Oct. 4--Waste management group Shanks will tomorrow announce an £8 million deal to build a Scottish energy plant to power 3,000 homes using discarded food.

The plant, being built in partnership with Scottish-based renewable energy company Energen Biogas, will be able to handle 60,000 tons of waste a year, from household leftovers to commercial kitchen waste.

Called an anaerobic digester, the plant will be up and running by summer 2010 and as well as producing up to 3MW of power will produce high-quality fertiliser as a by-product.

Shanks will use its own technology, which has already been used to build plants in the Netherlands and Canada.

The group has been carrying out a cost reduction programme and raised £71 million in a rights issue earlier this year to reduce its debts.

The shares hit a low of 36p in February, but have recovered to close on Friday at 95p.

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