From NOT A LOT OF PEOPLE KNOW THAT

By Paul Homewood

Time to take another look at heat pump costs, both installation and running.

Here I will be looking specifically at air to water heat pumps. There are lots of figures floated around for installation costs, and obviously a lot depends on the size of the house and other variables. Some, like Which, merely give a ballpark figure of around £10,000; others, like Ecoexperts give a range of between £7000 for 2-bedrooms and £13000 for 4-bedrooms. None seem to say exactly what is included.

Claims from heat pump suppliers need to be treated with extra caution. Certainly some I have seen, such as Octopus Energy, are grossly misleading.

I am therefore using data from the Energy Saving Trust and Greenmatch, neither of which can be described as anti-heat pump! The fact sheets from both are fully up to date.

According to the former, the typical cost is £14000, which they imply includes the cost of new radiators or other changes to the way heat is distributed. This cost of course does not include extra insulation.

In addition to this would be the cost of a new hot water tank. This would be a particular problem if there is no existing space to put one, which might involve building work. Alternatives such as hybrid systems (basically running the heat pump alongside a boiler!) would also be costly.

Greenmatch suggest anything between £8000 and £18000 for 2 and 3 bedrooms.

With insulation and water tanks, it is easy to see the cost approaching £20000 for an average sized home.

Running costs of a heat pump ultimately come down to what is called the Coefficient of Performance (COP). You will often see a COP of 3.0 bandied around as “typical” – this means that you 3 units of heat out of the system for every 1 unit of energy put in. For more details, see here.

However such claims are extremely oversimplistic. Greenmatch suggest anything between 2.5 and 3.5, assuming “adequate insulation”.

Greenmatch also state that the system will run at a COP of 3.0 when the outside temperature is above 7C. However they note that UK monthly average  temperatures are constantly below 7C between November and March, meaning a COP of 2.8 is more realistic. (Their figure of 4.5, by the way, is for ground source heat pumps.)

So let’s plug a few numbers in.

A typical 3-bedroom house is reckoned to use about 12000 KWh a year of gas for heating. Some of that energy is wasted, as gas boilers do not run at 100% efficiency. Greenmatch claim that the typical boiler only achieves 82.5% efficiency, but this is grossly misleading. Although this figure is derived from government studies, they were published as long ago as 2009, and were based on boilers that were already several years old at the time. As with heat pumps and other appliances, efficiency will inevitably decline over time. But nobody with a working gas boiler is likely to buy a heat pump, so the proper comparison must be made with a new modern gas boiler.

By law, A-rated gas boilers must be a minimum of 92% efficient. Even allowing for non-optimal working, a figure of 90% is not unreasonable, meaning that 12000 KWh of input energy supplies 10800 KWh of heat. With the price of gas set at 7p/KWh from Jan 2024, 12000 KWh will cost £840 a year. (Even assuming boiler efficiency of 85%, the cost would only increase to £889).

A heat pump working at a COP of 2.8 will use 3857 KWh. At a price of 29p/KWh, this amounts to £1118 a year.

A heat pump therefore is going to increase most people’s energy bills by £200 or more.

There is also the issue of hot water to consider, as heat pumps are neither able to supply super hot water, or hot water on demand. (The Energy Saving Trust talk about circulating water at between 35C and 45C, hence the need for much larger radiators).

This means that a heat pump will need a separate means of heating water, such as an immersion tank. But given that electricity is four times the price of gas, this could drastically raise the cost of hot water, compared to gas.

So don’t believe industry claims that heat pumps can save you money. And with gas prices set to fall in April, when the new Energy Price Cap is due, heat pumps will become even more costly in relative terms.

Finally, a quick comment about Air-to Air Heat Pumps, which have been commented on in previous posts:

The Energy Saving Trust have a separate factsheet for these.

The obvious advantage is that they are cheaper to install, between £1500 and £3500, according to Greenmatch. But the Energy Saving Trust note that “In the UK, air-to-air heat pumps are not typically used for heating larger homes, with most domestic air source heat pumps installations using air-to-water systems. More often, air-to-air heat pumps are installed in smaller properties, such as park homes or flats”

The first big problem for average sized homes is that you would need some sort of ducting system, which would be costly and disruptive to install. Moreover air cannot carry the large amounts of heat that water can.

Secondly, of course, you would need to install a hot water system, further adding to the cost:

And as we have seen already, using electricity to heat water is four times the cost of using a gas boiler.

According to a 2018 study, hot water accounts for a fifth of a typical household’s gas usage. At current prices that would be about £200.

Replacing a gas boiler with an immersion tank could see that bill rise to £800.