Eco Happy (Solar Expert)

Published February 23, 2024

If you’re a homeowner wanting or planning to install a heat pump on your property – you’ve made a great choice! Heat pumps are the most carbon-friendly heating system around, but how do their running expenses compare to other heating systems?

Heat pumps have 300% – 400% energy efficiency ratings, which means they’re generating three to four times as much heat as they are using fuel. If this number doesn’t knock your socks off, then I don’t know what will!

But jokes aside, while heat pumps have exceptional energy efficiency ratings, it’s their installation and running costs that need to be considered. These clever devices offer air conditioning during the warmer months and act as heaters in colder months.

Air source heat pumps are generally more costly to run when compared to gas boilers, due to higher electricity prices, but you can save on running costs when opting for green heat pump tariffs and reduce your reliance on the gas grid.

So let’s cut to the chase and dive into this heat pump running costs article – where we’ll answer all your heat pump installations, efficiency, and cost questions – and more!

Heat Pumps: What Are They And How Do They Work?

Let’s quickly discuss what heat pumps are and how they work:

What is a heat pump?

  • A heat pump is a mechanical device used to heat and cool buildings.
  • It’s a renewable heating system that transfers heat from one location (e.g. outside air) to another (e.g. inside) using a compressor and fan-like structure of liquid or gas refrigerant.
  • A heat pump works by moving heat rather than generating it. It can move heat from a cool space to warm up a room and vice versa.

In essence, heat pumps move air rather than generate it, resulting in reduced energy consumption and lower energy bills. Commonly used in domestic and commercial properties, these marvellous contraptions can also be integrated with renewable energy technology (e.g. solar panels), further reducing their reliance on fossil fuels!

How do heat pumps work?

  • Heat absorption: In heating mode, warmth is absorbed from the outside via air, ground, or water. This mode warms our homes in chilly temperatures.
  • Heat transfer: The absorbed heat is then transferred to a refrigerant which is compressed to increase the temperature.
  • Heat distribution: The heated refrigerant is then circulated in the building, via a network of pipes such as central- and underfloor heating, to provide warmth.
  • Cooling mode: In ‘reverse mode’, the above process is reversed and acts as an air conditioner. The heat pump extracts warmth from inside your home and releases it outdoors, giving that cooling effect.

Types of heat pumps

You get two main types of heat pumps:

  1. Air source heat pump (ASHP)
  2. Ground source heat pump (GSHP)

Air source heat pumps

These extract heat from outside air, even in cooler temperatures, and transfer it inside. They effectively warm and cool homes and are often used in moderate-climate countries.

  • An air source heat pump system is only suitable for heating and cooling purposes (not for hot water supply or connection to your central heating system, like underfloor heating).
  • Installations for two- to three-bedroomed homes cost between £8,000 and £18,000.

Ground source heat pumps

A ground source heat pump uses the consistent temperature of the ground for heating and cooling. A ground-source heat pump is more energy efficient when compared to an air-source heat pump but has higher installation costs.

  • This system provides heating through your underfloor heating system and radiators, as well as supplying your home with hot water.
  • Ground source heat pumps for average two- to three-bedroomed homes cost between £1,500 and £3,500 to install.

Top tip: With UK government grants, such as the Boiler Upgrade Scheme or ECO4, you can receive up to £7,500 towards your initial heat pump installation cost – for qualifying homes.

Efficiency metrics

The Coefficient of Performance (CoP) metric is used to measure how efficiently an air source heat pump transfers heat from a lower temperature – and vice versa. It’s the ratio of the heat output to the amount of energy input required to generate that heat.

  • Essentially, it’s how well air source heat pumps convert energy/fuel (e.g. electricity) into heating or cooling for your home.
  • The higher the CoP, the more heat or coolness you get from the electricity input. This leads to low running costs and reduced energy bills.
  • CoPs can change based on things like outside temperature or how warm/cool you want your home to be.
  • So when you see high CoP metrics, it means your heat pump is doing a really good job in supplying your home with the most energy-efficient heating!
  • The CoP rating is calculated by:
    • Dividing the heat output (in watts) by the electrical energy input (in watts)
      • For example, an air source heat pump CoP of 3.0 means that for every unit of electricity, it generates three units of heat.
      • To put this into perspective, traditional electric heaters have a CoP of about 1.0. Typically, heat pump CoPs range between 2.0 and 4.0.

Understanding CoPs is crucial when evaluating the efficiency of your heat pump, especially in terms of energy consumption and cost savings.

Running Costs And Savings

Heat pump utility expenses, for air- and ground-source heat pumps, are influenced by many factors such as insulation and specific heating requirements of your home.

What factors impact heat pump running costs?

