Ofgem has issued Non-Domestic Renewable Heat Incentive (RHI): Sustainability Guidance for Participants and Auditors since some participants will need to have their submissions annually audited.
Affected participants are all biomass and biogas participants who are ‘self-reporting’ and have an installation of 1MWth and above, and all biomethane participants.
From 5 October 2015 the government introduced mandatory sustainability requirements and associated third-party verification for participants using solid biomass, biogas or producing biomethane to gain support under the RHI. From this date, some participants are obliged to submit an annual sustainability audit report demonstrating compliance with the sustainability requirements and have their sustainability data independently verified. Following the verification, an audit report must be submitted to Ofgem.
Participants must submit an annual sustainability audit if any of the following apply:
- they have a biomass installation and are self-reporting on the fuel used (not sourcing from the BSL or self-supplying) and their installation is 1MWth orabove. This includes:
- if the fuel is ‘waste’; or
- if it is a CHP installation which is not compliant with the RO sustainability criteria
- they have a biogas installation and their installation is 1MWth or above. This includes:
- if the fuel is ‘waste’; or
- if it is a CHP installation
- they are producing biomethane
The Regulations set out the requirements on how the audit report is to be prepared including that it must:
- be prepared by a person who is not the participant or a connected person
- be prepared in accordance with the International Standard on Assurance Engagements 3000 (Revised): Assurance engagements other than audits or reviews of historical financial information dated 9th December 2013 or an equivalent standard
- state whether anything has come to the attention of the person preparing the report to indicate that the sustainability information is not accurate; and consider, in relation to each consignment:
- whether the systems used to produce the sustainability information are likely to produce information which is reasonably accurate and reliable;
- the suitability of the frequency and methodology of any sampling carried out for the purpose of obtaining or checking the data on which the participant relied in preparing the sustainability information; and
- whether there are controls in place to protect the sustainability information against material misstatements due to fraud or error; and
- the robustness of the data on which the participant relied in preparing the sustainability information.
The audit will require the participant and their auditor to go through a number of steps, working together throughout the verification process. An overview is shown below.
- Read and understand the auditing requirements as set out by the Regulations and their responsibilities in the verification process
- Engage a verification body that is appropriately qualified to undertake a limited assurance engagement of the participant’s sustainability data following ISAE 3000 standard or equivalent
- Continually engage with, and submit the relevant information and sustainability data and evidence to, the auditor
- Host any visits from the auditor
- Respond to any of the auditor’s questions
- Correct any material and non-material misstatement(s) identified by the auditor
- Read the audit report provided by the auditor and check that it includes all the information required
- Submit the annual sustainability audit report to Ofgem by the relevant date
It is the responsibility of the participant to provide Ofgem with an annual sustainability audit report. This report must meet the requirements specified by the Regulations and be submitted to Ofgem within three months after:
- each anniversary of the tariff start date; or
- in the case of biomethane producers, each anniversary of the date on which the participant was first registered as a producer of biomethane.
Where the annual sustainability audit report is not provided by the relevant deadline or is provided but is incomplete or unsatisfactory, Ofgem may postpone RHI payments, and may remain postponed until the annual report is provided (or revised as required).
The document has been specifically created for the Non-Domestic Renewable Heat Incentive scheme and is guidance only, and therefore not intended to be a legal guide.
For further information please contact Andrew Riley on 020 7112 8300 or email email@example.com