The initiative known as RHI (Renewable Heat Initiative) will apply to households that installed renewable heating from 15th July 2009 and those looking to replace their current heating with a renewable heating kit.
Eligibility to the scheme
For oil-heated homes off the gas grid that install a £3,000 solar hot water system, owners would receive roughly £200 per year in RHI payments for seven years, in addition to an ongoing annual £80 in bill savings, meaning the upfront cost would be recovered in 20 years.
According to the Guardian newspaper most homes are currently heated by cheaper gas and will struggle to recoup their investment for more than 30 years at the proposed rates, only getting back around £250 a year on bill savings and payments. Most solar thermal systems cost between £3,000-£5,000.
After some delays the scheme will now launch in summer 2013 and the subsidy payments will be made over a period of seven years.
“We need to revolutionise the way we heat our homes and businesses and move away from expensive fossil fuels, not only to cut carbon but to help meet our renewables targets and save money on bills,” Energy and Climate Change Minister Greg Barker said in the statement. “Our proposals aim to encourage even more uptake of clean green heating in industry.” The DECC (Department for Energy and Climate Change) who are behind the initiative are hoping the scheme could help drive 380,000 renewable heating installations by 2020.
Many in the renewables industry welcomed the announcement. The Renewable Energy Association's head of policy, Paul Thompson, said: "We are delighted that the government has published these proposals on time and we are looking forward to engaging further with Decc on the details to make the RHI work."
It was also welcomed by Paul Barwell of the Solar Trade Association however he warned “The tariff level proposed for solar thermal will concern many of our members, but following sustained lobbying from the STA, the door has been left open for flexibility on this support level. The STA will continue to press DECC to reflect the unique benefits of solar thermal in the final support level decision.”
DECC also published two consultations on expanding the RHI scheme for commercial, industrial and community customers to increase uptake of renewable heating kit in this sector.
The first consultation looks at the broader expansion of the scheme and closes on 7 December 2012. The second consultation focuses on air to water heat pumps and energy from waste and closes on 18 October 2012.