Олег Йовженко — 27.05.2026
A biogas plant is a capital-intensive infrastructure project. Depending on capacity and technology, investments can range from €2 million to €10+ million. At the same time, the Ukrainian market for biogas and biomethane already has instruments that allow such facilities to be launched without 100% self-financing. For example, grants, loans from international financial organisations, bank financing, ESCO models and leasing.
In this article, we will look at how to finance a biogas plant, which schemes are available in Ukraine, and how to prepare to raise funds.
Biogas projects in Ukraine can be financed through several models simultaneously. In practice, developers and agricultural companies rarely use just one financing method — most often, they employ a combination of equity, loans, grant funding, and tax incentives.
The choice of model depends on the scale of the project, the availability of liquid collateral, the company’s ownership structure, and the readiness of the documentation.
Below is a comparison of the key instruments that are actually effective for the bioenergy sector in Ukraine in 2026.
A brief overview of the available options:
| Tool | Coating | Terms and conditions | Difficulty |
| Tax relief on biogas equipment | 20–25% savings | Provided that customs clearance is carried out correctly | Low |
| EU/donor grants | 20–80% | Competition | High |
| Loans from international financial institutions (EBRD, IFC) | 50-70% | Collateral, business plan | Average |
| Bank loan | up to 70% | Collateral, high stakes | Average |
| ESCO contract | 100% | Pay-as-you-go, for medium and large companies | High |
| Leasing | 60–90% | This applies only to equipment, not to the project’s overall CAPEX. The deposit is 10–30%. | Low |
This is the simplest and quickest way to reduce costs for certain aspects of financing biogas projects. It works automatically — there is no need to submit applications or wait for decisions. When clearing equipment through customs that falls under the UKT ZED codes specified by law, no duties are charged.
Benefits apply to the following categories of equipment:
A different legal framework applies to certain components of biogas plants — mixers, pumps, gas holders, and separators. These are classified under general industrial codes, to which the automatic exemption from VAT and customs duties does not apply under Laws No. 4698-IX and No. 4710-IX. At the same time, alternative tax exemption mechanisms exist for such equipment.
Mixers, pumps, and gas storage tanks are classified under general industrial codes to which the automatic exemption from VAT and customs duties does not apply. However, alternative tax exemption mechanisms are available for such equipment.
One of these is the import of a biogas plant as a complete unit. In this case, all equipment is imported not as separate items, but as a single production line under the HS code for a cogeneration plant or generator (heading 8502). To implement this mechanism, it is necessary to obtain a decision in advance from the State Customs Service of Ukraine regarding the classification of the complete facility.
The result is that specific components of a biogas plant can be classified under a single preferential tariff code alongside the power-generating equipment.
Grants for biogas plants are one of the most attractive funding options, but also one of the most challenging. Competition is fierce, and preparing an application takes between two and six months. Donors fund projects that come with a completed feasibility study, a financial model and a clear business case.
The LIFE Programme is one of the European Union’s key environmental programmes, with a budget of €5.4 billion for 2021–2027. Ukraine is a full participant in the programme, so Ukrainian companies can apply directly for funding for projects in the fields of decarbonisation, the circular economy and renewable energy. For pilot and demonstration projects, the level of grant support can reach up to 60% of the budget.
The key feature of LIFE is that the programme does not fund “standard” biogas plants, but rather projects with an innovative or environmentally significant element that can be scaled up at sectoral or regional level.
In the biogas sector, LIFE most often supports:
Separately, grant funds for the “green” transition of businesses operate in Ukraine, administered through international financial organisations and specialised programmes: GIZ, the Global Environment Facility (GEF), the EBRD (FINTECC), as well as the Ukraine Facility (Pillar II) investment window through partner banks — Crédit Agricole, ProCredit Bank, OTP Bank and Oschadbank.
These programmes are now aimed not only at innovative projects but also at practical commercial projects in the fields of renewable energy and energy efficiency. Companies can secure funding of between €100,000 and €2 million, provided they contribute their own co-financing, which typically amounts to 50% of the project budget.
Basic eligibility criteria:
Through the Energy Security Project, USAID supports the development of Ukraine’s energy resilience, in particular projects in the areas of decentralised generation, renewable energy sources and reducing dependence on imported fuel. The format of participation typically involves technical assistance, grant co-financing and expert support. Project selection is competitive and focuses on solutions of strategic importance to the energy system.
In 2025–2026, the programme underwent a slight reorientation: the focus shifted towards critical infrastructure and projects that have a rapid and measurable impact on energy security.
What exactly is supported in biogas projects:
USAID PEB is not a traditional investor in construction, but it actively supports the preparatory and infrastructure-critical stages of projects:
What is not funded
USAID PEB does not cover direct capital expenditure for private projects. In particular:
In other words, the programme does not replace investment, but lowers the barrier to entry into the project by providing training, expert advice and partial technical support.
In April 2026, NORAD (the Norwegian Agency for Development Cooperation) launched a call for proposals to support the development of Ukraine’s private sector, with a total budget of 100 million Norwegian kroner for the period 2026–2027.
