Homeowners and businesses will be paid for heat generated from renewables ranging from solar panels to ‘green’ gas under a £860 million scheme set out last Thursday.
The Renewable Heat Incentive (RHI) aims to reduce the UK’s carbon emissions by around five per cent by 2020 by cutting the country’s reliance on fossil fuels for heating buildings.
The incentives, which will pay people for the amount of heat they produce from green sources, had been proposed by the previous Government and were due to come into force next month.
Last October, the Chancellor George Osborne said the incentive scheme would go ahead but plans to pay for it through a levy on bills were ditched as being “overly complex”.
Instead, the £860 million scheme to encourage renewable heat would be tax payer-funded.
Commercial and non-domestic schemes, which could include energy from household waste plants, geothermal power and gas from biological sources including brewery waste, are expected to generate four-fifths of renewable heat being produced by 2020.
Under Thursday’s announcement, businesses, community projects and public sector organisations such as schools, libraries and health clinics will receive the payments – which continue for a 20-year period – from September.
But homes will not start getting the payments for solar thermal power, air and grounds source heat pumps or boilers which burn biomass such as wood chips until October 2012.
The RHI scheme for households will be part of the wider ‘Green Deal’, which aims to improve energy efficiency and cut carbon from homes, with businesses taking on the upfront costs and householders paying them back through savings on bills.
From July this year, homeowners who install green heating systems before the scheme starts will get a one-off payment ranging from a few hundred pounds to over a thousand pounds depending on the type of renewable technology they put in.
Energy Secretary Chris Huhne insisted the delay in payments for homes would not put the brakes on the development of the emerging technologies.
Some £15 million has been ring-fenced for the upfront premium payments, which will be controlled by the government to ensure a fair spread of different technologies being installed across the UK.
Officials believe that the payment will provide a discount for installing the green technologies early, prompting up to 25,000 households to put in solar panels, heat pumps or biomassboilers.
Mr Huhne said the Renewable Heat Incentive, the first of its kind in the world, was a key part of the Government’s vision for a low-carbon future for the UK.
“Heat is responsible for a little less than half of our carbon emissions. This is a scheme designed to provide support to all of the technologies that can replace carbon technologies.
“It’s a very significant scheme indeed, for the whole process of being a pioneer green economy, and it’s a key part of the government’s commitment to being the greenest government ever.”
Renewable heat is expected to make up 12 per cent of the UK’s heating by 2020, and the RHI will reduce emissions by 44 million tonnes, the equivalent of taking 20 gas-fired power stations off the grid.