British Gas said it plans to develop five biomethane demonstration projects that will feed clean gas into the national grid to produce renewable heat.
Biomethane is a mixture of gases, mainly methane, produced from organic material such as cattle slurry, food and household waste.
The gas is expected to help de-carbonise the grid by delivering renewable heat to households through the existing gas network and central heating boilers.
The first project includes developing a plant at Thames Water and Scotia Gas Networks’ Didcot sewage works to clean the raw biogas that is currently flared and feed it in to the grid.
The company will purchase the raw gas from Thames Water under long term contract when the project is completed in the third quarter of 2010.
British Gas will also sign development agreements with GWE Biogas, Potters Waste, Dillington Biogas and Adnams Brewery to carry out feasibility studies for similar ventures.
All projects will receive incentives recently announced by the government under the renewable heat scheme from April 2011.
Biogas is estimated to account for 15% of the gas market by 2020, according to a study by National Grid.