Gas distribution network Cadent says it has taken a major step towards removing one of the biggest obstacles facing developers of biomethane – the high cost of reinforcing the gas network – by introducing the UK’s first cost-sharing model for entry connections capacity.
The group, the UK’s largest gas distribution network, has confirmed the new network-charging approach with regulator Ofgem.
In areas of the country where network capacity is constrained, the new model will make reinforcement more affordable and accessible, says Cadent. Where a group of customers (developers) are competing for the same capacity, and where required, the new ‘cluster’ model allows for the high costs of reinforcing the gas network to be shared, by developers and across the wider customer base.
To support the shift, the group has opened a two-month ‘Entry Reinforcement Assessment Window’, giving biomethane developers the opportunity to submit connection projects which require reinforcement that could benefit from the new cost-sharing approach. This is open until 6 March.
More information is at cadentgas.com/bio-entry.
Produced from organic waste streams – such as food, manure, waste water and other feedstocks – biomethane today contributes around 7TWh to the UK’s energy supply. More than half (4TWh) is connected into the four networks that Cadent manages, which is equivalent to 351,000 homes heated.
The group said it is aiming to significantly increase this, reaching 20TWh in its four networks by 2035 (equivalent to 1.7 million homes heated).
Current biomethane producers range from individual landowners installing a plant on their farm, to large multinational developers managing portfolios of sites. Both existing biomethane producers seeking to expand, and entirely new sites, can benefit from this new network charging arrangement and ‘clustering’ approach.
A major shift away from “first‑connector pays”
Until now, where network capacity is constrained, the first biomethane developer triggering a reinforcement was required to fund the full cost of making it happen, including wider system upgrades. This was a financial barrier that is known to have stalled or even ended many otherwise viable biomethane projects.
“Following extensive industry engagement and developer feedback, Ofgem has supported Cadent’s proposal to overhaul these charging arrangements”, said a press release.
The new model is said to reduce the financial burden on individual projects by sharing (socialising) a large proportion of reinforcement costs across the wider customer base, up to a cost cap.
Where clustering is possible, reinforcement costs that exceed the cap can now be shared across developers. This enables multiple biomethane projects in a similar area to come forward in tandem, improving cost efficiency and removing a fundamental market barrier.
These reforms are backed up further by Ofgem’s RIIO‑3 Final Determinations, which confirmed an initial £20 million per network “biomethane use‑it‑or‑lose‑it” allowance to support reinforcement. This has a £2 million cap per biomethane connection project.
Howard Forster, Chief Operating Officer, Cadent, said: “Biomethane is one of the fastest, most cost‑effective ways to decarbonise heat today. But the industry has been held back by outdated charging rules that placed the entire reinforcement burden on individual developers.
“This new process – the first‑of‑its‑kind in our industry – moves away from the ‘first‑connector pays’ principle. It creates a fairer, more customer‑centric path for biomethane projects to connect.
“By clustering applications and sharing reinforcement costs, we’re helping unlock the next wave of biomethane growth across our networks.
“We’re encouraging developers to put their hat in the ring. Every application gives us a clearer understanding of where biomethane demand is greatest, which in turn strengthens our evidence base in discussions with Ofgem about future funding and support for reinforcement.
“By stepping forward and applying now, biomethane developers help shape a more coordinated and cost‑efficient approach to reinforcement that benefits the whole sector.”
How the new assessment window works
Where network entry capacity is constrained and reinforcement is required, biomethane developers can submit an application through the dedicated portal.
Once the application window closes on 6 March, Cadent will assess reinforcement requirements and, where possible, cluster applications in close proximity to each other. Developers will be provided with reinforcement cost estimates within 15 days and can then decide whether to proceed with the reinforcement works and associated costs above the high-cost cap.
The gas distribution network also aims to commence reinforcement works with delivery partners by 29 July, with reinforcement constructed in time for the dependent new biomethane connections or expansions to be able to connect at the agreed ‘Gas to Grid’ date.
How can the gas network be reinforced to make this happen?
Cadent said reinforcement can be delivered through several technical approaches, including:
- Meshing: linking parts of the network with new pipe to access additional capacity.
- Smart Network Control: installing smart pressure management technology to prioritise biomethane injection.
- Reverse Compression: moving gas from lower‑pressure constrained areas into higher‑pressure tiers to free up injection capacity.
