Notice

NDRHI 2022-2023 budget caps for shared ground loop modified capacity and COVID extension budget cap increase for other technologies

Updated 6 April 2023

Sectoral shared ground loop modified capacity budget caps for 2022/2023

Following closure of the non-domestic renewable heat incentive (NDRHI) to new applications on 31 March 2021, participants of installations that are accredited as shared ground loops (SGL) or installations that would become defined as such following a modification of capacity are, subject to certain conditions, able to continue to modify capacity of their installations. Details of this policy were set out in the NDRHI: ensuring a sustainable scheme - government response, January 2021.

Plans to modify capacity are required to be submitted to Ofgem, the scheme administrator, by participants on or before 31 March 2023.

To control overall scheme expenditure, on 5 August 2021, the Secretary of State introduced a £15 million budget cap for the cost of modified capacity (MC) applications notified in 2021/2022.

Following consultation, on the 21 February 2022 the Secretary of State was given the power to set new budget caps for SGL MC applications in 2022/2023 and 2023/2024 on a sectoral basis; one covering ‘domestic’ applications and another covering ‘other’ applications.

To further control expenditure a shared ground loop modified capacity budget cap of £4 million has been introduced for ‘domestic’ applications and £1 million for applications from ‘other’ sectors for 2022/2023.

Ofgem will assess applications to modify capacity in order of receipt. Total potential expenditure will be calculated on the expected total additional modified capacity notified following all modifications.

The inflation estimates and load factor used to determine modified capacity application affordability can be found in the RHI budget caps document.

If there are insufficient funds in the relevant 2022/2023 modified capacity sectoral budget cap to fund the total additional expenditure attributed to a plan then it will be queued, in order of receipt, and could be allocated funding if plans ahead of them are rejected, withdrawn or if further budget becomes available because of an increase to the cap. This may mean that a large application could remain in the queue while smaller applications could proceed.

Full details of the modified capacity application process can be found in Ofgem’s Guidance Volume 2, in the modified capacity for shared ground loops section.

Ofgem will publish regular updates on the budget headroom for applications for modified capacity. In the second half of 2022 to 2023 the Secretary of State will review the need for SGL MC budget caps in 2023/2024.

COVID extension ‘All other non-TG eligible technologies’ budget cap

The November 2020 government response on NDRHI support and COVID-19 response contained details of a mechanism to aid non-Tariff Guarantee (TG) eligible projects impacted by COVID-19 related delays that had invested resource into project development prior to 17 August 2020 (the date of the Notice that initially announced these proposals).

This mechanism provided these projects with an additional 12 months after scheme closure (on or before 31 March 2022) to commission and submit a properly made full application for accreditation, providing that they submitted a properly made ‘extension application’ to the scheme during a window in March 2021. Following a further announcement on 19 January 2022 those projects that did so and are not eligible for the Green Gas Support Scheme now have until 31 March 2023 to commission and submit a properly made full application for accreditation.

Technology specific budgets for extension applications were set in line with the technology profile of NDRHI deployment trends to ensure that no one individual technology could utilise an oversized portion of the total budget for this measure and block other technologies from having fair access to this funding.

Since the introduction of the mechanism the department has regularly reviewed latest deployment data and forecasts resulting in an increase in the total annual budget for these applications and certain technology-specific budgets being announced in December 2020 and in May 2021.

Following a review of the latest deployment data and forecasts the department has now decided to increase the technology-specific budget for ‘all other non-TG eligible technologies’ by £178,000 to facilitate the progression of queued applications. The application window is now closed but properly made applications that are currently in the queue will be processed if the increased allocation means there is sufficient budget. All other details of this mechanism remain as set out in the November 2020 Changes to NDHRHI support and COVID-19 response publication.

Ofgem will process the queued applications in the order in which they were received until all are funded or all available funds under the budget cap have been allocated.