Heat Supply Agreement – Terms and Conditions

The following terms and conditions apply to any Heat Supply Agreement entered into between the supplier and the end user.

1.     Contract

1.1.      The Supplier agrees to supply Heat to the End User’s premises derived from Renewable Energy Biomass Wood Chip fuel and the End User agrees to purchase from the Supplier the Heat used at their premises, in accordance with the Contract Details and these Conditions.

1.2.      This Contract is exclusive between both parties in terms of the biomass heat, however if on any occasion the Supplier fails to deliver the Heat requirement to the End User, the End User may switch from the Biomass Heat back to their existing Heat source ie Oil, after 24 hours of continuous lack of biomass heat to ensure the required heat is available to their premises during the Term of this Contract.

1.3.      The Heat used from the Supplier shall be metered and the End User shall pay for Heat on this basis only. The heat requirement as per the calculated heat load available shall be up to the specified kWh Heat Offtake in the customer’s contractual agreement per year.

2.     Supply of Equipment to Premises

2.1.      All and any equipment provided or installed by the Supplier as part of their Heat Supply Agreement such as Heat Exchangers and Heat Meters and any adaptation to allow the End User to receive Heat into their existing Heating System shall be supplied and fitted by the Supplier at no cost to the End User. This equipment shall remain the property of the Supplier at all times throughout the term of the contract. The Supplier shall remove this equipment when the contract ends or is terminated by the End User or Supplier.

2.2.      The End User agrees to allow access to their premises in order to install, maintain and or remove any of the Suppliers equipment with 2 working days’ notice provided to End User.

2.3.      Whereas the Supplier may have a Funding Partner. The Funding Partner shall have a right to step into this contract for the Supply of Heat to the End User in the event of a failure by the Supplier by way of Service or in event of the Supplier entering into administration, liquidation or bankruptcy.

2.4.      The Supplier shall ensure that the existing Heating system is reinstated and fully operational as before, at no cost to the End User, should either party terminate this agreement.

3.     Duration of Contract

3.1.      This Contract shall endure for the Term agreed – when it shall automatically extend subject to the Supplier providing a written notice to the End User 30 days prior to the contract end date and with an agreed price discount per kWh of Heat and such price to be agreed within 5 working days of receipt by the End User. Without limiting its other rights and remedies either party may terminate this Contract immediately by way of written notice or email if:

3.1.1.         the other party commits a material breach of any term of the Contract and, if such a breach is remediable, fails to remedy that breach within 14 days of that party being notified in writing to do so; or

3.1.2.         the other party commits a material breach of any term which, in the reasonable opinion of the non-defaulting party, cannot be remedied within 14 days.

4.     Heat Supply

4.1.      The Supplier is responsible for providing a Heat supply exclusively to the Delivery Point ie the Heat Exchanger at the End User;s site on the terms of this Agreement and in accordance with the required Heat Load Specification.

4.2.      The Supplier shall not be responsible for any faults on the End User’s existing heating system as the Supplier is connecting via a Plate Heat Exchanger, and the End User is responsible for their own Heating system within their property.

4.3.      The Supplier shall supply the End User with Heat supplies on demand up to the Maximum kWh heat Load and any Heat supplied to the User by us in excess of the Maximum shall be at the Supplier absolute discretion. The User agrees and acknowledges that the Supplier shall in no circumstances be under any obligation to make any Heat supply in excess of the Maximum.

4.4.      The User agrees to pay for:

4.4.1.         the Biomass Heat Supplied and used within their premises.

4.4.2.         at the agreed rate per kWh of heat as per the Heat Meter, and the price per kWh shall be as calculated by the Discounted Price Matrix each month.

4.5.      The Supplier shall not be liable for any failure to provide the End User with the Heat in accordance with this Agreement if such failure is caused as a result of, or is in anyway attributable to:

4.5.1.         The User’s use of the Heat System outside of or in excess of the Maximum or in any way that couId void any manufacturer’s warranties.

4.5.2.         The User breach of this Agreement; or

4.5.3.         The User act, omission, or negligence.

4.6.      If the Supplier fails to provide the Heat supplies in accordance with Clause 4.3 for any reason and such interruption lasts for more than 24 (twenty-four) continuous hours, then the Supplier shall at no cost to the End user return the Heat Supply to the Oil system in the interim period until the Biomass system returns to operation and then the heat supply shall return to the Biomass system. This is by means of two valves and with no interruption to the end user’s site with the exception of allowing access to make the system switch.

