Government publishes the amount of money that householders can expect to be paid for fitting solar hot water systems

The amount of money householders can expect to be paid for fitting "green heating" was published for the first time on Thursday, revealing most homeowners installing solar hot water systems are unlikely to recoup their initial outlay for more than 30 years.

The renewable heat incentive (RHI) will reward households for each unit of low-carbon heat generated from solar thermal panels and other renewable heating systems such as biomass boilers and ground-source heat pumps.

The scheme was due to launch this October but the government delayed it earlier this year. It will now launch in summer 2013 and the subsidy payments will be made over a period of seven years.

For oil-heated homes off the gas grid that install a £3,000 solar hot water system, owners would receive roughly £200 per year in RHI payments for seven years, in addition to an ongoing annual £80 in bill savings, meaning the upfront cost would be recovered in 20 years.

However, most homes are currently heated by cheaper gas and will struggle to recoup their investment for more than 30 years at the proposed rates, only getting back around £250 a year on bill savings and payments. Most solar thermal systems cost between £3,000-£5,000.

Paul Barwell, the chief executive of the Solar Trade Association, welcomed the RHI but said "the tariff level proposed for solar thermal will concern many of our members" and the association would be pushing for higher rates.

Dave Sowden, chief executive of the Micropower Council, told BusinessGreen: "The tariff levels for biomass and solar are problematic and will probably not provide adequate returns to help these technologies flourish."

RHI payments will be estimated based on the likely generation of the renewable heating system, measured in kWh (units), rather than based on a metered system. The rates, paid over seven years, are 17.3p per unit for solar hot-water panels, 12.5-17.3p for ground-source heat pumps, 6.9-11.5p for air-source heat pumps and 5.2-8.7p for biomass boilers.

The Department for Energy and Climate Change (Decc) hopes the scheme could help drive 380,000 renewable heating installations by 2020 - around 1.5% of the UK's 26m homes. Greg Barker, the climate change minister, said: "We need to revolutionise the way we heat our homes and businesses and move away from expensive fossil fuels, not only to cut carbon but to help meet our renewables targets and save money on bills."

Many in the renewables industry welcomed the announcement. The Renewable Energy Association's head of policy, Paul Thompson, said: "We are delighted that the government has published these proposals on time and we are looking forward to engaging further with Decc on the details to make the RHI work."

The RHI was announced under the last Labour government as the first scheme of its kind anywhere in the world. It is already operating for large-scale installations.