Notice

Green Gas Support Scheme expenditure forecast statement for the quarter ending 31 January 2024

Updated 29 November 2024

Applies to England, Scotland and Wales

This is the quarterly Expenditure Forecast Statement for the Green Gas Support Scheme (GGSS) for the quarter ending 31 January 2024. It is based on scheme data as of the end of the quarter. It is published in accordance with regulation 20 of The Green Gas Support Scheme Regulations 2021.

This quarter’s Expenditure Forecast, which is for spend for 12 months from 1 February 2024, is £53.09 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 June 2024, covering the quarter ending 30 April 2024. A degression, if applicable, will then be active from 1 July 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 Threshold.

Each quarterly Expenditure Forecast and Expenditure 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)	NA	NA
31 October	1 December	15 December	1 January

If forecasted spend exceeds the scheme’s Expenditure 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 DESNZ 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 on 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 (ATR), published by 1 September each year. ATRs which can be found on the GGSS Annual Tariff Review page. New thresholds, if they are changed, then come into force on 1 October, applying to the next quarterly assessment. Degression thresholds are published in Expenditure Forecast Statements and also on the GGSS budget management page.

The GGSS is open to new applicants until 30 November 2025, though we recently announced our intention to extend this period to 31 March 2028. Tariff degressions cannot occur once the scheme 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 plants if they injected gas at their full eligible capacity from the date they are 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 February 2024.

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 £53.09 million, with 12 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 March 2024

Quarter ending	Forecast expenditure (£M) as at 01/03/2024	Expenditure Degression Threshold (£M), as at 01/03/2024	Has the threshold been breached (YES/NO)
Date of final day in the quarter	Expected expenditure for following 12-month period 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	54.35	139.90	NO
31/10/2023	53.24	152.89	NO
31/01/2024	53.09	166.00	NO
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 expenditure forecasts and thresholds

This graph 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 233,000 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 has been open to applicants in England, Scotland and Wales since 30 November 2021. It followed 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 (DESNZ) 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 - the dates DESNZ 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) - data provided to DESNZ 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 - estimates by DESNZ 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 - 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 - a quarterly statement published by DESNZ 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 - 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 was charged from 1 April 2022