4.7.      Without prejudice to any other Clause of this Agreement, the Heat supply may be interrupted or reduced at any time in the following circumstances:

4.7.1.         if the Supplier, acting reasonably, consider it necessary in order to prevent danger or damage, or in case of an emergency;

4.7.2.         in order to comply with any requirement imposed by Law;

4.7.3.         if required by industry arrangements;

4.7.4.         due to an event outside our reasonable control;

4.7.5.         to carry out maintenance, including the repair or replacement any part of the Heat System.

Except in the case of 4.7.1 or 4.7.5 or any other emergency, the Supplier will provide the User with no less than 2 Working Days’ prior written notice.

If any interruption under this Clause 4.7.1 to 4.7.4 (inclusive) lasts for more than 24 (twenty-four) continuous hours, then clause 4.6 applies.

4.8.      The Supplier may disconnect the Heat supply (on a permanent or impermanent basis) by 14 days’ written notice and terminate the agreement:

4.8.1.         if the User has not paid the invoice within 30 days of the date on the invoice and the Supplier has sent a written reminder to make payment and the amount is still outstanding 15 days after the date of the written reminder;

4.8.2.         if the User takes, or attempt to use Heat by interfering (or allowing others to interfere) with the Heat System;

4.8.3.         if the User commits a material or persistent breach of this Agreement;

4.8.4.         if the User go into liquidation, either voluntary or compulsory (except for reconstruction or amalgamation) or if any administrator or administrative receiver is appointed in respect of the whole or any party of the User’ assets or if the User makes or offers to make any arrangement or composition for the benefit of its creditors generally;

4.8.5.         if the User is in breach of the Site Obligations or the Supplier’ access to the Site as required by this Agreement is restricted;

4.8.6.         if the User ceases to occupy or own the Site or the Premises;

4.8.7.         if the User uses the Heat for any purpose that is not an Eligible Purpose;

4.8.8.         if the User damages or otherwise tampers with the Heat System or fuel supply (including attempting to put in your own fuel); or

4.8.9.         if you do not restrict or stop your use of Heat in accordance with our instructions given pursuant to Clause 4.9.

4.9.      The User must restrict or stop its use of Heat if the Supplier tell him to do so because the Supplier is so required by Law, or for operational safety reasons.

4.10.   The User shall have a right to terminate this Agreement immediately on notice, if the Supplier goes into liquidation, either voluntary or compulsory (except for reconstruction or amalgamation) or if any administrator or administrative receiver is appointed in respect of the whole or any party of the Supplier’ assets or if the Supplier makes or offers to make any arrangement or composition for the benefit of its creditors generally .

4.11.   Any provision of this Agreement which expressly or by implication is intended to come into or continue in force on or after termination of this Agreement shall remain in full force and effect. Except where Clause 4.8 applies, any other termination of this Agreement is without prejudice to any accrued liabilities or any rights and remedies that the User and the Supplier may respectively have under this Agreement.

5.     Heat User obligation

Throughout the Term, and in addition to any of its other obligations under this Agreement the User agrees:

5.1.      To only use the Heat for an eligible purpose and not to re-sell, re-distribute or re-deliver any Heat purchased from the supplier

5.2.      Not to move, modify, remove, adjust, alter, change in any way the Heat System and provide reasonable cooperation in relation the operations and maintenance

5.3.      Not to claim capital allowances in respect of the Heat System

5.4.      To provide reasonable assistance to help obtaining any and all renewable and environmental incentives

5.5.      To ensure that the Delivery Point is at all times maintained in good and safe state of repair sufficient to allow the supply of all Heat generated by the Biomass Heat System to the heating or other appropriate systems;

5.6.      at all times comply with all applicable Laws with respect to the use and operation of the Site, in performing the User obligations under this Agreement and in all other respects that could have an adverse impact on the eligibility of all Heat supplied to receive the RHI Tariff or the Supplier’s ability to operate this Agreement in an efficient manner;

5.7.      Not to install and not to permit any other person to install a biomass boiler or other renewable heat generating equipment without first offering to the Supplier the right to supply and /or install such heat generating equipment.

6.     Service and Maintenance

The Supplier shall provide the Service and Maintenance of the Biomass Equipment at the Biomass Plant Room and at the End User’s premises ie the Heat Exchangers and any other Biomass Equipment, to ensure safe and satisfactory operation of the system.

