The facility will reduce current chemical oxygen demand output in distillery wastewater by up to 95 per cent to create methane gas, which will replace some of the fossil fuels currently used at the distillery to heat the stills in which the spirit is made.
UU says the AD site will also improve the standards of water discharged into the nearby Dornoch Firth, and preserve the unique biodiversity of the area.
Construction work has started, and the plant is due to be operational in summer 2016.
The firm’s director of retail Sue Amies-King said: “Anaerobic digestion has huge potential in its ability to help businesses make use of waste products and create more sustainable organisations.
“Scotland, and the UK as a whole, has a very strong spirits industry and we believe there are real opportunities for companies to invest in renewable energy technologies like AD in a way which will benefit their businesses, customers and the environment.”
To date UU has built more than 20 AD plants in the UK, including a thermal hydrolysis plant at its own Davyhulme site which it claimed helped cut its carbon footprint by 11 per cent in 2013/14.