Green Gas Support Scheme expenditure forecast statement for the quarter ending 30 April 2023
Updated 30 August 2024
Applies to England, Scotland and Wales
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This publication is available at https://www.gov.uk/government/publications/green-gas-support-scheme-ggss-expenditure-forecast-statements-and-tariff-change-notices/green-gas-support-scheme-expenditure-forecast-statement-for-the-quarter-ending-30-april-2023
This is a quarterly Expenditure Forecast Statement for the Green Gas Support Scheme (GGSS), published in accordance with Regulation 20 of The Green Gas Support Scheme Regulations 2021.
The forecast uses scheme data as at 30 April 2023 and is based on the capacity of applications that have passed Stage 2 of the application process.
The Expenditure Forecast for this quarter is £43.50 million, which is below the expenditure forecast level that would trigger a degression. This does not reflect expected actual spend on the GGSS (see the Expenditure forecast methodology for more detail). The next Expenditure Forecast Statement will be published on 1 September 2023 simultaneously with the GGSS Annual Tariff Review (ATR). It will not trigger a tariff degression, as the ATR informs a decision to increase, decrease or hold tariffs, taking precedence in setting tariffs from 1 October. The degression process then works as normal for the quarter ending 31 October, with the Statement published by 1 December and a degression, if applicable, active from 1 January 2024.
The Green Gas Support Scheme: budget management page provides additional information on the budget management policies for the GGSS.
If you have any queries regarding this statement, please email greengasoperations@energysecurity.gov.uk with the subject ‘GGSS – expenditure forecast statement’.
Expenditure forecast statement
The forecast and degression threshold
The Green Gas Support Scheme Regulations 2021 require that the Department for Energy Security and Net Zero (DESNZ) publishes a quarterly forecast of expenditure on the scheme.
The Expenditure Forecast is used to assess whether a tariff degression will take place in any given quarter by comparing it to the scheme’s Expenditure Degression Threshold.
Each quarterly Expenditure Forecast and Degression Threshold figure is for spend over 12 months from the end of the quarter. The statement for the quarter ending 31 January covers expenditure to 31 January the following year, for the quarter ending 30 April until 30 April the following year, and so on.
Table: Schedule for Expenditure Forecast Statements and tariff change
| Quarter ending | Publication of Expenditure Forecast Statement and, if applicable, Tariff Change Notice | Ofgem publishes tariff | Tariff change takes effect |
|---|---|---|---|
| 31 January | 1 March | 15 March | 1 April |
| 30 April | 1 June | 15 June | 1 July |
| 31 July | 1 September (simultaneously with the Annual Tariff Review) | 15 September | 1 October |
| 31 October | 1 December | 15 December | 1 January |
If forecasted spend exceeds the scheme’s Expenditure Degression Threshold for a quarter, then this triggers a tariff rate degression. A degression reduces all scheme tariffs by 10% compared to the previous rates. All applications that have had a Stage 1 application approved prior to a degression will have been issued a Provisional Tariff Guarantee Notice (PTGN), which means they are guaranteed the tariff rate in place at that time should they become fully registered on the scheme.
If a degression is triggered, then the Department for Energy Security and Net Zero will also publish a Tariff Change Notice simultaneously with the Expenditure Forecast Statement. The new tariff rate and start date will be published by Ofgem by the 15th of the month following the publication of the Forecast Statement, either 15 March, 15 June, 15 September, or 15 December. The tariff change will come into force on the first day of the following month.
Expenditure Degression Thresholds are reviewed and can be revised annually following the GGSS’s Annual Tariff Review, published by 1 September each year, with changes taking effect subsequently from 1 October. The degression thresholds are published in Expenditure Forecast Statements and on the GGSS budget management page.
The GGSS is open to new applicants until 30 November 2025; tariff degressions cannot occur once the scheme application period has closed.
Expenditure forecast methodology
The Expenditure Forecast figures are based on expected maximum spend on all “relevant producers” as defined in the Green Gas Support Scheme Regulations 2021 (Regulation 17), meaning all those that, at the least, have a “pending tariff guarantee”, meaning they have passed Stage 2 of the application process and not had the tariff guarantee or their scheme registration rejected or withdrawn.
Spend for each plant is calculated based on its “eligible biomethane” volume, meaning the amount of biomethane that a participant is or will be entitled to supply if the application is fully accredited. In effect, this means that the forecast is based on the full tariff amount that would be paid to a plant if it injected gas at its full eligible capacity from the date it is awarded a tariff guarantee.
The spend forecast increases as more applications advance through the application process and accreditations are granted. It differs in its approach to that used to set the GGSS scheme budgets, which includes expected spend on plants regardless of whether they have yet applied and is a forecast of actual spend using Production Factors rather than taking the full value of the eligible capacity (more details available on the GGSS Budget Management page).
This quarter
This Expenditure Forecast Statement forecasts spend for 12 months from 1 May 2023.
The table below shows the latest expenditure forecast and previous quarters’ forecasts as compared to the current Expenditure Degression Threshold. It confirms the quarters in which degressions have been triggered.