7.     Existing Boiler

The Existing Boiler at the End Users site shall be Serviced by the Supplier at no cost to the End User- one service per year, to ensure that this can be fully operational if required. The Supplier’s qualified Engineers shall carry out this service at no cost to the End User and provide a service record to the End User, subject to the terms of clause 13.6.

8.     Fuel Sources

8.1.      The Heat Supplied to the End User will come from the Biomass Boiler owned by the Supplier or their Funding partners. The Wood Chip to fuel this Biomass Boiler will be derived from the following sources:

8.1.1.         licensed harvested forestry timber; or

8.1.2.         the parent source of the Wood Chip is declared as being FSC Certified.

9.     Service and Maintenance of the Biomass Plant

The Biomass Plant that supplies the Heat to the End User shall be Serviced and Maintained by the Supplier to ensure continuity of Supply to the End User. There shall be no additional cost to the End User in relation to service and maintenance of the Biomass Plant.

10.  Health and Safety

A risk assessment and method statement shall be prepared in advance by the Supplier following an initial site visit and discussion with the End User, to take account of any hazards on Site and the risks posed to anyone operating the Heating System. This shall be formally reviewed annually, or whenever a change to the personnel or hazards and risks on Site are identified.

11.  Breakdown in Heat Supply

11.1.   Should there be an issue in respect of the Heat supply to the End Users premises, the End User representative must contact the Supplier, and register the fault immediately.

11.2.   The Supplier shall ensure that an Engineer attends site within 4 hours to ensure Supply is reinstated. The Biomass Plant room will have large volume Buffer/Thermal Store that stores the Heat from the Biomass to ensure continuity of supply in the event of a short breakdown.

11.3.   Access to the End Users site should be provided between the hours of 08.00 and 19.00 between Monday to Friday. However, the Suppliers Engineers can accommodate out with these times.

12.  Price and Terms of Payment

The End User agrees to pay the Supplier the contracted Price as per the Discounted Price Matrix as per below for each kWh of Heat supplied and based on the Office for National Statistics (ONS) Average Price Heating Oil per 1000 litre with pricing and discount set monthly in accordance, a print from ONS shall be provided with monthly Invoice. The ONS benchmark Price shall be subject to Consumer Price Index CPI.


Discounted Pricing Matrix – Biomass Woodfuel versus –  Heating Oil
Oil Price per Litre = Price per kWh Average Woodchip Heat Discounted by Woodchip per kWh Price
£0.60p and above £0.060p 40% £0.0360p
£0.55p – £0.59p £0.057p 35% £0.0370p
£0.51p – £0.54 £0.051p 30% £0.0357p
£0.46p – £0.50p £0.048p 30% £0.0336p
£0.41p – £0.45p £0.043p 25% £0.0322p
£0.40p and below £0.040p 20% £0.032p

The Minimum Discounted price when Oil prices are £0.40p or below shall be 20%.

12.1.   the annual Consumer Price Index shall apply in January each year

12.2.   The Supplier will invoice the End User seven days following month end and the End User shall pay by DD/Standing Order/Bank Transfer on or around the 15th of the month.

12.3.   Invoices shall be paid in line with what is set out in the Contract Details.

12.4.   In the event that any payments are overdue the Supplier has:

a.    the right to refuse to make further supplies of Heat until all outstanding overdue invoices have been settled; and

b.    may require that guarantees or other forms of security are required in respect of payment.

12.5.   Interest shall be payable on amounts overdue and outwith the agreed payment terms at the daily published Bank of England base rate plus 4%.

12.6.   In the event that the End User’s fails to make payment of invoices due within the timescales set out under the obligations of the Contract the Supplier may:

a.    change the payment terms pursuant to clause 12.3 including a requirement to pay in advance for the Heat Supplied; or

b.    terminate this contract without any penalty.

12.7.   If the End User disputes an invoice, then the End User will need to contact the Supplier within ten (10) days of the date the User receive the invoice. The Supplier will work with the End User to resolve the issue. If the Supplier and the End User are unable to reach agreement about the disputed amount within twenty (20) working days of the End User notifying the Supplier, then either party may refer the dispute on to Heat Trust  or an independent meter examiner appointed by the President of the lnstitute of Mechanical Engineers.