  • Household heat demand: This refers to the amount of heating power needed by heat pumps to keep your home at an optimal temperature. The size and layout of your home, coupled with your lifestyle routines will determine the size heat pump you need.The higher your hot water and heating demands are, the bigger the heat pump you’ll need: bigger heat pumps = bigger heat pump cost.
  • Insulation: The effectiveness of heat pumps is significantly affected by the insulation of your home. Better insulated buildings = lower running costs. Heat pumps in poorly insulated homes need to work harder (i.e. use more fuel) to keep homes warm/cool; leading to higher electricity bills.
  • Heat pump efficiency: This refers to how effectively heat pumps warm your home, shown as CoP ratings.

Heat pump vs gas boiler

  • A heat pump system is often considered a more cost-effective heating solution in the long run compared to a traditional gas boiler.
  • The initial installation costs for air source heat pumps are higher (£8,000 – £18,000) than traditional heating systems (£3,500 – £7,000) but long-term running costs are generally lower.
  • A ground source heat pump is cheaper to install (£1,500 – £3,500) compared to air source heat pump installations. They offer more reliable heating, especially during colder months, and generate less noise.

Read our complete “heat pump vs gas boiler” guide for more detailed information.

Cost comparison

In 2023, electricity was charged at 27 p per kWh. The annual Energy Price Cap (EPC) was £1,834 for typical households. According to Ofgem, the UK’s energy regulator, the new price cap coming into effect from January – March 2024 will raise the price cap to £1,928 per year:

  • Electricity = 28,62 per kWh (with 53,35 p daily standing charge)
  • Gas = 7,42 per kWh (with 29,60 p daily standing charge)
  • North Wales, London, and the South East have some of the highest electricity rates in the UK: 29,57 p; 29,38 p; and 29,38 p respectively while Yorkshire has the lowest rates (27,79 p).

Natural gas has the cheapest fuel price at the moment, however, it’s highly reliant on fossil fuels. With the UK government’s ambitious goal of net zero carbon emissions by 2050, energy efficiency and fuel types are important considerations when it comes to heating system running costs.

Ofgem says the average household uses 2,700 kWh of electricity and 11,500 kWh of gas each year.

Using these figures, we can estimate households NOT using heat pumps to be:

  • 2,700 kWh electricity x £0,02862/unit = £77,24 (excl. daily charges)
  • 11,500 kWh gas x £0,0742/unit = £85,33
  • This equates to an annual energy bill of £162,57

Based on 2023 Octopus Energy statistics, the price comparison between running costs of air source heat pumps and gas boilers are as follows:

  • Gas boilers:
    • Annual heat demand = 9,653 kWh
    • Energy efficiency = 82.5%
    • Annual energy use = 11,700 kWh
    • Average gas energy price = 7p/kWh
    • Annual heating costs = £820
  • Air source heat pumps:
    • Annual heat demand = 9,653 kWh
    • Energy efficiency = 300%
    • Annual energy use = 3,218 kWh
    • Average electricity energy price = 27p/kWh
    • Annual heating costs = £870

Based on the above, air-source heat pumps are a little more expensive to run – due to higher electricity prices – when compared to a gas boiler. However, they use three times less fuel to generate the same amount of warmth, making them a more eco-friendly choice in the long term.

Pro tip: Make use of flexible Cosy Octopussmart tariffs and save around £85 a year on your heat pump running cost. What’s more, if you completely rid your home of a gas supply entirely, you’ll no longer need to pay gas standing charges – saving a further £110 per year!

How do I calculate average heat demand?

Typically, a new gas boiler has an “A” EPC rating that is roughly 92% efficient. However, studies show that the actual in-use performance is generally lower than this, with an average gas boiler being 82.5% efficient.

If the average UK home gas consumption is 11,700 kWh, you’d calculate actual heat demand as such:

  • 11,700 kWh x 82.5 divided by 100 = 9,653 kWh (as seen in the Octopus Energy example)

Long-term benefits of heat pumps

Looking beyond heat pump costs, these systems offer many long-term benefits:

  1. Energy efficiency: Heat pumps maintain high efficiency over their lifespan, often outperforming traditional heating systems.
  2. Cost savings: Homeowners can expect significant savings on energy bills over time as heat pumps use less energy to generate warmth, particularly when you’re no longer reliant on a gas supply.
  3. Less maintenance costs: Generally, heat pumps require less maintenance than a combustion-based heating system.
  4. Reduced carbon footprint: By using electricity, especially generated from renewable energy, heat pumps emit less carbon emissions compared to fossil fuel systems.
  5. Solar integration: Heat pumps can be integrated with solar power, saving you more money. For example, 12 solar panels can generate up to 3,200 kWh of electricity, almost wiping out your heat pump electricity bill!

