Financial Benefits

The financial benefits of having an AD plant on your farm are significant. The following diagram illustratively summarises what these benefits are:

RawAD farmers

You as the farmer, whose land an AD plant has been installed on, will receive £60,000 per year from the sale of electricity generated by the AD plant for the first 3 years after signing a contract with Raw AD to install the plant on your land.

At the beginning of the 4th year, after your initial engagement with Raw AD, you have the option to either buy the plant outright with 100% debt finance
 or continue with your contract arrangement with Raw AD.

A) Buying the Plant outright in year 4 will have the following financial effects*:

  • You will earn £200,000 per year initially, which will increase to £600,000 per year by the end of year 20;
  • Your after-tax profit from the AD plant over 20 years will amount to over £5 million;
  • The investment has a Net Present Value (NPV) of £2 million at an Internal Rate of Return of 8% per annum.

B) Continuing with the Contractual Arrangement with Raw AD for 20 years will have the following financial effects*:

  • You will earn £60,000 per year initially, rising to £300,000 per annum by the end of year 20;
  • Your after-tax profit from the AD plant over 20 years will amount to over £3 million;
  • The investment has a Net Present Value (NPV) of £1.2 million when calculated using an Internal Rate of Return of 8% per annum.

* Note: These financial effects include only the predictable effects of the sale of electricity and exclude any revenue from the sale of organic fertiliser produced by the AD plant, which are not predictable, but could prove to be very significant.