Planners at Fenland District Council refused a farming co-operative planning permission to build an anaerobic digester.
Fengrain’s bid to create the plant close to its site in Hook Lane in Wimblington was turned down at a meeting on Wednesday.
The plans had been recommended for approval and had received some opposition from the public.
Company development director Paul Randle said the firm would make a decision on their next step after seeing the reasons for refusal.
Mr Randle said: “We don’t know if we will appeal, that will be a board decision.
“We will have to wait and see until the official confirmation comes through and then take advice.”
The application sought permission for a digester plant with three silage clamps, earth bunding surrounding an alligator tank for liquid storage and the formation of a lagoon.
The digester facility is proposed to process 45,000 tonnes of sugar beet, rye or maize per annum to produce gas for the local grid system.
Potentially some of the gas will be used to generate electricity for the adjoining grainstore. Crops would have been grown by Fengrain members.