lancashire renewable energy firm Farmgen has secured a £2.1m loan from the Co-operative Bank to support construction and operation of its anaerobic digestion plant at Carr Farm, near Warton, Preston.

Previous farm AD plants had been financed by offering asset-based security such as land, but this deal was different because the loan was achieved on the basis of the business plan for the project, including a robust fuel strategy, said Ed Cattigan, chief operating officer at Farmgen.

Central to the plan that secured the 11-year loan, was income from the government’s 20-year Feed-in Tariff scheme, which guarantees payments for electricity generated from renewable sources. The plant also has funding from a small group of private investors.

Marks & Spencer has a five year commitment to buy power from the £3m project at a fixed price.

The AD plant will generate a constant 800kW of electricity when it begins operation in spring 2011 – equivalent to the requirement of more than 1,000 homes.

Farmgen, established last year, has plans for investment of up to £30m in a series of farm-based AD plants. It has sites in Cumbria, Lancashire, Yorkshire and the midlands with construction at Silloth in Cumbria set to begin later this year.