In one of his reports from February 2015, Mr Nicol noted that he was asked to advise one Invest NI client - a hotelier - who wanted to install four smaller biomass boilers instead of one or two a larger units "so as to generate the maximum" subsidy from the RHI scheme.

He advised that it would be "difficult, expensive and technically inappropriate" to do so and put forward an alternative solution.

But he acknowledged that the "very high RHI revenue payment is essentially driving the installation of multiple small boilers".

Ultimately, he advised that the client should install a "technically appropriate solution rather than an RHI-driven solution" at the hotel.

Telling the inquiry about that case, he says the client was "almost insistent" on maximising their RHI income but their intended heating system was "ludicrous".

The RHI scheme led to the increase in prices of biomass boilers that made installing them "almost prohibitive", noted Mr Nicol in one report for an Invest NI client in November 2014.

By that stage, the scheme had been open for a year.

"Costs have escalated throughout the supply chain as entrepreneurs seek to exploit the RHI," he wrote.

Image source, Getty Images

He tells the inquiry that a 99kW biomass boiler was costing £48,000 - a gas boiler of the same capacity was worth less than 10% of that, somewhere between £3,500 or £4,000.

But Mr Lunny, the inquiry barrister, points out that even with the increase in cost there was a "very substantial increase" in the number of people having biomass boilers fitting through the scheme.

Mr Nicol says it's a "definite" that people were willing to pay the increasing prices because they could see that the income from the scheme would be so high.

Mr Nicol observed in his reports for Invest NI clients that the RHI scheme offered high rates of return and payback on investments in new heating systems within as short a time as three years.

Inquiry panellist Dr Keith MacLean (below) asks what the rate of return would be on a boiler installation that was not on the scheme.

Image source, RHI Inquiry

Mr Nicol explains that in a normal installation there is no payback: "You're putting in an asset, you're going to burn fuel in it - there's no return unless the preceding one was grimly inefficient."

With the RHI there is an income from the subsidy plus the savings on the fossil fuel that a user would've had to buy, balanced against the cost of the biomass pellets.

That represented a return on investment of 34% in one example offered by Mr Nicol in a report from March 2014.

The "predominant motive" behind installing multiple smaller boilers instead of a single large unit is to maximise the amount of money that could be from the RHI scheme, says Sir Patrick.

Mr Nicol says it's hard to see any other reason for doing so.

Image source, Getty Images

He says he saw examples that he didn't believe were "in the spirit of the RHI".

In one case he sent a "warning shot across [the] bows" of one client who wasn't doing anything illegal but whose system was designed "basically to improve the revenue potential" from the initiative.

Mr Nicol put some possible scenarios to Ofgem about the use of multiple biomass boilers on separate heaing systems.

He says he'd been "a little bit astounded" to hear that you could maximise RHI income by fitting multiple smaller boilers so he was "testing Ofgem to see if this was true of not".

His presumption was that Ofgem would say: "Don't be ridiculous!"

But Mr Lunny quotes from the evidence of senior Ofgem official Edmund Ward, who confirmed that that multiple boilers would be eligible for RHI provided they were "hydraulically separate" - ie, on separate heating systems.

Biomass boiler installer had drawn up proposals for heating systems for their clients and Mr Nicol came across some of them in his work for Invest NI.

In one instance, it had been suggested that a large warehouse that needed a single large boiler should instead have multiple smaller boilers installed on separate heating systems.

Image source, Getty Images

Mr Nicol says it was a "ludicrous" solution designed solely to maximise income from the RHI scheme.

He raised the issue with Ofgem but was told that because the boilers would be on separate heating systems they would be eligible under the rules of the initiative.

Mr Nicol wrote to John Batch, an official at Invest NI, to say that people were putting in multiple smaller boilers instead of the better solution of a single larger unit in order to "grab the RHI money".

He tells the inquiry that it frustrated him and his description of what was happening was the "equivalent of my banging my head on the desk".

Image source, RHI Inquiry

Sir Patrick wants to concentrate on the responsibility of Invest NI to safeguard public money.

"We will begin to look at the obligation on a public body paid by public funds... to ensure that DETI are fully informed of this type of material," he says.

Mr Lunny says the importance of the reports he is showing to the panel is specifically that there were communications between Mr Nicol and Invest NI.

In a report he wrote in January 2013, just two months after the RHI scheme opened, Mr Nicol made a stark judgement.

He said the scheme "completely distorts the economic case for biomass" and the overgenerosity of the subsidies it offered meant that the best technical solution for heating systems "can now not be recommended on economic grounds".

Image source, RHI Inquiry

"I was expressing a little bit of frustration in those words in a polite way," he tells the inquiry.

Inquiry panellist Dame Una O'Brien (above) makes the point that witnesses from the Department fo Enterprise, Trade and Investment (DETI), which was running the scheme, have told the inquiry they were unaware of the problems with RHI until 2016.

It was "not rocket science" that the much more lucrative "uncapped revenue" on offer for smaller boilers on the RHI scheme was "going to make people install" them, says Mr Nicol.

He says his reports about heating systems for Invest NI clients suggested the "best technical solution, the best efficient solution, the best, easily maintained solution".

Image source, RHI Inquiry

That may have been a single large boiler rather than multiple smaller units that were eligible for the more generous RHI subsidies.

The witness accepts that some clients "would've been desperate to get hold of as much revenue as possible" and says they may have gone against his "technically appropriate advice".

Sir Patrick says it's "not hard to understand even from a layman's point of view" about the benefits of fitting several smaller biomass boilers instead of a single larger heating system through the RHI scheme.

In some cases it is "solely for the purposes of generating income", he points out.

