UK green gas scheme doubles participants but niche challenges remain

• Registered biomethane plants increased from seven to 13 during the year, producing 649 GWh since the scheme began.
• Ofgem received 68 initial tariff guarantee applications, but only 23 secured guarantees and 13 completed registration.
• Stronger recent demand has almost exhausted parts of the budget, creating a queue for further applicants.

The number of plants registered under Britain’s Green Gas Support Scheme has almost doubled during the latest scheme year, although their combined output still supplies the equivalent of only 0.2% of British households.

Ofgem said 13 anaerobic digestion plants had completed registration by the end of March, up from seven a year earlier.

Since the scheme opened in November 2021, those facilities have injected 649 GWh of eligible biomethane into the gas grid. That is equivalent to the annual heating consumption of 56,435 typical homes.

Participants have received almost £40 million in support, including £13.6 million during the year to March 2026. The payments are funded through the Green Gas Levy applied to licensed fossil gas suppliers.

Ofgem collected £59.38 million from suppliers during the year. The difference between levy receipts and immediate participant payments does not represent a permanent surplus: unused funds are carried forward and taken into account when future levy rates are calculated.

Ofgem executive director for delivery and schemes Neil Lawrence described the programme as “low-volume, high-impact”. The regulator estimates that peak production could eventually provide biomethane equivalent to the consumption of around 250,000 homes a year and save up to 10.7 million tonnes of carbon dioxide over the supported projects’ lifetimes.

Policy test

The application data shows the difficulty of converting developer interest into commissioned plants. Ofgem received 68 initial tariff guarantee applications, including reapplications. Fifty received provisional notices, but only 23 progressed to a firm tariff guarantee and 13 completed registration by the reporting deadline.

Ten initial applications were rejected, mainly because developers could not provide sufficient evidence of planning permission or a grid connection agreement. Later applications were rejected or revoked where developers could not demonstrate financial close.

Meanwhile, 20 stage-two applications were cancelled. Ofgem said supply chain problems and site-specific delays were the main causes, although affected applicants subsequently resubmitted with revised injection dates.

The remaining pipeline should increase production. Tariff guarantees have been issued to 15 projects in England, seven in Scotland and one in Wales. Of the ten guaranteed projects awaiting full registration when the data was compiled, two had begun injecting and the rest expected to start by August 2027.

Demand has also accelerated since the reporting period. Ofgem said applications received during the first quarter of the new scheme year had almost fully allocated the available budget for a later delivery year, forcing it to create a queue. New projects can progress only if budget becomes available through withdrawals or rejected applications.

The scheme remains open to tariff guarantee applications until 31 March 2028. DESNZ intends to extend the deadline for commissioning and full registration to March 2030, subject to parliamentary scrutiny. Projects completing after March 2028 would receive support for a shorter period, ending no later than March 2043.

Biomethane cannot replace natural gas at national scale. Around three quarters of British households remain connected to mains gas, while the programme’s 649 GWh of cumulative output is small beside annual gas consumption.

Its value lies in using food, agricultural and industrial waste to produce a fuel compatible with existing infrastructure. Biomethane may prove particularly useful where electrification is difficult and where capturing waste methane produces additional climate benefits.

Nevertheless, a nearly exhausted budget indicates that developers see a viable opportunity. The policy test is whether the queue turns into operating plants quickly enough and whether the government creates a credible post-2030 framework without encouraging unsustainable feedstock demand.