British Gas and Bio Group have announced that they have signed an agreement to build a facility that will convert commercial food waste in to renewable gas.

The project will be the UK's first purpose-built site to benefit from the Renewable Heat Incentive (RHI).

The £5 million facility, in Stockport, which will open in April 2012, will use food waste from local hotels, restaurants and even British Gas' own offices, to generate enough renewable gas to supply up to 1,400 homes every year. It will be built on an old landfill site.

The RHI incentivises renewable gas generation by providing to the gas supplier a premium over the actual gas price paid. It is being heralded by Government as the first financial support scheme for renewable heat in the world.

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Biomethane will make a contribution to decarbonising the gas grid by delivering renewable heat to households through the existing gas network and central heating boilers. According to a study by National Grid, it could account for at least 15 per cent of the domestic gas market by 2020.

Renewable gas is made from organic materials like cattle slurry, food or household waste. It's very similar to the natural gas used in central heating and cookers today and, with a little processing to clean it up, it can be injected into the grid for use by customers.

Gearóid Lane, Managing Director, British Gas New Markets, said: "This project shows how recycling waste that would otherwise go to landfill is not only good for the environment, but can also play a vital role in meeting people's everyday energy needs. It provides evidence that the RHI is starting to bring on the investment that will help realise the potential in renewable gas."

Steve Sharratt OBE, Chief Executive of Bio Group said: "We are delighted to be working with British Gas to make a real difference to energy provision in the North West. This facility has been designed using our groundbreaking technology as the next stage of a national roll out of anaerobic digestion plants. We use innovative, low carbon building techniques to produce energy through a completely organic and natural process; nothing is wasted.

"As a business we are committed to reducing greenhouse gas emissions and tackling climate change head on both in what we do and how we do it."

(CD)