ADBA responds to Green Gas Support Scheme Annual Tariff Review

Green Gas Support Scheme Annual Tariff Review 2024: A Step in the Right Direction, But Is It Enough? 

The Department for Energy Security & Net Zero (DESNZ) has recently published the results of its Annual Tariff Review (ATR) for the Green Gas Support Scheme (GGSS). We welcome the government’s acknowledgement of the challenges facing our industry. However, we must question: do these changes go far enough to support the growth and sustainability of the AD sector? 

Tariff Increases: A Positive Move, But Short of Industry Needs 

We’re pleased to see that the government has increased tariffs across all tiers: 

• Tier 1: 6.69 p/kWh (up from 6.09 p/kWh) 

• Tier 2: 4.16 p/kWh (up from 3.90 p/kWh) 

• Tier 3: 3.88 p/kWh (up from 3.45 p/kWh) 

These increases represent a step in the right direction and show that the government has listened to Industry’s concerns about the inadequacy of current tariff levels. However, with increases ranging from 6.67% to 12.46%, they fall short of fully addressing the 15-18% rise in CAPEX costs over the past two years that we highlighted in our submission. This will not be enough to justify new build AD plants in isolation from other policy changes. 

Cost Pressures: Acknowledged But Not Fully Addressed 

We’re encouraged that the ATR summary acknowledges the cost pressures faced by our members, noting “increases in labour, consumables, and maintenance costs”. This recognition is crucial. However, the tariff increases, all below 13%, do not fully compensate for these rising costs, particularly the 15-18% CAPEX increase we reported. 

Feedstock Challenges: Recognised But Solutions Needed 

The government has taken note of our concerns regarding feedstock availability and associated costs. The ATR summary echoes our message, stating that “respondents cited problems with availability of feedstocks, as well as associated costs, including transport, remaining high whilst revenues have fallen”. While this recognition is important, we eagerly await concrete measures to address these challenges. 

Industry Attractiveness: A Shared Concern 

We’re pleased that the government has acknowledged our assessment of the decreasing attractiveness of AD development. The ATR summary reflects our view, noting that “respondents indicated that overall, the attractiveness of developing anaerobic digestion capacity has decreased in the last year and that tariffs are set too low”. This alignment in perspective is crucial for future policy developments. 

As ADBA, we shall continue to engage with the government to press for further support for our industry. We believe that the AD sector has a crucial role to play in the UK’s journey to net zero, and we require a policy framework that fully recognises and supports this potential.