Businesses and communities will be eligible for payments of 7.9p per kWh for heat generated using biomass boilers when a government scheme kicks off next week.
The Renewable Heat Incentive will be open to applicants from Monday 28 November, providing payments for heat generated from renewable technologies installed since 15 July 2009.
Recipients will be paid up to 7.9p per kWh for biomass boilers, 8.5p per kWh for solar thermal and 4.5p per kWh for heat pumps. Payments will be made quarterly.
Energy and Climate Change Minister Greg Barker said: “The RHI will usher in a new era in clean green heat technology. It’s a world first and has the potential to put the UK at the forefront of a vibrant new green technology sector.
“Renewable heat will be a big win for our economy – it will support thousands of green jobs, reduce our dependency on imported fossil fuels, reduce our carbon emissions and help us meet our renewable target.”
The RHI aims to cut emissions by 43 million tonnes of carbon by 2020, while up to 500,000 jobs are expected to be created in the renewables industry by the end of the decade.
The start of the scheme follows a short delay while the government resolved the scheme’s compatibility with EU state aid rules.
Gaynor Hartnell, chief executive of the Renewable Energy Associaiton, said: “This is excellent and very long-awaited news. REA regards the heat incentive as one of its most significant goals in policy advocacy in our 10 years of existence.
“It’s high time UK started benefiting from a major roll out of some of the cheapest forms of renewable energy. It’s not a perfect policy yet, but we look forward to working with DECC and the regulator to help it bring out the best in British renewables.”
Tim Minett, chief executive of UK wood pellet supplier CPL Distribution, which supplies biomass boilers said:
“We are relieved by today’s announcement. There is no denying that the delays to the Renewable Heat Incentive’s launch knocked confidence among board-level decision makers and a large number of projects to install renewable systems have been stalled as a result.
“On the basis of our own dealings, and feedback from biomass boiler manufacturers, we believe there are at least 250 major investment projects currently in limbo. To put it bluntly, there has been a huge amount of interest in the RHI but in the absence of absolute clarity over the tariff rates, people simply weren’t willing to trust politicians’ assurances given the backdrop of the cuts in feed-in-tariffs elsewhere.
“Those fears can now be allayed thanks to today’s announcement.”
A report from the UK Energy Research Centre last week found that a fifth of global energy could be provided by biomass without damaging food production.
Waste wood, paper, food and textiles were included in the report as sources of biomass, as well as sewage sludge and animal manures.