Thursday, 18 February 2021
On 8 February 2021, the UK Office of Gas and Electricity Markets (Ofgem) released a draft of the guidance for their Non-Domestic Renewable Heat Incentive (NDRHI) scheme closure for comment.
The NDRHI is the mechanism for which biomethane producers can be compensated for injecting their output into the national gas grid, in addition to support for larger renewable heat producers as the scheme name suggests. The scheme is closed to new entrants on 31 March 2021, although current participants will continue to receive support.
The document (here) is in no way final, rather it is intended to give stakeholders an opportunity to comment and shape future NDRHI direction. The comments period will end on 5 March 2021, with any amendments coming into force on 31 March 2021.
Intended changes of note to biomethane producers include:
The ability to claim RTFO and RHI payments in the same quarter offers biomethane producers greater flexibility, although whether producers will opt to receive part payments of each in practice remains to be seen. While it is difficult to analyse for every scenario, the following is noted:
Under these proposed changes, it may be optimal for larger producers to claim the RHI payments for a small portion of their production volume which would receive favourable rates, then RTFO benefits for the remainder.
The NDRHI has widely been considered a success in promoting biomethane technology at reasonable expenditure to the government; a replacement program to continue the momentum should be a priority.
The UK Department of Business, Energy and Industrial Strategy (BEIS) proposed a replacement scheme, the GGSS, to the RHI to continue to encourage the development of the biogas industry in the nation.
While the scheme is not final, the draft proposals were published last year, and open for comments from April 2020 to July 2020. The scheme is expected to commence in Autumn of 2021, with the first support payments being made April 2022.
Unlike the NDRHI, the GGSS is intended to handle biomethane injections rather than heating in general. Other important distinctions include:
Further details can be found in the BEIS consultation document Future support for low carbon heat.
Greenfact is monitoring the European biomethane certificate markets, gathering data on pricing and information on specific regions such as the UK and associated Green Gas Certification Scheme. Get in contact with us if you wish to find out more.