Non-domestic RHI: introduction of a shared ground loop modified capacity budget cap
Published 5 August 2021
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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 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 NDRHI: ensuring a sustainable scheme – government response, January 2021.
Plans to modify capacity, and information pertaining to the total intended capacity of the system, are required to be submitted to Ofgem, the scheme administrator, by participants on or before 31 March 2023.
To control overall scheme expenditure, the Secretary of State has the power to introduce a budget cap for the cost of modified capacity should the total potential spend attributed to plans to modify capacity represent a risk to overall scheme affordability.
A shared ground loop modified capacity budget cap of £15 million has been introduced for the total annual potential expenditure related to modified capacity plans notified to Ofgem in 2021/2022.
Ofgem will assess applications to modify capacity in order of receipt. Total potential expenditure will be calculated based on the expected total installation capacity of the plant 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 2021/2022 modified capacity budget cap to fund the total potential 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a plan then it will be queued, in order of receipt, and could be allocated funding if plans ahead of them are rejected, withdrawn or if further budget becomes available as a result of an increase to the cap.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 section at paragraph 5.6 onwards.
Ofgem will publish regular updates on the budget headroom for applications for modified capacity.
We will consult industry shortly on options for managing modified capacity budget caps in subsequent years.