Green central heating subsidy may cause business energy prices to rise.

If a proposed green central heating subsidy comes into effect then the amount businesses pay for their business gas and electricity will increase, consumer watchdogs and business groups have claimed.

The renewable energy incentive, which will be introduced next April, will benefit people that install renewable heating devices, reports the Times.

But the equipment needed to reap the benefits of the incentive, which includes biomass boilers, solar-thermal water heaters or ground-source heat pump, is expensive and is only available for owner-occupiers.

In order to pay for the subsidy, business energy bills are expected to rise by 12 to 35 per cent, as companies are expected to be forced to pay twice as much as the existing renewable energy subsidy.

There is growing concern that interventions, including the Carbon Reduction Commitment (CRC) scheme, are causing business energy costs to rise.

From the beginning of last month, the CRC initiative was introduced by the government.

The aim was for businesses that showed they were energy efficient to be rewarded under the scheme and others that were less green to be penalised by it.