Strong demand sparks fears limited budget could be overrun.
The Energy Saving Trust (EST) is expecting strong interest from households wishing to take advantage of the first phase of the government's Renewable Heat Incentive (RHI) following the official launch of the scheme today.
The EST, which administers the scheme on behalf of the Department of Energy and Climate Change (DECC) told BusinessGreen that 2,700 households have already expressed an interest in applying for grants from the £15m Renewable Heat Premium Payment (RHPP) initiative since it was officially announced on 21 July.
Some 40 per cent of those enquiries were seeking solar thermal panels, 25 per cent air source heat pumps, 16 per cent ground source heat pumps and 18 per cent biomass boilers, a spokesman said.
Helen White, projects and performance manager at the EST, said that the RHPP team is prepared to deal with a large number of enquiries.
"There's no question that our RHPP team have been busy since the scheme was formally announced, and things have upped a notch now that we're open for business," she said.
"We're really pleased with the level of interest we've seen so far. There's clearly an appetite out there to explore alternatives to fossil fuel heating systems."
The RHPP is budgeted to support the deployment of 25,000 renewable heat generators, and the 2,700 enquiries so far represents more than 10 per cent of planned installations.
However, the news has prompted concerns that the limited funds available in the grant scheme to help households install solar thermal panels, heat pumps and biomass boilers could run out, and that the government could curtail payments early if it fears that the scheme is becoming oversubscribed.
The RHPP is available from today until 31 March 2012 and operates on a first come first served basis. DECC has said it will review payments when £10m has been administered.
Despite applauding the level of interest shown, Howard Johns, chairman of the Solar Trade Association, said he is concerned by the cash-limited nature of the fund and the fact that DECC is urging people to "be quick off the mark" to take advantage of the RHPP.
"I just think the whole scheme is going to come to a nasty end," he warned. "I don't see there's any way they can build a sustainable industry if the backdrop is 'get in fast'. It seems very short sighted."
Johns suggested that the second phase of the RHI, which offers incentives to commercial organisations installing renewable heat systems and is due to be launched later this year, looks more promising.
But he added that concerns remain across the industry that the EST will take a highly cautious approach to dishing out RHPP grants and send out "panicked" signals that that the limited funds could run out.
Johns warned that this prospect could dampen investor confidence in renewable heat, businesses fearing that "stop start" incentives will create a boom and bust industry.
"It's a bit of a joke from the government which wants to be the greenest ever, and shows it does not understand that businesses need some sort of framework that's stable to be able to invest," he said.
Johns cited DECC's decision to launch a fast track review of feed-in-tariffs earlier this year, the previous government's early closure of the Low Carbon Building Programme grant scheme, and delays to the launch of the RHI as signs that the government is failing to provide the stable policy framework the renewables industry craves.
A DECC spokeswoman declined to comment on specific concerns about investor confidence, saying only: "The RHPP is designed to be a voucher scheme to help people across the country install renewable heat equipment in their homes ahead of the RHI for householders next year.
"The scheme is open to applications today until 31 March 2012 and will operate on a first come first served basis."