New York-based Clarkson University is undertaking a US$2 million ($A2.5 million) project to design and build an anaerobic digester and power/heat recovery system at a working dairy farm.

Clarkson's associate professor of civil and environmental engineering Stefan Grimberg said biogas derived from the anaerobic digestion of cow manure and cheese whey could provide thousands of farms with significant economic, environmental and social benefits.

"Farmers and dairy processing facilities can displace purchased sources of heat and power, reduce wastewater treatment and environmental compliance costs, and mitigate exposure to fluctuating power prices," he said.

The project aims to improve on current digester technologies by optimising the integrated energy system and developing ways to separate sand used for bedding from the manure.

Grimberg said more than half the anaerobic digesters built before the mid-1980s failed to operate properly.