Households using renewable heating systems are to be offered cash for their green heat under a new scheme.

The domestic Renewable Heat Incentive (RHI), launched by the Government last week, is the first long-term financial support programme for renewable heat in the world.

It offers homeowners payments to offset the cost of installing low carbon systems in their residential properties.

Anyone can take advantage of the innovative scheme, as well as households both on and off the gas grid.

Greg Barker, Minister for Energy, believes thousands of homes nationwide will benefit from the payments.

“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,” he said.

“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.”

Alex Hagan, Energy Consultant at Strutt & Parker, added: “The introduction of the domestic RHI is especially good news for owners of older/ traditional buildings who are unable to undertake any structural changes to improve their EPC rating as, in some cases, changing their heating systems from oil to biomass will the only option available to improve the energy efficiency of their home and make significant savings on their energy bills. The nature of the Renewable Heat Incentive payments for the domestic scheme will allow for the cost of installation to be paid off in seven years (the average length of time spent in one home) which reduces the complexities with regards to moving house. Homeowners that have previously installed renewable heat technologies eligible for the scheme since 15th July 2009 will be able to be able to apply for the tariff to be applied retrospectively as long as they make their claim within the next 12 months."

The guaranteed payments are made quarterly over seven years for households in England, Wales and Scotland, while Northern Ireland has its own RHI scheme.

These are designed to bridge the gap between the cost of fossil fuel heat sources and renewable heat alternatives.

Technologies currently covered by the scheme include biomass heating systems, which burn fuel such as wood pellets, chips or logs to provide central heating and hot water in a home, and biomass-only boilers.

Pellet stoves with integrated boilers, which are designed to burn only wood pellets and can heat the room they are in directly, as well as provide heat to the rest of the home using a wet system and provide hot water, are also covered, as are ground or water source heat pumps, air to water heat pumps and solar thermal panels.

Only one space heating system is allowed per property but homeowners can apply for solar thermal for hot water and a space heating system.

The Renewable Energy Association, which has already backed the scheme, says its introduction could make 2014 a breakthrough year for renewable heating.

Read more about Strutt & Parker's Resources and Energy team.