13.  Other Terms and Conditions

13.1.   Operational problems of the End User that are a direct result of misuse/neglect or existing heating system defects are not the responsibility of the Supplier. The Supplier is responsible for sending Heat to the End User, but not responsible for the End Users original Heating System and failures that may exist. The Supplier agrees to service the existing Boiler but not the whole heating system, and any new parts or defects of the existing boiler or existing heating system shall remain the responsibility of the End User.

13.2.   The End User and Supplier hereby agree that billing data may be passed to Energy Saving Trust for Monitoring purposes to ensure commercial Users and Householders are getting a fair deal on their heating costs.

13.3.   The Supplier will have public liability insurance of £10,000,000.

14.  In the Event of a Dispute

14.1.   Both parties shall attempt in good faith to negotiate a settlement to any dispute between them arising out of or in connection with the Contract within thirty days of either party notifying the other of the dispute. Initially the party who wishes to bring the dispute to the notice of the other will do so in writing or email. The other party will respond to this in writing or email within five working days of receiving the notification of a potential dispute. Where the potential dispute relates to on-site issues at either the End User or Supplier sites, a joint site meeting will normally take place within 10 working days of the potential dispute being brought to the other party’s attention.

14.2.   The Supplier shall be a member of “Heat Trust” – Registration with Heat Trust provides assurance to customers and investors that their heat supplier will meet sector-wide service standards that are comparable to those provided in the rest of the energy market. It also enables an independent process for settling disputes between heat suppliers and their customers.

14.3.   Where a resolution has been agreed after one or more meetings, including a site meeting (if appropriate), this shall be communicated in writing or email and noted by both parties.

15.  Force Majeure

15.1.   A party, provided that it has complied with the provisions of clause 12.3, shall not be in breach of this Contract, nor liable for any failure or delay in performance of any obligations under this Contract (and, subject to clause 12.4, the time for performance of the obligations shall be extended accordingly) arising from or attributable to acts, events, omissions or accidents beyond its reasonable control (Force Majeure Event), including but not limited to any of the following:

a.    Acts of God, including but not limited to fire, flood, earthquake, windstorm or other natural disaster;

b.    war, threat of or preparation for war, armed conflict, imposition of sanctions, embargo, breaking off of diplomatic relations or similar actions;

c.     compliance with any law;

d.    fire, explosion or accidental damage;

e.    extreme adverse weather conditions;

f.      collapse of building structures, failure of plant machinery, machinery, computers or vehicles;

g.    any labour dispute, including but not limited to strikes, industrial action or lockouts;

h.    non-performance by Suppliers or subcontractors (other than by companies in the same group as the party seeking to rely on this clause);

i.      interruption or failure of utility service, including but not limited to electric power, gas or water;

j.      in respect of the Supplier only unfavourable weather conditions including frost, sleet and snow.

15.2.   The corresponding obligations of the other party will be suspended to the same extent as those of the party first affected by the Force Majeure Event.

15.3.   Any party that is subject to a Force Majeure Event shall not be in breach of this Contract provided that:

a.    it promptly notifies the other parties in writing of the nature and extent of the Force Majeure Event causing its failure or delay in performance; and

b.    it could not have avoided the effect of the Force Majeure Event by taking precautions which, having regard to all the matters known to it before the Force Majeure Event, it ought reasonably to have taken, but did not; and

c.     it has used all reasonable endeavours to mitigate the effect of the Force Majeure Event to carry out its obligations under this Contract in any way that is reasonably practicable and to resume the performance of its obligations as soon as reasonably possible.

15.4.   If the Force Majeure Event prevails for a continuous period of more than six months, any party may terminate this Contract by giving 14 days’ written notice to the other party. On the expiry of this notice period, this Contract will terminate. Such termination shall be without prejudice to the rights of the parties in respect of any breach of this Contract occurring prior to such termination.

16.  Third Party Rights

The parties hereby confirm the terms of this Contract shall not and shall not purport to confer on any third party any right to enforce any term of the Agreement for the purposes of the Contract (Third Party Rights) (Scotland) Act 2017.

17.  Governing Law and Jurisdiction

17.1.   This Contract and any dispute or claim arising out of or in connection with it or its subject matter shall be governed by and construed in accordance with the law of Scotland.

17.2.   The parties irrevocably agree that the courts of Scotland shall have exclusive jurisdiction to settle any dispute or claim that arises out of or in connection with this Contract or its subject matter.