The UK Green Investment Bank (GIB) is providing £7.5 million worth of funding for a waste-to-energy facility in north London.

The 1.2MW anaerobic digestion (AD) plant will use food waste from the capital’s hotels, restaurants and retailers and generate around 7,400MWh of power every year – enough to supply more than 1,700 homes.

The cash, channelled through Foresight Group, will be used by Williams & Co to build the facility which will have the capacity to process 30,000 tonnes of waste.

Business Secretary Vince Cable believes the UK has the potential to become a “world leader in this kind of technology”.

He added: “This new plant will mean less of our waste going to landfill, less reliance on fossil fuels for energy generation and provides compost for the farmers whose land it is built on.”

Construction of the new facility is expected to start next month and begin operation by 2016.

The capital’s first commercial-scale anaerobic digestion and composting facility, funded by the GIB, was officially opened in Dagenham last month.