Energy secretary Chris Huhne has launched an £860M scheme to spur investment in renewable heat for industrial, commercial and domestic buildings.
The Department for Energy and Climate Change (DECC) has launched the renewable heat incentive (RHI) to stimulate a new market in renewable heat.
Under the RHI, organisations using renewable heat will receive quarterly payments for 20 years from the date the enter the scheme. It will cover technologies such as heat pumps, biomass boiler and renewable combined heat and power.
Decc hopes it will stimulate up to £4.5bn investment by 2020 and support up to 150,000 manufacturing, supply chain and installer jobs.
“This incentive is the first of its kind in the world,” said energy secretary Chris Huhne. “It’ll help the UK shift away from fossil fuel, reducing carbon emissions and encouraging innovation, jobs and growth in new advanced technologies.”
Currently around half of the UK’s carbon emissions come from the energy used to produce heat – more than from generating electricity. Decc hopes the RHI will reduce emissions by 44M.t of carbon to 2020, equivalent to the annual carbon emitted by 20 typical new gas power stations .
The new financial incentive will encourage installation of equipment like renewable heat pumps, biomass boilers and solar thermal panels to reduce emissions and support the existing 150,000 jobs in the heating industry.
The RHI tariff scheme, which is subject to parliamentary approval, will stand alongside the renewable obligation and feed in tariffs (FIT).
Payments will start alongside the Green Deal from 2012 to allow a more whole-house approach to heat production and energy saving. But Decc said that rates will be reviewed in 2014 and at deployment rates rather than fixed timescales.