Service And Maintenance Costs

  • Annual heat pump maintenance cost = £100 – £200
  • Average heat pump repair cost = £500 – £600 (extensive repairs can go up to £2,000)
  • Heat pump lifespan = 10 to 15 years

Like any good machine, heat pumps need occasional TLC. Regular servicing – at least once a year – is key to keeping your heating system in tip-top condition. A few common issues leading to heat pump repairs include:

  • Electrical component malfunctions
  • Faulty compressors
  • Frozen coils (in colder climates)
  • Sensor issues
  • Refrigerant leaks

Regular maintenance, professional installations, and quick repairs are vital to heat pump longevity, your warmth – and your wallet!

Factors influencing repair costs

  • Type of heat pump: A ground source heat pump is generally more expensive to repair and service than an air source heat pump, due to components being underground. Specialised equipment is often needed to access and repair GSHPs.
  • Age of heat pump: Like any appliance, age affects its performance and heating ability. Older heat pump systems are prone to more wear and tear. If your heat pump is an older model, replacement parts may be challenging to find, leading to higher repair fees.
  • Type of repair needed: Minor repairs such as faulty thermostats or worn-out valves are usually inexpensive to fix. Bigger components like compressors and refrigerants are more expensive.
  • The extent of damage: The damage to your heat pump will impact repair costs. If multiple components need repairing or replacement, it will be more costly to fix.
  • Seasonal considerations: The time of year you choose to do heat pump servicing impacts the price tag. Colder months tend to have higher demand, leading to higher service fees. Opt for maintenance checks during warmer months (i.e. low-demand periods) for cheaper rates.

Next Steps

Let’s recap the top reasons why switching to a heat pump is recommended:

  1. Heat pumps are more energy efficient than traditional heating systems (300% – 400%).
  2. They generate more heat from less fuel and are easily integrated with solar power.
  3. Switching to heat pumps reduces your reliance on the gas grid, eliminating gas standing charges and supply.
  4. Heat pumps are more environmentally friendly, releasing less carbon emissions and reducing your household’s carbon footprint.
  5. Running costs, particularly for ground source heat pumps, are lower compared to gas boilers. Opting for smart energy tariffs (e.g. Cosy Octopus) can further reduce energy bills.
  6. Heat pump installation is suitable for all types of homes, whereas a gas boiler needs a reliable gas supply in your area.
  7. Heat pumps are less noisy (40 – 50 decibels) than boilers (30 – 60 decibels).

If you’re ready to make the switch from gas boilers to heat pumps, here’s what you need to do:

  • Explore government heat pump grants, like ECO4 and Warmer Homes Scotland, for savings on your initial heat pump installation.
  • Compare energy tariffs from various energy suppliers.
  • Consider solar power integration – UK government grants are available for this.
  • Contact Eco Happy for bespoke heat pump cost quotes and advice.

FAQs

Why is my electric bill so high with an air source heat pump?

Heat pumps use electricity to transfer heat from one location to another to meet the heat demand of your home. In the UK, electricity rates are higher (28,62 p per kWh) than gas (7,42 p per kWh), which is why your electric bill is higher.

However, you’ll likely find that your gas charges are significantly less.

How much does it cost to run a heat pump per hour?

On average, domestic homes use about 12,000 kWh of heat per year. An air source heat pump is between 300% – 400% efficient, which means it uses 3,000 – 4,000 kWh of fuel to generate the same amount of warmth.

A 2.2 kilowatt (kW) air source heat pump generates around 11 kW of heating power. If we calculate this on the average price cap for electricity (28,62 per kWh), you’ll pay roughly 63 p per hour or just over £5 for an 8-hour ‘running period’.

Is it cheaper to run a heat pump continuously?

It’s more cost-effective to run your heat pump (e.g. air source heat pump or ground source heat pump) when you’re at home, as continuous running is a waste of energy and money. Running your air source heat pump for eight hours a day will cost around £5, as opposed to £15 for 24 hours.

Conclusion

As you can see, many factors come into play when determining heat pump costs. In the long run, these heating systems are more cost-effective and better for the environment. However, electricity charges are the highest-priced energy source.

The great thing about switching over to an air-source heat pump is that you’ll eliminate your reliance on the gas grid, removing standing daily charges and reducing your energy bill in the long term.

Installing a heat pump system is more expensive compared to gas boiler installations, but taking advantage of government heating grants like the Boiler Upgrade Scheme can drastically lower your initial investment.

All in all, when deciding to install an air source heat pump to meet your home heat demand, it comes down to what is important to you. Do you want instant cash savings on your energy bill? If so, these systems are not the (immediate) answer. But if you’re in it for the long-haul, then heat pumps are the way to go!

If you’re unsure about your heat pump cost, chat with Eco Happy today!

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