Image source, RHI Inquiry

"You then, perhaps not unnaturally, find the boiler installers rubbing their hands and saying: 'This is pretty good - let's not bother with [bigger] boilers - this is where the payback is.'"

Sir Patrick adds that it was "blatantly obvious" even to a layperson.

Mr Nicol agrees and says that "once one person's done it" it has an "exponential effect" in the market.

Biomass boilers with a capacity of up to 99kW were eligible for the most lucrative subsidy on the RHI scheme, about 6p per kW hour of heat.

Boilers above that capacity were eligible to receive a subsidy of 1.5p for the same output.

Image source, RHI Inquiry

That sharp difference - of "cliff edge", as Mr Lunny described it, caused claimants to install multiple small boilers to meet their heat need rather than a single larger unit.

Mr Nicol says that there are some circumstances in which it is "appropriate" to install multiple small boilers but there are other when it is "largely inappropriate".

Mr Nicol also spotted several other trends or flaws with the RHI scheme and they appear in his technical reports.

They include:

• A potentially high income could be collected over a short period for a boiler used for a lengthy periods
• Biomass boilers sales firms were raising the prices of lucrative 99kW boilers
• There was a widespread knowledge among boiler sellers and customers of the potentially high returns
• The scheme seemed to allow or encourage the adoption of less energy efficient solutions

As a technical consultant, Mr Nicol's expertise is in biomass combustion and part of his work for Invest NI was the drawing up of a guide to biomass heating.

He also complied bespoke reports for the benefit of Invest NI's client businesses, with the intention of recommending ways of saving money on energy.

He was aware of the RHI scheme and saw from an early stage that the subsidies it offered were not tiered as was the case in the similar initiative in Great Britain.

Tiering is a way of dropping the subsidy on offer once a certain limit of usage has been reached, with the intention of preventing a claimant from overusing their heating system to collect more cash.

The result of the lack of tiering in the Northern Ireland RHI scheme was that there was what's described as a perverse financial incentive to waste heat.

Mr Nicol identified that as a flaw in the scheme.

Raising an interesting technical point that the inquiry hasn't heard about before, Mr Nicol says it was "rumoured in the marketplace" that heating meter readings could be influenced by altering the density of the fluid circulating in the heating system.

He says he mentioned it to the scheme administrator Ofgem but he didn't tell Invest NI and his opinion is that the technique would constitute fraud rather than gaming the system.

Sir Patrick is quick to react and remind the inquiry that they "do not have powers to [consider] criminal liability or civil liability of any kind".

"I am just a little anxious," he says.

Mr Nicol claims he could be described as a whistleblower who pointed out some of the problems with the RHI scheme.

Image source, RHI Inquiry

He says he told a senior official at Ofgem - the body that was administering the scheme - that the scheme was "skewing the prices of [biomass] boilers" and there were ways that it "could be manipulated quite legally to increase" the amount of money that claimants could receive.

Inquiry chair Sir Patrick Coghlin says it would "certainly be of some significance" if Mr Nicol's warnings hadn't been acted on by Ofgem.

This morning's witness Alastair Nicol affirms that he will tell the truth to the inquiry.

He's a heating consultant from County Antrim - his company Element Consultants was engaged to provide feasibility studies for biomass installations for the government economic development agency Invest NI.

Image source, RHI Inquiry

He's taken through his written evidence by junior counsel Donal Lunny.

Mr Lunny says the witness appears to have identified flaws in the scheme long before the Stormont department that was running it became aware of the problems.

BBC News NI

An independent inquiry into the RHI scandal was established in January last year by the then finance minister Máirtín Ó Muilleoir.

He ordered it in the wake of the huge public concern and what was then a developing political crisis surrounding the scheme.

The RHI Inquiry began in November and Sir Patrick Coghlin (below), a retired Court of Appeal judge, is its chair and has been given full control over how it will operate.

Image source, Pacemaker

It will look at:

• the design and introduction of the RHI scheme
• the scheme's initial operation, administration, promotion and supervision
• the introduction of revised subsidies and a usage cap for new scheme claimants in 2015
• the scheme's closure

For more information on the RHI Inquiry, you can read our handy Q&A.

When the scale of the overspend emerged, public and political concern rocketed.

As the minister in charge of the Stormont department that set up the RHI scheme, the Democratic Unionist Party (DUP) leader Arlene Foster faced calls to resign from her role as Northern Ireland's first minister in December 2016.

Image source, PA

She resisted, and Sinn Féin's Martin McGuinness then quit as deputy first minister in protest at the DUP's handling of what had by then become a full-blown political crisis.

That move brought about the collapse of the Northern Ireland Executive. Now, well beyond a year-and-a-half on from that, Northern Ireland remains without a devolved administration.

You can find much more detail on the RHI scheme in our need-to-know guide.

The budget of the RHI scheme ran out of control because of critical flaws in the way it was set up.

Claimants could effectively earn more money the more fuel they burned because the subsidies on offer for renewable fuels were far greater than the cost of the fuels themselves.

At one point the estimate for the overspend was set at £700m if permanent cost controls weren't introduced - temporary cuts have since pulled the budget back on track for now.

Whatever the scale of the bill, it will have to be picked up by the Northern Ireland taxpayer.

The Renewable Heat Incentive scheme - or RHI for short - came to the fore of the Northern Ireland public's knowledge in late-2016... and the fallout from the scandal attached to it is still being felt in the region's politics today.

Image source, Getty Images

The scheme was set up by the Northern Ireland Executive in 2012, as a way of encouraging businesses to switch from using fossil fuels to renewable sources for generating their heat.

Those who signed up were offered financial incentives to buy new heating systems and the fuel to run them.