Priority areas of the NORAD programme:
The aim of the programme is to promote investment-ready projects, attract private capital, create jobs and improve the conditions for business development in Ukraine.
Applications must be submitted via the NORAD Grants Portal. The call for proposals is open to Ukrainian, international and Norwegian companies.
What NORAD funds
NORAD directly supports:
To obtain biogas funding through donor programmes, you need to:
Common mistakes:
It is important to note that most grant competitions have a deadline of 4–8 weeks. If a project exists only as “an idea”, it is practically impossible to prepare a high-quality application in time. On the other hand, this is a good opportunity for projects that have already gone through the development process and have been waiting to be implemented for some time.
For large-scale projects, investment in biogas is often secured through international financial institutions. The advantage of these institutions is that they offer lower interest rates and longer loan terms compared to Ukrainian banks.
The European Bank for Reconstruction and Development finances renewable energy and energy efficiency projects in Ukraine through a number of instruments. UKRSEFF (Ukraine Sustainable Energy Finance Facility) is a special programme for small and medium-sized enterprises, offering interest rates of approximately 5–8% per annum and loan terms of up to seven years. The programme is implemented through partner banks in Ukraine.
EBRD’s basic requirements:
The EBRD’s advantage over Ukrainian banks lies in its interest rate and loan term. Its drawbacks are the lengthy due diligence process (3–9 months) and strict documentation requirements.
The IFC (a member of the World Bank Group) is one of the key global investors in Ukraine’s private sector. In 2026, biogas and biomethane projects feature among the IFC’s strategic priorities as part of its programmes for the decarbonisation of the agricultural sector and the development of green energy.
In practice, the IFC does not simply finance energy projects — it sets standards for their quality, sustainability and investment suitability.
The IFC operates through two main channels:
1. Direct funding for major projects
Ideal for large-scale biogas and biomethane plants (typically producing 5–10 million m³ of biomethane per year or with a CAPEX of $10–15 million).
Support format:
Funding may cover up to ~50% of the project cost, with the remainder coming from equity or co-financing from banks and investors.
The key advantage is access to ‘cheaper’ long-term capital, which cannot be obtained on the local market under similar conditions.
2. Financing through partner banks
For medium-sized projects, the IFC works through Ukrainian financial institutions, providing them with dedicated “green“ credit lines.
Key partners include:
Typical funding range: $500,000 – $5,000,000
The advantage of this format is that it offers easier access to capital compared to direct IFC financing, whilst maintaining international risk assessment standards.
IFC projects undergo a thorough, multi-stage vetting process. This is one of the most rigorous institutional selection processes in the sector.
3. Environmental and social standards
The project must comply with IFC Performance Standards:
4. Operational reliability
The IFC funds only proven solutions (Tier 1):
5. A secure supply of raw materials
One of the key criteria is the stability of the feedstock:
6. Off-take strategy
The IFC assesses not only production but also sales:
The IFC does not finance “construction projects“, but rather fully-fledged business models with a proven economic case, a solid resource base, and long-term stability.
This is one of the most demanding, yet at the same time one of the cheapest and most stable financing instruments for biogas projects in the world.
The European Investment Bank has significantly stepped up its involvement in Ukraine since 2022. The Bank is financing infrastructure and climate projects under the EU4Ukraine and ReSolve programmes, as well as within the framework of the Ukraine Facility and the European Green Deal policy.
As of 2026, biogas and biomethane projects are among the priority areas for funding as part of the decarbonisation of the energy and agricultural sectors.
How EIB financing works
The European Investment Bank rarely provides direct financing for private projects if their value is less than €25 million. Instead, it uses a model of indirect financing via Ukrainian banks (Apex loans).
Key partners:
Typical funding amount: €500,000 — €5,000,000 (up to ~50% of the project’s CAPEX)
Terms and conditions:
The EIB’s key requirements for biogas projects:
The EIB operates in accordance with strict European standards, so it assesses not only the financial model but also full compliance with EU environmental policy.
1. Carbon efficiency (RED III)
The project is expected to deliver a 70–80% reduction in CO₂ emissions compared with fossil fuels.
Priority raw materials:
However, the use of food crops (such as maize silage grown on fertile land) is restricted.
2. Principle DNSH (Do No Significant Harm)
The project must not cause harm:
The technology for biogas purification and digestate management is assessed separately.
3. European procurement rules
All equipment purchases are carried out through transparent tender procedures in accordance with the EIB Procurement Guidelines.
Features:
4. Financial stability without subsidies
The key requirement is that the project must be viable even without government incentives.
In other words, the model should be based on:
The European Investment Bank does not simply finance energy projects; it funds long-term, sustainable projects that are in line with the EU’s policies on climate, the environment and the energy transition.
This is one of the cheapest sources of capital for biogas projects, but it comes with the most stringent project preparation requirements.
To obtain an EBRD loan for biogas or IFC/EIB financing, you must:
The entire process, from the initial contact with the MFI to receiving the first tranche, usually takes between 6 and 12 months. This should be taken into account when planning the start of construction.
Despite higher interest rates, a bank loan is often still the quickest option if you need to get a project off the ground quickly.
