Extensive preparation is key to successful applications for the Renewable Heat Incentive (RHI) tariff guarantee, according to one renewable energy funding provider.
Speaking at the ADBA Finance Forum on 13 November, Phil Gerrard, Chief Executive Officer at Privilege Finance, describes how rigorous preparation and working with advisors from the start of the process gives the best chance of RHI success.
“The main challenge is that once a developer has cleared the Ofgem auditing process and received a provisional tariff guarantee offer, they only have three weeks to achieve ‘financial close’.
“To reach this stage, the developer must provide proof that they are able to finance the project, which is evidenced by documentation provided by the funder.”
Having successfully secured financial close for £70m worth of AD projects in the past two months, Mr Gerrard adds that preparation of data is key.
“Preparing data well ahead of financial close means a final credit application can be drafted during the Ofgem auditing process. A credit committee meeting can then be held within a few days of achieving a tariff guarantee offer, and paperwork can be submitted back to Ofgem well within the three-week deadline.”
With a cut-off date of January 2020 for all RHI-accredited projects to be exporting gas to the grid, prioritisation of projects based on financial viability and construction time can also improve chances of a successful application, explains Mr Gerrard.
“Pre-auditing according to the ISAE3000 standard, the auditing methodology used by Ofgem, can help to reduce the ‘to and fro’ during the official process. It also gives the impression of a well thought out submission, greatly improving the likelihood of approval.
“Potential developers should be aware that there is still RHI funding available and working with a funder to extensively prepare an application, prioritising projects and pre-auditing will maximise chances of achieving tariff guarantee,” he says.
To date, approximately half of the 111 tariff guarantee applications have been rejected, but there is money available for new projects that meet the required criteria. There will, however, possibly be a planned degression of the tariff by 15% in January 2019 which accelerates the urgency for those projects that cannot financially stand the degression.