The Department of Energy and Climate Change (Decc) awarded the funding in a move to explore new ways of turning plant-based material derived from harvesting wetlands into renewable heat and electricity.
AMW IBERS, Natural Synergies and AB Systems were awarded the contracts.
According to the government, sustainably sourced bioenergy has the potential to contribute around 11 per cent of the UK’s energy demand by 2020.
The winning companies will use the funding to test their project designs in three wetland areas in the UK, including Somerset, Suffolk and Inverness.
Energy and climate change minister Greg Barker said: “The ability to turn plant material – that would otherwise have been burned or left to decompose – into a sustainable energy source is an important part of the move towards a low carbon economy.
“I wish the winning organisations every success with their projects. These valuable initiatives will help to bring down the costs of this clean, green technology.”