Abuse of Green Schemes Costing Ofgem Millions

“Abuse” of green energy schemes is costing the public purse millions of pounds a year, a whistleblower from Ofgem has claimed.

Edd Fyfe, a former counter-fraud officer at the energy regulator, says that businesses are regularly exploiting weaknesses in the management of subsidy schemes to generate huge profits. Firms induced customers to redirect subsidy money to the firms themselves and although Ofgem’s legal team said these “third party models” were not allowed, the regulator did nothing to stop them.

Between 2013 and 2017, Fyfe worked as a manager in compliancy and fraud for Ofgem E-serve, a department of the regulator which approves and polices green energy subsidies. While there, he became concerned about poor levels of oversight and negligent management that was allowing companies to exploit subsidies for their own profit.

He said that when he reviewed cases where subsidies had been awarded, he found 50 to 60% of them did not comply with Ofgem guidelines and in many cases there was evidence of abuse.

He said he was especially worried about abuse within the Domestic Renewable Heat Incentive (RHI), a programme which provides subsidies for households which use renewable heating systems. Under controversial business practices, firms offered “free” biomass boilers to households in exchange for them signing away their incentive payments.

“They [the firms] were getting paid many millions and millions of pounds, the return on investment was absolutely huge, but they bled the scheme dry," Fyfe told the BBC.

Fyfe said he alerted his bosses about the misuse of the scheme but they didn’t take action. He said there were pressures on senior management within Ofgem because there was seen to be a "a risk of the management of those schemes being taken away from Ofgem and contracted out to a private company.”

"There was a huge drive to get as many applications through as possible. There simply were not checks getting done. They were processed willy-nilly,” he said.

Ofgem told the BBC: "We have a system of processes and checks in place to support our staff to make robust assessments and decisions on applications.”

One of those systems were visits to green energy instalments by external auditors. But even these were mismanaged, Fyfe said. Auditors were reluctant to visit certain parts of the country, including Orkney, Shetland, the Western Isles and Northern Ireland, and would frequently accept excuses like illness or bereavement to delay audits.

Fyfe left his job with Ofgem in September 2017, after registering complaints with the National Audit office, after which Ofgem threatened him with fines or even jail time under Section 105 of the Utilities Act. He is now speaking out with the help of the charity Protect, which assists whistleblowers.

He said the use of taxpayer money to subsidise businesses in England, Scotland, and Wales was “worse than what was happening in Northern Ireland,” referring to the misuse of the RHI scheme in North Ireland, the so-called “cash for ash” scandal where taxpayers paid £490m in subsidies that were greater than the cost of fuel.

Lauren Smith

Lauren Smith has worked as a journalist and copywriter for most of the last decade, covering technology, energy, and consumer rights, in the US and UK.

Read all articles