Green Gas Support Scheme 2022 Annual Tariff Review: call for evidence

Overview

The Green Gas Support Scheme (GGSS) makes tariff payments to biomethane producers for gas that they inject into the grid. It was launched on 30 November 2021 with initial tariffs set in the Green Gas Support Scheme Regulations 2021.

The use of biomethane, or green gas, has an important role to play in reducing the UK’s emissions by lowering the climate change impact of gas supply. Biomethane is produced by the capture and processing of emissions from the decomposition of organic matter, including food and agricultural waste. Its use has the dual benefits of reducing emissions from the gas grid, while reducing emissions from waste.

The GGSS regulations allow tariffs to be increased, decreased or held each year from 2022 to 2024. They can then reduce every quarter for the rest of the year if a degression is triggered. The Annual Tariff Review (ATR) informs the decision to change or maintain tariffs, acting to ensure that payments continue to incentivise the deployment of biomethane production plants effectively, whilst ensuring value for money for billpayers. The resulting decision must be published by 1 September, with new tariffs, if applicable, in effect one month later, from 1 October.

This Call for Evidence seeks input from industry, investors, trade associations and other stakeholders to inform the 2022 ATR. Participant responses will provide evidence for the re-running of the tariff-setting process and gather insight into the effectiveness of the scheme and its current tariff levels. We will also use market intelligence gathered outside the review and applications data provided by Ofgem.

The ATR is distinct from the mid-scheme review which BEIS has committed to undertake, which will evaluate specific policy questions, such as whether to amend the scheme’s waste feedstock threshold and whether CHP conversions should become eligible for support. The mid-scheme review and any potential policy changes as a result will be consulted upon fully in due course.

More information on the GGSS can be found in the Government’s response to its consultation on Future support for low carbon heat and the Green Gas Support Scheme – Budget Management page.

How to respond

There are two parts to this Call for Evidence:

1. A downloadable spreadsheet for biomethane anaerobic digestion plant developers and operators to fill in and upload. The spreadsheet asks for details of plants covering basic information like status and capacity, ramp-up profile, and revenue and cost details. Please fill in and return the form if you either currently operate, have recently developed or are developing an anaerobic digestion plant or plant project. Information on plants will be taken into account in the updating of the tariff-setting model. The spreadsheet can be downloaded from this page via the link below, or on the "Biomethane Plant Spreadsheet" response page. The filled in spreadsheet must be uploaded and submitted on the response page. 

2. A set of questions for all respondents. This element is broader, though designed to complement the spreadsheet form. It is open to all respondents. You will find the questions on the response pages, where answers are also submitted. You have the option to upload supporting evidence for all responses. 

Confidentiality and data protection

Individual responses will be handled securely and in compliance with GDPR regulations. Full details are available in the Privacy Notice. 

Data from individual responses from the spreadsheet element of this Call for Evidence will not be shared with anyone outside BEIS. We may publish summary conclusions drawn from the analysis, such as outputs of our tariff-setting model, which will be informed by aggregated responses.

Responses to the questions element will not be shared in their entirety with anyone as submitted to BEIS. We may publish extracts of responses or findings arising from their analysis, both in the Annual Tariff Review and in subsequent, related publications.

We will process your personal data under the Public Task legal basis, as processing is necessary for the performance of a task carried out in the public interest and in the exercise of official authority vested in BEIS.

Your personal data will be kept by us for no longer than it is needed to fulfil our functions in completing the Annual Tariff Review. Other, non-personal data, including data on plants and written responses that may be commercially sensitive in nature, will be retained separately by BEIS for monitoring, statistical and/or research purposes. Data will be retained until all payments on the GGSS have been made.

Why your views matter

The GGSS’s Annual Tariff Review informs whether tariffs will be increased, decreased, or held on 1 October. Tariffs that are too low risk decreasing deployment or lowering quality of equipment and feedstocks used, and therefore lowering scheme benefits. Tariff rates that are too high risk overcompensating producers and overburdening the billpayer.

The GGSS’s tariffs are set according to a tariff-setting model based on a reference biomethane plant. A discounted cash flow model is used to calculate the tariff required for the plant to achieve a target post-tax nominal rate of return. The model takes into account factors including capital, operating and net feedstock costs, and revenues in the absence of policy support include those earned from selling the biomethane to the grid and from Green Gas Certificates. The ATR process involves re-running this model and updating its inputs. The ultimate decision to increase, decrease or hold tariffs then also takes into account other factors, including forecast uncertainties, risk perception and the broader policy context.

The ATR Call for Evidence is a key input in the updating process, both for the tariff-setting model, and in gathering wider evidence on the market environment and outlook. We are seeking stakeholders’ views on the outlook for the biomethane industry and on whether specific costs and revenues for biomethane plants have changed over the past year.

What happens next

The Annual Tariff Review will be published by 1 September 2022. We will contact you when it is published if you select the relevant option in the "About You" response section. The Review will be accessible via a link on the GGSS - Budget Management gov.uk page.