This Statement’s expenditure forecast is £43.50 million, with ten applications having passed Stage 2 of the application process (see Expenditure forecast methodology). The forecast reflects only the progression of applications, not the expected actual spend on the scheme.
Table: GGSS Expenditure Forecasts and Expenditure Degression Threshold, as at 1 June 2023
| Quarter ending | Forecast expenditure (£M) as at 01/06/2023 | Expenditure Degression Threshold (£M), as at 01/06/2023 | Has the threshold been breached (YES/NO) |
|---|---|---|---|
| Date of final day in the quarter | Expected expenditure per quarter based on data provided by Ofgem | This is the expenditure forecast level that triggers a tariff degression | Indicator variable |
| 31/01/2022 | 0.00 | - | NO |
| 30/04/2022 | 32.51 | 81.24 | NO |
| 31/07/2022 | 33.95 | 92.44 | NO |
| 31/10/2022 | 35.69 | 103.80 | NO |
| 31/01/2023 | 36.17 | 115.34 | NO |
| 30/04/2023 | 43.50 | 127.05 | NO |
| 31/07/2023 | - | 139.90 | - |
| 31/10/2023 | - | 152.89 | - |
| 31/01/2024 | - | 166.00 | - |
| 30/04/2024 | - | 179.43 | - |
| 31/07/2024 | - | 193.33 | - |
| 31/10/2024 | - | 207.36 | - |
| 31/01/2025 | - | 208.39 | - |
| 30/04/2025 | - | 209.42 | - |
| 31/07/2025 | - | 210.46 | - |
| 31/10/2025 | - | 211.50 | - |
Graph of scheme expenditure and degression thresholds
The graph below shows the current scheme Expenditure Degression Thresholds and expenditure forecasts.
Scheme background
The Green Gas Support Scheme (GGSS) is a government environmental scheme that provides financial incentives for the injection of biomethane from new anaerobic digestion plants into the gas grid to increase the use of green gas, thereby helping to reduce emissions. During peak years of production, biomethane plants incentivised by the GGSS are forecast to produce enough green gas to heat around 200,000 homes. We expect the GGSS to help support high quality jobs in the renewable energy sector.
Registered participants on the scheme will receive quarterly payments over a period of 15 years. Payments are based on the amount of eligible biomethane that a participant injects into the gas grid.
The scheme is open to applicants in England, Scotland and Wales for four years from 30 November 2021. It follows the Non-Domestic Renewable Heat Incentive (NDRHI) scheme which closed to new applicants on 31 March 2021.
The GGSS is funded by a levy, the Green Gas Levy (GGL), which is paid by energy suppliers according to the number of meters they supply.
The GGSS policy is set by the Department for Energy Security and Net Zero and the scheme is administered by Ofgem.
Find more information about the GGSS and the GGL:
- Green Gas Support Scheme: budget management
- Future support for low carbon heat consultation outcome
- Apply for the Green Gas Support Scheme
- Proposals for a green gas levy consultation outcome
- Green Gas Levy (GGL): rates and exemptions notice
Glossary
- Anaerobic digestion - a biological process by which organic matter is broken down by bacteria releasing biogas, which can then be treated and upgraded to biomethane
- Assessment dates - These are the dates the Department for Energy Security and Net Zero refers to when calculating forecast expenditure over or reporting expenditure. The assessment dates are the final days of each quarter. The relevant dates are: 30 April, 31 July, 31 October and 31 January in any year.
- Biogas – a gas mixture of methane, carbon dioxide and small amounts of other gases produced by the anaerobic digestion process.
- Biomethane – pure or near-pure methane gas, produced by treating biogas to upgrade it, removing the CO2 element and other gases.
- Data (from Ofgem) - This is data provided to the Department for Energy Security and Net Zero by Ofgem detailing the number of applications it has received for accreditation, as well all installations it has already accredited by each assessment date.
- Forecast expenditure - These are estimates by the Department for Energy Security and Net Zero of the cost of GGSS payments in a quarter. The forecast reflects all applications for systems installed but does not include failed and rejected applications.
- Forecast expenditure threshold - This is a spending threshold which if exceeded will lead to a tariff reduction of 10%.
- Meter – an individual measuring point for determining the amount of gas supplied to a premises. Energy suppliers charge for supplying each meter.
- Regulations - The Green Gas Support Scheme Regulations 2021.
- Tariff Change Notice - This is a quarterly statement published by the Department for Energy Security and Net Zero which sets out whether any tariffs will be reduced in the next tariff period. The Tariff Change Notice must be published on the GOV.UK website by 1 June, 1 September, 1 December and 1 March in any given year. It will accompany the Expenditure Forecast Statement and be published on the same gov.uk webpage.
- Tariff period - This is a 3-month period commencing 1 January, 1 April, 1 July or 1 October in any given year.
- Tariffs – payments made to accredited producers of biomethane for volumes injected into the gas grid.
- The Levy – the green gas levy, which funds the GGSS. The levy is charged on energy suppliers according to the number of energy meters they supply. It has been charged since 1 April 2022.