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% of the domestic gas market by 2020.

Biomethane is a mixture of gases (predominantly methane) that are sourced from organic material, such as cattle slurry, food and household waste. It has similar thermal characteristics to natural gas and, once upgraded to grid specification, can be injected into the gas grid for end use by customers.

The first project will involve British Gas working with Thames Water and Scotia Gas Networks to build plant at Didcot sewage works. Thames Water already makes and flares raw biogas from sewage processing. The project will design and build a plant to clean the gas and inject it into the grid.

First gas from this project could flow into the grid in summer 2010. Upon completion, British Gas will also enter into a long-term gas purchase contract with Thames Water.

British Gas has also signed development agreements with four other companies to carry out feasibility studies with a view to delivering biomethane to grid. The agreements are with GWE Biogas (using food waste and farm crops), Potters Waste (manufacturing waste), Dillington Biogas (farm waste slurry) and Adnams Brewery (brewery waste).

Assessment and development of these projects will start immediately.

Gearoid Lane, managing director of communities and new energy at British Gas, said: “We’re delighted that the Government will provide support to make investment in biomethane commercially viable. With 85 per cent of homes heated by natural gas, this is a fantastic opportunity to deliver renewable heat through our existing gas network and central heating boilers.”

“These five projects demonstrate once again British Gas’ leadership in renewable energy. By making early investments in biomethane we intend to drive forward the opportunity to deliver green gas to our customers.”

Mel Karam, director of asset management at Thames Water, said: “Our project with Centrica and Scotia Gas Networks at Didcot marks a big step forward for our ‘poo power’ endeavours. For decades we’ve generated electricity by burning sewage sludge or methane derived from it, saving GBP15m in power bills last year alone.

“Next on our renewable energy hit list is using biomethane from sewage as another source of gas, so to see it become a reality later this year will be great for customers and great for the environment.”