Notice

29 November 2021: Proposals to extend NDRHI commissioning deadlines for existing tariff guarantee and extension applications

Updated 3 April 2022

Applies to England, Scotland and Wales

Summary

Government has implemented multiple measures to support Non-domestic Renewable Heat Incentive (NDRHI) projects through challenges related to the COVID-19 pandemic. We are now looking to implement further support for these projects, by providing an additional 12-month extension for the NDRHI’s remaining tariff guarantee (TG) and extension application deadlines for non-biomethane technologies.

Policy background

The NDRHI closed to new applicants on 31 March 2021, as outlined in the government response NDRHI – Ensuring a Sustainable Scheme.

Government implemented several measures to support plants through COVID-19, including extending the second tariff guarantee allocation (TG2), introducing a third tariff guarantee allocation (TG3) and allowing COVID-19 affected plants to apply for a year longer to commission through an ‘extension application’. We also introduced modified capacity for shared ground loops, to allow projects to commission their heat capacity in stages rather than all at once (see the consultation outcome for more information).

We recognise the difficulty some projects have continued to face in meeting their commissioning deadlines, due to a range of factors including the COVID-19 pandemic. We want to ensure projects that otherwise would have been able to commission by 31 March 2022 are not prevented from doing so due to extenuating factors.

29 November 2021: Proposal for an extension

We propose to extend the deadline for commissioning for eligible TG2, TG3 and extension applications from 31 March 2022 to 31 March 2023. This extension will only affect applicants who already have a Tariff Guarantee or have successfully made an extension application. Tariff payments will continue to cease by 31 March 2041. This extension does not affect withdrawn Tariff Guarantee or extension applications.

We judge that a 12-month extension to deadlines, until 31 March 2023, will give sufficient time for projects currently experiencing disruption to be able to successfully commission.

All NDRHI technologies with eligible TG2, TG3 and extension applications will be eligible for these proposed extensions, except for biomethane. This is because NDRHI biomethane Tariff Guarantee applicants are able to apply to the successor Green Gas Support Scheme (GGSS). As set out in our GGSS Government Response, current NDRHI tariff guarantee applicants can apply for the GGSS by either withdrawing their NDRHI tariff guarantee application before the coming into force date of the GGSS regulations, or by letting their tariff guarantee application time-out.

Question: Do you agree with our proposal to extend TG2, TG3 and extension application deadlines for non-biomethane technologies by 12 months to 31 March 2023? Please explain your reasoning and include any evidence you think is relevant.

Further details on taking forward either of these measures will be published in a further government publication. Please send any responses to [email protected] by 20 December 2021.

19 January 2022: Government response

We received 35 responses to this question: all expressed strong support for the proposals. Respondents agreed that the delays caused by COVID-19 had made the commissioning of Non-Domestic Renewable Heat Incentive (NDRHI) projects harder to deliver. Issues cited included:

• shortages in materials
• parts and labour
• increased delays in supply chains

Some respondents also highlighted that while the Green Gas Support Scheme (GGSS) was a positive successor scheme for most NDRHI biomethane projects, some projects at risk from COVID-19 delays would be ineligible for the GGSS.

We therefore will implement a 12-month extension to the commissioning deadline, from 31 March 2022 to 31 March 2023.

We will apply this extension more broadly than our original proposal:

• it will apply to all NDRHI technologies with eligible TG2, TG3 or extension applications, including to biomethane projects who could not become eligible for the GGSS
• it will not apply to NDRHI biomethane projects that would become eligible for the GGSS if their current TG application timed out

The extension applies automatically to existing eligible applications. Ofgem will provide guidance on what evidence biomethane plants should submit to show that the project would not become eligible for the Green Gas Support Scheme, such as evidence of their equipment being pre-used.

The NDRHI will remain closed to new applications. Cancelled or withdrawn applications will not be re-opened or extended.