Biogas plant: how it works and who can invest?

In Ukraine, the demand for renewable energy sources is growing, and biogas is becoming one of the key answers to the challenge of energy independence. Pro-Energy has been developing and implementing biogas projects for over ten years, helping farmers, communities, and investors understand how a biogas plant works, what the feedstock requirements are, and what financial opportunities this sector offers.

Biogas plant technology: operating principle and significance

A biogas plant is a modern complex that converts organic waste into energy. Its core process is the production of biogas from agricultural raw materials, livestock waste, straw, or beet pulp. Such solutions not only reduce dependence on imported gas but also address environmental issues — lowering greenhouse gas emissions and recycling waste.

The technology of a biogas plant is based on anaerobic digestion. In special sealed bioreactors — methane tanks — anaerobic bacteria break down organic biomass, producing biogas. After purification, it can be upgraded to biomethane and injected into the gas transmission system and/or used to generate electricity and heat. The comparison between electricity and heat generation from biogas demonstrates why this model is so effective.

How a biogas plant works step by step

The first stage is collecting, preparing, and processing feedstock. Here, the key question arises: How to prepare feedstock for a biogas plant? For biogas plants based on agricultural waste, the main resources include manure, poultry litter, corn silage, and straw (used both as bedding and as a separate raw material). However, the feedstock base is not limited to the agricultural sector. For example, food industry waste and by-products from processing industries (such as sugar production) can also be used. Additionally, biogas can be extracted from landfills.

Next, the feedstock enters methane tanks, where the fermentation process takes place. Afterward, the biogas is either purified into biomethane or directed to cogeneration units. These units produce electricity and heat, which enterprises or communities can use for their own needs or sell to the grid.

Until 2019, the model of a “biogas plant under the green tariff” was widely used as a mechanism to support renewable energy development in Ukraine. Companies could sell excess electricity at a fixed green tariff, ensuring a stable income. However, the rules have since changed.

Today, the sale of electricity from biogas cogeneration units in Ukraine takes place under market-based mechanisms. The main one is the day-ahead market (DAM), where producers submit daily bids with projected electricity volumes and desired prices, and the Market Operator sets the hourly price for the next day. Participation in the DAM allows plants to sell surplus electricity at market prices, which is especially beneficial for continuous-operation cogeneration units.

In addition, some enterprises use the Net Billing model — where surplus electricity is not sold but credited as a discount on self-consumption. This approach is convenient for large agricultural enterprises with high energy consumption levels, enabling significant savings by generating energy from their own waste. This model does not involve selling excess electricity at a fixed price.

When combined with heat production, this model remains effective in 2025, despite changes in legislation — although, unfortunately, it is only feasible for very large enterprises.

Who can invest in biogas

Various market participants can invest in biogas in Ukraine.

First and foremost, agricultural companies and farms that have a stable volume of raw materials. They gain a double benefit: energy independence and solving the problem of handling manufacturing by-products (and yes, according to legislation, manure is not considered waste).

The second segment includes industrial enterprises that generate large volumes of organic waste — such as those in the food, meat, and dairy industries.

The third direction involves municipal projects. The structure of a biogas plant can be adapted for solid waste landfills, as already implemented in Rivne.

The fourth segment includes private investors, funds, and international organizations. Today, such projects are supported by entities that view biogas as a key part of decarbonization strategies.

Finally, the state itself plays a role: partnerships between communities and government institutions open new opportunities for development. This is why our article “10 Most Common Questions About Biogas Plants“ remains one of the most popular among investors seeking to understand the advantages and risks of this sector.

Costs and profitability of a biogas project

The key question for any investor is economics. The costs and profitability of a biogas project depend on its capacity, chosen technology, and the quantity and quality of feedstock. According to Pro-Energy, the construction cost of a biogas complex in Ukraine starts from €2–3 million for small-scale plants and can reach €10 million for large complexes.

Sources of revenue include biomethane export, heat supply for local needs, and the use of digestate as organic fertilizer.

Examples of biogas plants in Ukraine

Today, biogas in Ukraine is developing thanks to agribusiness and municipal projects. One notable case is the launch of the Kalypso Biogas LLC plant with a capacity of 3.12 MWe in the Chernihiv region. The biogas plant was implemented with the support of Raiffeisen and in partnership with HoSt Biogas B.V., using corn silage as the main feedstock. The project demonstrates the efficiency of modern technology and the economic feasibility of using biogas in the agricultural sector.

Another example is the MHP biogas plant in the Vinnytsia region, which processes agricultural waste into biomethane and LNG and is already operating on a large scale.

These examples prove that launching a biogas plant is feasible under various conditions and with different feedstock bases, provided the solution is based on a technically sound approach and a stable source of organic raw materials.

What to consider before investing

Before investing, it is important to assess your own potential. The first step is to analyze the feedstock base — its volume, stability, and logistics. Next comes technology selection: whether purification to biomethane is needed, what level of automation is optimal, and what plant capacity to choose. It is also crucial to ensure connection to energy networks and understand the regulatory framework. And, of course, financial planning — including capital investments, operating costs, and the projected payback period.

This is where Pro-Energy offers its services — from an initial assessment of feedstock potential to full investor support in the field of biogas technologies.

Conclusions

Ukraine has all the prerequisites for the development of biogas projects: a strong agricultural sector, a large volume of accumulated organic waste, and a pressing need for energy independence. A biogas plant is not just a technological solution but also a business model that, when properly designed, can become accessible to farmers, communities, and large companies.

Order a consultation from Pro-Energy and find out whether your business is suitable for investing in a biogas plant.