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Ofgem releases guidance on competing biomethane scheme claims

Wednesday, 03 November 2021

On 2 November, the UK Office of Gas and Electricity Markets (Ofgem) released their decision with final guidance on 'Further validation of NDRHI/RTFO interaction by biomethane producers'. The document details the process regarding audits to verify the interaction between the two schemes, to mitigate double claiming for a given volume of produced biomethane.

The initial proposal was open for comment earlier this year; the complete timeline:

  • 17 June 2021 - consultation open to public
  • 30 July 2021 - consultation closed
  • 2 Nov 2021 - publication (now)
  • (1 April 2022) - NDRHI/RTFO validation rules come into force

For respondents were noted:

  1. The Association for Renewable Energy and Clean Technology (REA)
  2. Green Gas Certification Scheme (GGCS)
  3. Northumbrian Water Limited (NWL)
  4. The Anaerobic Digestion and Bioresources Association (ADBA)

It should be noted that these respondents collectively represent several stakeholders in the UK green gas sector, particularly in the case of the GGCS.

Key points

  • As per prior arrangements, quarterly NDRHI claims and declarations for NDRHI/RTFO to Ofgem are expected.
  • The Annual Sustainability Audit Report is to incorporate this information and submitted to Ofgem via the RHI Register. The summary should include details of auditor, scope of work and fraud/error prevention measures.
  • All registered BM producers are expected to provide annual audit (ISAE 3000 or equivalent) to verify interaction. This requirement applies regardless of whether RTFO is claimed or not.
  • NDRHI/RTFO validation (as part of ASA) to be determined before 1 April 2022.
  • Evidence to be provided includes sale documentation, injection data including GEMINI system data.
  • Some difficulties where gas is on-sold to parties who are unable to retain or present evidence regarding the whole contractual chain. The decision document in this case suggests a reasonableness test in taking measures to prevent double claims.
  • Non-compliance may result in support payments being withheld.
  • Ofgem reserves the right to request further evidence.

The full decision document can be found here.

Grid Injection (NDRHI) versus Transport (RTFO)

Renewable Gas Guarantees of Origin aside, biomethane producers are able to be compensated in the way of a feed-in subsidy (via the NDRHI), or they can receive Renewable Transport Fuel Certificates (RTFCs) via the RTFO scheme.

The degree of compensation for producers via the two schemes is difficult to compare; while the NDRHI has prescribed rates for volumes produced, RTFC value is determined by the market.

Generally, RTFCs become more attractive where biomethane from waste/residues is concerned, as the resulting fuel is considered advanced and is eligible to receive twice the number of certificates which would normally be granted for a given volume.