Homeowners relying on expensive, dirty oil for heating will be offered payments of thousands of pounds from Wednesday to switch to renewable energy alternatives in a government drive to cut carbon emissions from heat.

The domestic renewable heat incentive, which was meant to launch in 2012 but has been repeatedly delayed, is the first scheme of its kind in the world, offering financial incentives for low carbon heating technologies including boilers that burn wood pellets.

Around 18,000 households who have installed the technologies in recent years are already eligible to start receiving the payments, which will be made quarterly from public money over seven years. Although the scheme is open to people with gas-fired boilers, the upfront and running costs of the technologies means they will be most attractive to homes off the gas grid reliant on oil or electricity for heating.

Greg Barker, the climate minister, said: “This is the first scheme of its kind in the world – showing yet again that the UK is leading the way in the clean energy sector. Not only will people have warmer homes and cheaper fuel bills, they will reduce their carbon emissions, and will also get cash payments for installing these new technologies. It opens up a market for the supply chain, engineers and installers – generating growth and supporting jobs as part of our long-term economic plan.”

The technologies eligible for the payments include biomass boilers, solar thermal systems that provide hot water, ground source heat pumps which draw heat from warmth underground and air source heat pumps which extract heat from the air outside a home.

The renewable energy industry and rural groups welcomed the launch of the scheme. Dave Sowden, chief executive of the Sustainable Energy Association said: “The industry is delighted the domestic RHI has finally launched and that the journey to cleaner home heating can now begin. Installing low carbon heating technologies into energy efficient homes is one of the most important ways of securing cheap, affordable, clean energy, and this world-first scheme is a very important start.”

Henry Robinson, president of the Country Land and Business Association, which represents landowners said: “We have campaigned for such a scheme for years so we are pleased that domestic properties in rural England and Wales now have the opportunity to reduce their heating bills while delivering environmental benefits.”

The RHI differs from the feed-in tariffs for solar panels launched in 2010 – which paid for both electricity generated as well as exported to the national grid – by paying just for heat generated for use at home.

Homeowners will have to pay for a green deal assessment of their home, which typically cost £100-150, before being eligible for the RHI scheme.

Cathy Debenham, who runs the renewable energy advice website YouGen, said: “Its aim is to enable renewable heating systems to compete on a level playing field with fossil fuel ones. The payments, which are made over seven years compensate the owner for the price difference between the two, including the cost of borrowing money to pay for installation.”

However, she cautioned that people should make sure technologies are right for their property before switching. “Not all renewable heating is appropriate for every property. Heat pumps run at much lower temperatures than a standard boiler, and so they are most suited to well insulated buildings, ideally with underfloor heating.”

“Biomass boilers are significantly bigger than an oil boiler and will need more space, plus space to store the fuel, which must be kept dry. Solar thermal panels are not much use if you have electric showers, as most of the hot water they generate won’t be used.”

Oftec, the oil heating industry’s trade body, said the high upfront costs of many of the technologies made the RHI “only fit for the wealthy few.”

Tariffs announced today:

Solar thermal – 19.2p per kilowatt hour. Upfront cost £3-5,000

Ground source heat pumps – 18.8p per kWh. £11-15,000

Air source heat pumps – 7.3p per kWh. £7-14,000

Biomass boilers – 12.2p per kWh. Up to £15,000

Adam Vaughn, the guardian

This article first appeared in the guardian

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