The renewable heat premium payment scheme, which opens on 1 August, is mainly aimed at households that do not have access to the mains gas network and are forced to rely on expensive oil or electric heaters.
However, a fifth of the fund will be set aside for social landlords to improve their stock. Details of how this will be allocated have not yet been announced.
The remainder of the fund will be open to applications from households in England, Wales and Scotland.
They will be able to apply for grants for ground source heat pumps, biomass boilers, air source heat pumps, and solar thermal hot water panels. Payments range from £300 to £1,250.
The Energy Saving Trust will run the scheme, with funds allocated on a first come first served basis. The effectiveness of the scheme will be closely monitored and, after £10 million has been allocated, an evaluation will determine if the remaining funds are handed out.
Climate change minister Greg Barker said: ‘This starts a new era in home heating because we’re making it more economical for people to go green by providing discounts off the cost of eco heaters.
‘Getting money off an eco heater 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.’
People who install eco heaters through the renewable heat premium payment scheme could also benefit from the renewable heat incentive, which is due to launch on 30 September.
This will make payments to people who generate renewable heat, in the same way as the feed-in tariff scheme pays people who generate electricity from renewable sources.
The government has said the RHI will apply retrospectively to equipment installed since 15 July 2009, if it meets eligibility criteria, even though it is also covered by the RHPP scheme.