The government hopes that it will help develop a market for new building products like solar thermal panels and heat pumps.
The scheme gives money off renewable technologies like biomass boilers, air and ground source heat pumps and solar thermal panels. Phase two will be launched on 2nd April and will be worth £10m more than the existing scheme.
The Department of Energy & Climate Change (DECC) said that new money would help the RHPP go further including an £8m competition for communities to apply for grants to encourage community groups to install renewable heating. This will be on top of the existing voucher scheme that will be mainly focused at the four million homes in Great Britain that are not heated by mains gas, who have to rely on higher carbon forms of heating such as oil. There will also be a £10m competition for social landlords.
Climate change minister Greg Barker said: “We’re increasing the budget from £15m to £25m, for the first time we’re including community schemes and there’ll be more social housing schemes that can benefit. Those people who are reliant on expensive oil or electric heating should consider applying to the Premium Payment scheme to cut their fuel bills in the long term.
“Generating heat from renewables will not just cut carbon emissions, it will also help create a market in developing, selling and installing kit like solar thermal panels or heat pumps.”
The scheme will continue to be administered by the Energy Saving Trust, whose delivery director Karen Lawrence said: "Without a doubt, one of the main barriers that prevents people from taking the plunge is the up-front capital cost. The announcement of the second phase of the government's renewable heat premium payment (RHPP) scheme not only offers homeowners help with the initial costs, but it also provides them with access to heat technologies that can help them to reduce their energy bills, year on year.”
At the same time, the DECC has also published plans to keep control of the budget for the renewable heat incentive (RHI) for commercial, public sector, industrial and community-scale installations. The £860m RHI opened in November 2011 to make it more financially attractive to install low carbon heating systems like heat pumps, biomass boilers or solar thermal panels. As with the solar feed-in tariff scheme, subsidies may have to be cut if the pot starts to run dry. Options include reducing subsidies or giving industry one month’s notice to temporarily suspend the scheme to new entrants if 80% of the available budget is expected to be spent.
Mr Barker said: “Putting in place cost control measures for the renewable heat incentive is the prudent thing to do, given this is millions of pounds of taxpayers’ money at stake and taking on board the lessons learned from the feed-in tariff scheme.”
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