The Renewable Heat Premium Payment (RHPP) is being be extended with a new budget of £25 million: £10m for a new social landlords' competition, £8m for a new communities competition and £7m for an extension of the existing scheme.
Grant levels for individual households remain unchanged, with a £950 grant for Biomass boiler - for homes without mains gas heating).
The second phase of the Renewable Heat Premium Payment (RHPP) scheme, which gives money off renewable technologies like biomass boilers, air and ground source heat pumps and solar thermal panels, will be launched on 2 April this year and will be worth £10m more than the existing scheme.
Climate Change Minister Greg Barker said: 'The new Renewable Heat Premium Payment scheme will be bigger and better than the original.
'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. (EST)
Karen Lawrence, EST director of delivery, said: '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.
'We are encouraged by the interest in the first phase of the schemes - particularly the social landlord scheme - and look forward to building on this.'
The coalition remains committed to providing longer term support for renewable heat technologies in households and has published an update to parliament today. Proposals will be consulted upon in September at which point a firmer timetable for the launch of a scheme will be published, although it is anticipated this will be from summer 2013. Given this, the tariffs set out by the previous government in the consultation document in February 2010 should not be used as a basis for predicting what future support may be.
Baxi spokesman Simon Osborne said: 'RHPP has always been seen as a precursor to domestic RHI, so as the Government pushes back the latter, we are glad that a new RHPP will bridge the gap.
'Ideally both schemes need to work together in order to encourage individual installers, as well as homeowners, to start thinking about renewables. RHPP will definitely support early adopters, but might have a limited scope if accompanying tariff payments are not announced soon. If installers are going to invest in training on renewables, then they need to know what the potential market is going to be - and this will be determined, to a large extent, by domestic RHI.
'Customers in off-gas areas definitely have the most to gain under RHPP and we are pleased to see continued support for biomass and heat pumps. By introducing new elements that will cover larger projects, in social housing for example, there is a massive opportunity to impact fuel switching and alleviate fuel poverty.'
BEAMA has welcomed the RHPP extension following its recent provision of evidence to demonstrate that industry is now marketing the scheme strongly and determined to grow uptake along the way to a definitive RHI for domestic dwellings.
Kelly Butler, BEAMA's marketing director, said: 'Recent meetings with DECC have shown that Government is really taking renewable heat seriously and this extended commitment to £25m from £15m last year is good news and gives confidence to the whole supply chain.'
Meanwhile, plans to manage the budget for the Renewable Heat Incentive (RHI) for commercial, public sector, industrial and community-scale installations have been revealed to ensure its long term success. The proposals include a package of measures to be in place by the end of this financial year and a plan to control spending in the interim.
The £860m RHI opened in November last year to make it more financially attractive to install low carbon heating systems like heat pumps, biomass boilers or solar thermal panels.
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.
'We will ask industry for its views in the summer and in the meantime will arrange for interim measures to be in place to manage the scheme's budget. Looking at the scheme's current spending it's unlikely we will need to use these short-term measures, however Ofgem will hold a series of conferences for potential applicants over the next few months so it is right for us to be cautious and have the ability to act should we need to.
'Renewable heat is a largely untapped resource and an important new green industry of the future. It'll help the UK shift away from fossil fuel, reducing carbon emissions and encouraging innovation, jobs and growth in new advanced technologies.'
Commenting on the further delay to full scale renewable heat support, BEAMA's Mr Butler said: 'It has been clear that the introduction of the RHI in 2012 was not going to happen and we have briefed our heat pump manufacturers along these lines for some months now.
'But the good news is that Government remains committed to Renewable Heat so we should be pleased and confident for the future. However, what the Minister and officials have to better understand is that industry needs to budget just the same as DECC and Treasury, so we now want to see some early signals of some firm dates for introduction so we do not end up in an industry endlessly waiting for a Government scheme.
'If the Government wants to meet its fourth Carbon budget targets then 600,000 heat pumps need to be installed by 2020 and this will take firm policy direction and early action.'
DECC will launch a formal consultation in the summer to explore different policy options to ensure the RHI stays within its budget. This could include a system to lower tariffs as the scheme grows. The plans would then be in place by the end of the financial year. This consultation will also include amendments to the existing scheme covering air quality and biomass sustainability issues as outlined in the original RHI Policy document. As with the proposals above we hope to lay these in Parliament in November.
In the meantime, DECC is launching a consultation proposing an interim measure to keep the RHI within the budgetary limits set by the Comprehensive Spending Review. This includes the possibility of giving industry one month's notice to temporarily suspend the scheme to new entrants if 80 per cent of the available budget is expected to be spent.
Regular updates on the budget spend will be published. These measures will be in place as early as the summer and will last until the longer term cost control system is in place.
DECC plans to consult in September this year about increasing the number of technologies eligible under the industrial RHI with a view to implementing the plans by summer next year.
DECC said it would also set out shortly its long-term plans to decarbonise the heat sector when it launches its Heat Strategy.