Among the banks working with the renewable energy sector:
Bank financing remains one of the most practical options for companies that need to launch a biogas project quickly, without the lengthy approval process required by international financial institutions. At the same time, this model involves a higher cost of capital and stricter collateral requirements; therefore, it is important to assess the project’s actual debt burden before taking out a loan.
Advantages:
Disadvantages:
Leasing allows you to purchase a combined heat and power plant or process equipment for a biogas plant with a minimal initial deposit. This scheme is particularly suitable for purchasing equipment, not for the construction of buildings.
Key leasing terms: 10–30% down payment, 3–5-year term, 15–22% interest rate. Ownership of the equipment is transferred once all payments have been made. Cogeneration units, compressors, and biogas purification equipment are ideal for leasing.
For agricultural enterprises that grow energy crops, one specific area of focus is silo-based biogas plants, where leasing is often used specifically to purchase cogeneration equipment.
It is advisable to combine leasing with a bank loan: equipment via leasing, and construction work via a loan. This reduces the amount of collateral required by the bank.
There is no one-size-fits-all solution for biogas financing. For small projects, the speed at which funds are secured is critical; for large projects, it is the cost of capital and the loan term.
That is why, before launching a biogas plant, it is important to compare not only the rates but also the requirements regarding the owner’s contribution, the complexity of the approval process, and the realistic timeframe for securing funding.
Below are the key specifications of the main models used in the Ukrainian bioenergy sector.
| Criterion | Grant | MFI loan | Bank | Leasing |
| Own funds | 20–80% | 20–40% equity | 30–50% equity | 10–30% |
| Rate | 0% | 5–8% | 16–22% | 15–20% |
| Term | — | 7–12 years | 3–7 years | 3–5 years |
| Difficulty | High | Average | Low | Low |
| Delivery time | 6–12 months | 4–8 months | 1–3 months | 1–2 months |
The choice of financing model depends on the project budget, the available equity capital, and the company’s willingness to undergo a comprehensive due diligence process by banks or international financial institutions. For small projects, speed of launch is critical; for large projects, the cost of capital and the long-term nature of the financing are key factors.
For small and medium-scale projects in Ukraine, combined mechanisms for financing and optimising CAPEX are most commonly used, in particular:
This model makes it possible to secure funding more quickly and reduce the initial investment through tax incentives.
For medium-sized biogas and biomethane projects, one of the most practical approaches is a combined financing structure, which may include:
A typical financing structure for such projects might be as follows:
Blended finance helps to reduce the debt burden, improve the project’s financial metrics and shorten the payback period.
For large-scale projects, the most realistic option is:
Such projects require a full set of documents in accordance with international standards; at the same time, it is precisely large-scale biogas complexes that have the best access to low-cost international capital, thanks to their scale and the expected economies.
Such projects require a full set of documentation in line with international standards: an ESIA, a 10–15-year financial model, audited accounts, and a professional EPC partner. At the same time, it is precisely large-scale biogas complexes that have the best access to low-cost international capital, thanks to their scale and predictable economics.
Pro-Energy is one of the companies actively operating in the biogas and biomethane market in Ukraine and has practical experience in implementing energy projects for the agricultural and industrial sectors. You can view examples of completed projects on our website.
Investments in biogas can now be secured without the need to finance the project solely with your own funds. In Ukraine, grant programmes from the EU and international donors, loans from MFIs, bank financing and equipment leasing are already in operation. In addition, tax incentives for the import of energy equipment remain in place until 2029, which automatically reduces the project’s CAPEX by 20–25%.
Securing funding depends directly on the quality of the project preparation. Investors, banks, and donors assess not only the technology, but also the stability of the raw material base, the financial model, the regulatory documentation, and the realism of the payback period. That is why the key to success is not the search for “easy money”, but a professionally structured project with transparent economics and a clear return on investment model.
If you are planning to launch a biogas project, please contact the experts at Pro-Energy for advice on selecting the right technology, assessing the project’s financial viability and choosing the best financing model.
What tax incentives apply to equipment for biogas plants?
Until 1 January 2029, there is an exemption from customs duties and VAT on the import of equipment for biogas plants, CHP plants, and energy storage systems. The savings amount to 20–25% of the cost of the imported equipment.
How can I apply for a grant for a biogas project?
You will need to: monitor calls for proposals (EU4Energy, USAID, GIZ), prepare an application (application form) in English, secure co-financing of 20–80%, and undergo due diligence. The process takes 6–12 months.
What are the EBRD’s lending terms?
Direct loans from €5 million, interest rate: EURIBOR + 3–5%, term: 7–12 years, grace period: 1–3 years. Required: business plan, ESIA, collateral. For smaller amounts, credit lines are available through Ukrainian banks.
What is an ESCO contract for biogas?
The ESCO company invests in the project, and the client repays the investment from energy savings over a period of 5–10 years. Once the investment has been repaid, ownership of the equipment is transferred to the client. Benefits: 0% upfront investment; the risk is borne by the ESCO.
How much of your own capital is required for a biogas project?
This depends on the financing option: grant — 20–80% own funds, MFI loan — 20–30%, bank loan — 20–30%, ESCO — 0%, leasing — 10–30%.
Sources used in the writing of this article:
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