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Burned. Sam McBride
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The non-domestic RHI had always been intended as the first stage of a larger scheme, which would allow domestic applications and also include further technologies. With pressure to spend the RHI money on offer from the Treasury – and to hit the EU targets – Hepper again turned to CEPA for advice. Having paid £100,000 for the flawed initial advice, DETI now agreed to spend about the same again for advice on how to get more people into the scheme. CEPA delivered its 131-page report in June 2013 and for those who read it there were a series of warning signs. The consultants raised one of the most flagrant abuses of the non-domestic RHI. The warning, on page 66 of the detailed report, came as CEPA set out several risks. Among them are problems with metering which ‘broadly relate to the range of issues encountered by the non-domestic RHI to date’. Under the heading ‘useful heat’, it went on to say: ‘With direct metering, properties may be heated to higher than best practice levels, windows opened, etc., if the tariff is tied to heat generated. In this case, the tariff could exceed operating costs.’ It was an unvarnished articulation of the sort of practices the industry had immediately spotted were being incentivised by DETI.
Throughout the report, the consultants also warned that the department could not afford the payments, which would be necessary if it was to reach its target of securing 10% of renewable heat by 2020: ‘In short, if DETI is spending more than 4.2p/kWh, it is not going to be able to afford the 10% target with its assumed budget. In that regard, we note that many of the tariffs in this report are above 4.2p.’
The report also reiterated the cost of wood chip and wood pellets – the two main biomass fuel sources – and said that the prices collated in its initial report had been substantiated by a Northern Ireland stakeholder group with which it had discussions. Not only was this in itself another chance for DETI to be reminded of the gulf between the cost of fuel and the level of its subsidy, but the report recommended that, as part of what were meant to be regular reviews of the non-domestic RHI, DETI specifically review the cost of biomass fuel.
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By December 2013, RHI had been open for a year in Northern Ireland. But despite the riches on offer, just 85 applications had been made to the scheme. Some in DETI were disappointed, and there was an understandable sense that RHI was underperforming. At least, that’s what the story was when the scandal erupted in 2016. It was the explanation offered by both Foster and her civil servants for why cost controls had not been prioritised. However, had the numbers been examined in more depth, they would have realised that was not quite the full story. The department was not comparing like with like. They were comparing Northern Ireland’s fledgling scheme with the more established GB scheme at that point. Had they compared their scheme with the GB scheme at the same stage, a year after it had been set up, they would have seen that Northern Ireland had a higher pro-rata take-up than GB.
On one reading, Stormont was lulled into a false sense of security by the mistaken belief that there was limited demand for its scheme and, whether consciously or subliminally, this contributed to cost controls being delayed. But was that really what happened? Several pieces of evidence suggest that DETI may have known that RHI was performing well.
In December 2013, Foster wrote in reply to another letter from Barker, the Whitehall minister. She told him: ‘The Northern Ireland RHI has only been in operation for 12 months, yet there has been an encouraging level of uptake, with the number of applications for the Northern Ireland scheme being around 7% of the number received by the GB scheme during its first year of operation.’ Given what Foster would later claim about low uptake helping to explain the inaction over implementing cost controls, that is a remarkable sentence. The 7% quoted is far above Northern Ireland’s 2.8% share of the UK population. Foster was now clearly aware that the uptake on her scheme was more than double what had been experienced in GB at the same stage of that scheme’s life. Perhaps that was in her mind – or in the mind of the civil servant who drafted the letter for Foster – when she also assured Barker that among the issues being considered by DETI was ‘cost control’.
The following month, Foster was asked in the Assembly to provide an update on the scheme. Oozing confidence, she gave no hint of alarm or disappointment. Foster told MLAs that the performance of her scheme was better than that in GB, and said that while Northern Ireland accounted for less than 3% of the UK heat demand, the number of Northern Ireland applications equated to 6.8% of GB applications. That, Foster said with the sort of clarity that gave many observers the idea that she was a competent minister, ‘demonstrates that the Northern Ireland scheme is punching above its weight’. Four months later, in a briefing which went to Foster, the then head of DETI’s energy division, John Mills, told her:
The current NI uptake compares favourably with the GB uptake at the same point in time on a pro-rata basis. The NI scheme is currently tracking at 7.2% of GB applications, 7.2% of accreditations and 4.1% of heat capacity, despite the NI heat market being only 3% of the UK market. This suggests that the NI RHI could experience a higher volume of applications but for smaller installations.
He was certainly right about that. As 2013 ended, the first year of RHI had seen multiple explicit warnings about the fledgling scheme or moments that ought to have prompted reflection by DETI. Rather than move to address the myriad problems with the subsidy, the department was putting all of its energy into expanding the scheme. But already there had been another seismic warning – a warning so significant that it would help to topple the future First Minister.
CHAPTER 7
WHISTLING IN THE WIND
It was a Monday morning and Janette O’Hagan was in the office of Okotech, her small technology company, in Antrim. The business had been set up the previous year and was centred around the development of energy - efficient heating controls called heatboss. The product enabled heating to be wirelessly controlled, switching the heat on and off in individual rooms remotely, rather than heating an entire property when much of it may be empty. Her pitch to businesses was simple: buy my product and expect to pay 30% less for heat. But on the morning of 26 August 2013, O’Hagan was not marketing her fledgling company’s product to potential customers. She had stumbled across something hard to believe, but because it was impacting her business she quickly came to see that it was true.
While most businesses were interested in discovering how they could save money on their heating bill, companies with biomass boilers seemed to have no interest. Baffled, O’Hagan dug into the issue. She had picked up in conversations at industry events that these businesses were receiving the RHI subsidy. She recalled:
The more I was hearing, the more I was getting more convinced, so I looked online, and I went onto the DETI website and looked at the tariffs that were set, and immediately I thought — and I mean immediately — thought that, ‘That can’t be right. You know, that can’t be right. Where is the limit? How do you ensure people are being efficient there?’
And then, whenever I compared it to the GB tariffs and their tiers, and they just seemed to have got it. They got it that, ‘Yes, we have to incentivise people to take up this technology’ … but they knew that there had to be a limit, you know: ‘We have to not incentivise waste’.
This epiphany immediately explained why when she contacted businesses with RHI boilers they were not interested in being efficient because the more that they burned, the more they earned. With scant knowledge of politics, she was unsure what to do. But she was clear that she had to try to alert the authorities to what was happening. Not only was her business suffering as a result of the RHI but she was angry at the thought of such waste being incentivised by government. That Monday morning she decided to go right to the top – to Arlene Foster. O’Hagan sent an email to DETI’s generic email address, marking it for the attention of Arlene Foster. It was a general email setting out her company’s attempts to facilitate energy efficiency and asked for a meeting with Foster to discuss the issue. Moments after hitting ‘send’, she had second thoughts. Would an email to a generic email inbox get picked up? And, if it did, would it ever make its way to the minister?
O’Hagan decided to try another route. Searching the DUP website, she found an email address where Foster could be emailed about