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CASH FOR ASH BEGINS
From the very first biomass boiler he installed, Neil Elliott knew that RHI facilitated a simple practice: burn to earn. The plain-spoken Fermanagh businessman had hired an installer, who had worked on the GB RHI, to assist his small renewables firm with its first contract for an RHI boiler. Elliott recalled the installer’s question: ‘What’s tier one? And what’s tier two?’ The baffled businessman replied: ‘What’s a tier?’ The installer changed the question: ‘When do you fall off?’ Elliott replied: ‘No, there is none in Northern Ireland. It’s open.’ Bewildered, the installer asked: ‘What? What do you mean it’s open? There’s no cap?’ Elliott later recalled:
We’re [saying to him]: ‘No. It’s just as much as you …’ And suddenly, everyone then realised, you know, ‘I’m paying 4p a kilowatt-hour for fuel here, and I’m getting possibly 6p at that stage or whatever, so I’m making a third here. And that’s it. And I can just use it as much as I want’. So, energy efficiency just went out the window and it was just essentially: ‘Use it as much as you can. You can’t lose.’
Elliott, an adventurer who in 2006 had led a small team of climbers to the top of Mount Everest, had been in the renewables business for a few years when RHI launched. Speaking with candour to the RHI Inquiry in 2018, Elliott recalled: ‘It just grew and grew and grew, to the point [that] we would have had ten times the staff we had initially – just on the RHI alone. It just became so big. It was incredible.’ But even though he could quickly see the fatal flaw at the heart of the scheme, prospective customers were not always easy to convince that it was a sound investment:
People weren’t aware of it, I suppose, initially. They didn’t understand it. And maybe, somewhat, they didn’t believe it either … one of the first ones we would’ve quoted for was a hotelier, and all his mates were in a hotelier association. They kinda laughed at him and said: ‘Ach sure, that — you couldn’t believe that that’s true’. But whenever the money started flowing from the RHI, they [saw] ‘this thing’s real’. And just the word of mouth got out and it just grew and grew from there.
Elliott said that he took no action to alert DETI to the flaws he could see ‘as we thought that DETI would cap the scheme or amend the scheme to the same scheme as the UK mainland … we did not communicate any potential flaws in the scheme to anyone, but it was widespread knowledge within the renewable industry that the incentive was too good to be true.’ Elliott said that he could not see how the department – or anyone else – was unaware of what was going on in open view. And yet that is what the civil servants and politicians would later claim.
When DETI later attempted at the inquiry to explain how it had failed to understand the biomass gold rush, it initially claimed that there had been a ‘conspiracy of silence’ from the industry. However, Andrew McCormick, who would go on to become the most senior civil servant in DETI, then contradicted that allegation and said that based on what he had come to see he realised there were warnings, but ‘if people aren’t listening, then it’s not much good people trying to speak to them.’ Elliott said that ‘not unless you were blind and deaf’ could anyone have remained unaware of the problem. ‘Any event you went to, all installers were advertising the same thing: cash for ash, earn as you burn. Everyone knew, in the renewable industry, including the customers. The more energy you used, the more you got paid. I can’t understand how anyone could say they couldn’t see that.’ He went on: ‘I can’t understand how anyone could say they didn’t understand, because I’m not superintelligent, so it wasn’t that I knew something that others didn’t. You know, everybody knew that the RHI was what it was.’
Elliott said that at Department of Agriculture events, to promote green energy to farmers, there were so many renewable installers that the organisers had to erect a marquee to fit them all in. The regular events – at which DETI officials were present and met installers – lasted for a large part of a day. Elliott said that installers were openly flogging their wares based on the ultra-lucrative RHI, with slogans such as ‘cash for ash’ prominently displayed. DETI’s Peter Hutchinson, who gave talks at some of the events, said that he did not recall ever seeing such lurid marketing.
The then Sinn Féin minister at the Department of Agriculture was Michelle O’Neill – who would go on to become deputy leader of her party. O’Neill defended her department’s role in advertising the subsidy, telling the inquiry that it had a responsibility to raise awareness of government initiatives relevant to farmers but ‘it was for the DETI minister and department to ensure the scheme was fit for purpose and value for money. It is not the role of a minister or department to scrutinise the work of another minister or department.’ Despite the widespread take-up of the scheme among farmers in particular, O’Neill said: ‘I did not know of any flaws in the scheme and no concerns were brought to my attention before February 2016 [when it was shut].’
Although Elliott was quick to see how attractively open-ended the subsidy was for claimants, he was not the first to do so. Just weeks after the scheme launched in November 2012, Brian Hood of BSH Holdings was openly marketing the scheme as one from which a handsome profit could be made – and marketing it in those terms to Stormont itself. RHI had been open for just over three weeks when Hood wrote to Stormont’s Department of Justice to propose that it use RHI boilers to heat a new police and fire service training facility outside Cookstown.
At that point, the design of the college proposed using two huge one-megawatt boilers to heat the entire site. Hood suggested that instead he could install multiple 99 kW boilers – the maximum size permissible for the most lucrative RHI tariff. As well as the massive financial incentive from RHI, he believed there were valid engineering reasons why multiple boilers would be more efficient, such as reducing the amount of heat lost in underground pipework travelling from two central boilers to multiple buildings around the large site. He told the Department of Justice that the running costs of the heating ‘could be turned into a profit rather than cost’ and calculated that the ‘profit’ would be £44,740 a year. In contrast to the normal heating costs proposed for the training centre, a 20-year heating bill of £2.3 million would be turned into a profit of almost £900,000. The figures were eye-watering.
Hood later said that he had simply read the RHI regulations and then double-checked his interpretation of them with DETI officials who had confirmed that he could do what he thought the law permitted. But those planning the college were sceptical, questioning whether multiple boilers could be installed and qualify for RHI when the heat demand was so great that the planned pair of 1MW boilers would have been too large to qualify. But even if that was technically possible under the RHI regulations, they wrote back to Hood and questioned whether it was ‘appropriate for a Government-funded facility to attempt to exploit possible loopholes in the RHI and recover the benefit’. Hood double-checked with DETI, who said it was fine, but the team responsible for the college came back to again reject his proposal, describing it as ‘manipulation’. Shortly after, one of Hood’s colleagues emailed DUP Finance Minister Sammy Wilson to set out RHI’s benefits and suggest that it could be used in government buildings and schools. In his own hand, Wilson scrawled on the correspondence a message to his officials: ‘Double dutch [sic] to me, but has DoJ [Department of Justice] checked this out. They are notorious for choosing expensive options.’
Hood had difficulty convincing prospective clients that the scheme was as good as his marketing brochures claimed. He recalled that people would say to him: ‘The Government doesn’t pay you to heat buildings … why would they be doing this?’ Hood put his money where his mouth was, becoming the first person to be accredited on the scheme. That milestone would see him stand beside a beaming Arlene Foster while she did something which until the RHI scandal would be most associated with her ministerial career – posing for a public relations photo. In an accompanying press release, Foster said: ‘I hope this installation is the first of many.’ It certainly would be.
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