On the 30th November, the government is set to launch its new Green Gas Support Scheme
(GGSS), which will provide support for the production of biomethane for grid
injection, from the anaerobic digestion (AD) of biological feedstocks.
This new framework
is being brought in to replace the former Renewable Heat Incentive (RHI) scheme
which closed to non-domestic applicants in March 2021, and which will close to
new domestic applicants in March 2022. The GGSS will be financed by a Green Gas
Levy being applied to gas suppliers (who will pass the cost on to their
customers).
From the date of
its launch, the GGSS will be open for applications for four years – until
autumn 2025 – and will provide financial support for a period of 15 years
(compared to 20 years under the RHI). Only “new” plants will be eligible, not
CHP conversions initially, and the biomethane injection facility will need to
be commissioned by the 30th November 2025 at the latest. Anyone with
an existing RHI tariff guarantee (TG) and wishing to apply to the GGSS instead
will need to withdraw their TG application before the GGSS regulations have passed
to remain eligible.
Similarly to the
RHI, the GGSS rates are tiered depending on biomethane production capacity. The starting rates are as follows:
- Tier 1 (up to 60,000 MWh): 5.51 p/KWh
- Tier 2 (up to 100,000 MWh): 3.53 p/KWh
- Tier 3 (above 100,000 MWh): 1.56 p/KWh
After the first 6
months of the scheme, these rates are expected to undergo quarterly degressions
to ensure the scheme remains within the bounds of the planned expenditure
thresholds, therefore, preventing overcompensation of biomethane producers and an
unfair burden on billpayers. Every year, the tariffs will be reviewed on the 15th March, 15th June, 15th September and 15th December. This mechanism has been put in place as a safeguard so that tariffs
wouldn’t need to be reviewed only once the expenditure threshold has been
breached (which happened under the RHI scheme). Under these conditions, the
quarterly reviews are expected to lead to tariffs that better match the
deployment of biomethane in the country. The degression thresholds were
published at the same time as the regulations, but as a separate document, allowing
for a more flexible and dynamic review process which will not lead to
legislative change.
Just like with the
RHI, a tariff guarantee (TG) mechanism will be put in place within the GGSS. Under
the scheme, TGs will be compulsory. This will also be used as a budget
management tool for BEIS and will allow a fairer and more accurate levy rate on
gas suppliers (i.e. billpayers).
Similar to RHI, quarterly
sustainability reporting is required and feedstock restrictions will apply, so
at least 50% of the biomethane output must derive from wastes and residues. The
methodology for calculating GHG emissions for reporting and compliance does
differ slightly though, with the new GGSS regulations allowing for averaging of
emissions across consignments and a carbon credit being granted for effective
manure management.
At NNFCC, we are
equipped and ready to provide consultancy to anyone wishing to apply to the
GGSS when it launches on the 30th November. We can prepare and
submit applications, liaise with Ofgem during the review process and have
modified our GHG Calculator to take the new GGSS sustainability reporting
requirements and calculation methodologies into account.