In February 2022, we published an article based on European Biogas Association data showing that biomethane had become cheaper than natural gas by as much as 30% — a striking claim at a time when the Russian invasion of Ukraine had sent UK wholesale gas prices spiralling to historic highs. Four years on, the energy landscape looks very different. This article reassesses where biomethane stands today.
What Happened to UK Gas Prices?
The backdrop to that 2022 article was extraordinary. UK wholesale gas prices peaked above 500 pence per therm in August 2022 — more than ten times the pre-crisis norm. For a brief period, biomethane production costs genuinely undercut natural gas on a straight price comparison, and that opened an important conversation about energy security and renewable gas.
The crisis has since partially unwound. UK National Balancing Point (NBP) prices fell significantly through 2024 and 2025, finishing 2025 roughly 40% lower year-on-year. Heading into 2026, wholesale gas has been trading broadly in a 60–90 pence per therm range — still well above the pre-2021 average of around 40–50p/therm, but a long way from the crisis peaks.
More recently, renewed geopolitical tension in the Middle East and disruption to Strait of Hormuz LNG shipments has pushed prices back above 115p/therm, illustrating just how volatile this market remains.
Where Does Biomethane Production Cost Stand Now?
The honest answer in mid-2026 is that it is complicated. UK biomethane production costs are currently estimated at around £77/MWh by the Anaerobic Digestion and Bioresources Association (ADBA), with the European Biogas Association quoting a range of £50–£95/MWh depending on feedstock and technology. At the lower end of that range — and with European gas contracts for 2026 averaging around 32–36 euros per MWh — biomethane can still be competitive. At the higher end, it relies on policy support to bridge the gap.
This is a more nuanced picture than the clean 30% price advantage we reported in 2022. The difference is not that biomethane has become more expensive; production costs have broadly held or declined as the industry scales. The difference is that natural gas prices have retreated from crisis levels, narrowing or reversing the cost advantage depending on which part of the market you are looking at.
The UK Policy Response: Green Gas Support Scheme Extended
Recognising that biomethane needs continued support to remain investable, the UK Government announced in December 2025 that the Green Gas Support Scheme (GGSS) will be extended by two years, with the commissioning deadline pushed to 31 March 2030. The announcement was made by Lord Alan Whitehead, Minister of State for DESNZ, at the ADBA National Conference.
This matters for plant operators and investors. The GGSS provides tariff payments for eligible biomethane injected into the gas grid, with tariffs inflation-linked annually. The extension gives new AD projects more runway to commission — and it arrives at a timely moment, coinciding with the rollout of mandatory separate food waste collections across England, which is expected to significantly increase the availability of organic feedstock for AD plants.
ADBA Chair Chris Huhne described the extension as “exactly the certainty the industry needed,” adding that it demonstrates the Government's recognition of biomethane's role in net zero and energy security.
A Landmark Moment: The First Unsubsidised Biomethane Plant
Perhaps the most significant signal of the sector's maturity in the UK came in mid-2025, when the first unsubsidised biomethane-to-grid plant was commissioned — the Moor Bioenergy facility operated by Future Biogas. This is a milestone that would have seemed unlikely during the RHI era: a plant injecting into the gas grid without a government tariff to make the economics work.
ADBA analysis suggests this model could become more common if mechanisms are developed to allow large gas users to reduce their Emissions Trading Scheme charges through the use of mass-balanced biomethane — which could make offtake agreements commercially viable for industrial buyers who currently sit on the fence.
A New Price Benchmark for UK Biomethane
A further sign of the market's growing maturity is the launch in September 2025 of daily price assessments for certified UK waste feedstock biomethane Guarantees of Origin (RGGOs) by Platts, part of S&P Global Commodity Insights.
This reflects increasing tradability of UK Renewable Gas Guarantees of Origin — particularly those with ISCC certification — and marks an important step towards biomethane becoming a properly priced, liquid commodity rather than a niche subsidised output.
The Bigger Picture Has Not Changed
What has not changed is the structural argument. The UK's dependence on gas imports has grown as domestic production has declined. LNG competition from Asian buyers, geopolitical instability near key shipping routes, and the ongoing separation of European markets from Russian pipeline supply all point to a gas market that will remain volatile and structurally elevated compared to pre-2021 norms.
Meanwhile, biomethane is domestically produced, uses waste feedstocks that would otherwise require disposal, and generates a digestate co-product with real agricultural value. It can move through the existing gas grid without new infrastructure. And the DNV's 2025 UK Energy Transition Outlook warned that the UK risks missing its legally binding net-zero targets partly due to a lack of a clear plan for decarbonising the 23 million homes currently on gas heating — a gap that biomethane is well-placed to help fill, at least as a transitional fuel.
What Should AD Plant Operators Take From This?
If you are operating an AD plant considering an upgrade to biomethane injection, the 2022 price parity argument has shifted — but it has not disappeared. The GGSS extension to 2030 maintains a viable support pathway. The first unsubsidised plant demonstrates that the economics can work without a tariff under the right conditions. And the launch of formal RGGO price assessments means that the value of certified green gas is becoming increasingly transparent and tradable.
The volatility that makes natural gas prices unpredictable is the same volatility that periodically makes biomethane highly competitive. Operators who keep close track of current market prices — including certificate values as well as commodity gas — will be best placed to maximise the return on their output.
For the original 2022 analysis based on EBA data, see our article: Biomethane Price Now Lower than Natural Gas by 30%. The situation described there was real — it just reflected a specific and extraordinary moment in energy market history.
