Total Cost of Heat Pumps in the UK

What Are the Costs of Ground-Source & Air-Source Heat Pumps?

The cost of installing a heat pump varies widely among heat pump systems. Installing an air source heat pump can cost between £8,000 and £18,000 , while installing a ground source heat pump can cost between £20,000 and £35,000. However, after a few years, homeowners can start making money thanks to savings and grants like the RHI.

Due to their low operating costs, ground source and air source heat pumps can offer significant cost reductions over conventional heating systems. A ground source heat pump, for instance, can cut energy costs by at least 26% when compared to a brand-new gas boiler.

Some of the key factors affecting the running costs of domestic heat pumps are:

Coefficient of Performance (COP): When utilized just for space heating in place of a gas boiler, it can save up to 52% with typical values of 3.5 to 4.5 for ground source heat pumps and 2.5 to 3.5 for air source heat pumps.

Heat Requirements—how much heat your heat pumps must produce and at what temperatures will determine how much it will cost to run them.

Insulation is necessary to prevent heat generated by your heat pump from escaping via walls, windows, doors, and your roof, which raises operating costs.

Renewable Heat Incentive (RHI), a government incentive, would generate $2,539 in annual income for a two-bedroom home.

Cost of Ground Source and Air Source Heat Pumps

Household Size Technology Type Installation Cost
2-3 bedrooms Ground-Source Heat Pump £20,000-35,000
2-3 bedrooms Air-Source Heat Pump £8,000-18,000

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Heat Pump Performance: Running Costs in the UK

The Energy Saving Trust conducted a field trial of 12 months, from 2008 to 2009, to evaluate the efficacy of heat pumps. From installation to performance indicators, 83 heat pumps (29 air-source and 54 ground-source heat pumps) were under observation in the trial.

The study's findings indicated that heat pumps can function effectively in the UK if they are properly installed and designed.

The customers who took part in this study gave the industry significant experience. Due to the numerous factors that influence the cost structure, running expenses for ground and air source heat pumps can vary greatly, as is to be expected.

Annual Heat Demand and Running Costs Breakdown

Heating System 1 Bedroom 2-3 Bedrooms 4+ Bedrooms
Estimated Annual Heat Demand* 8,000 kWh 12,000 kWh 17,000 kWh
Gas £305 £455 £645
Electricity £1,150 £1,725 £2,440
Oil £325 £490 £690
LPG £525 £785 £1,110
Coal £325 £485 £685

* The annual heat demand is in accordance with the Typical Domestic Consumption Values

Some of these factors include:

  •  The level of insulation

  •  Whether the system is paired with underfloor heating or low-temperature flow radiators

  •  If a separate heat source is used for domestic hot water heating, such as solar thermal panels

You run the risk of purchasing a costly machine with high operating costs and CO2 emissions if you ignore these guidelines.

The majority of people see a significant reduction in their heating costs after a few years, despite the initially high prices; those that disconnect from the gas grid receive the biggest savings.

We break out a heating system's annual heat consumption by household size to give you an idea of the typical operating costs.

Heat Pumps vs Gas Boilers

Let's say your 200 m2 two-story home was constructed in 2010 in accordance with building regulations. Since the acknowledged need for space heating is 125 kWh/m2/year, 200 m2 would require 25,000 kWh annually.

In addition, we require domestic hot water. Assuming there are 4 occupants in the home, this translates to 3.488 kWh per day, or roughly 60 liters of hot water, to each person.

Let’s calculate what is required of a heat pump versus a condensing gas boiler:

Gas boiler:

  •  Gas for space heating: £1000 per year

  •  Water: 5,093 kWh / year. Needs 5,361 kWh / year = £200 per year

  Heat pump:

  •  Electricity for space heating: £835 per year

  •  Water: for 50°C: 4,054 kWh per year. Costs £135 per year

  •  For 60°C it’s an extra £132 per year = £267 per year

With a 95% efficiency rating, a relatively new condensing gas boiler, 26,316 kWh of gross energy per year will be needed. That would cost you £1000 a year at the current 3.80p gas price.

For water heating up to 60 °C, a household of four would use around 5,093 kWh of water annually. That would amount to 5,361 kWh per year at a cost of £200 per year at a 95% efficiency.

Consider heat pumps for a moment. A heat pump with a COP of 4.3 would require 5,814 kWh of power to provide the 25,000 kW of heating that is required. It would cost £835 per year to heat a room at 14.37p/kWh power rates.

Keeping in mind that most heat pumps can only heat to 50 °C on their own, without using their built-in electric heater, is important when thinking about household water heating with your heat pump. With a COP of 4.3, you would require 943 kWh for a family of four, which equates to 4,054 kWh of annual electricity use. There would be £135 in expenses per year as a result.

However, if you do decide to heat the water to 60 °C, you will need to budget an additional £132 annually because more electricity is required to raise the temperature of the water from 50 °C to 60 °C.

Overall, this means that if 60 °C is needed, heat pumps will cost somewhat more to operate than a modern condensing gas boiler.

3 Factors That Determine the Costs of Heat Pumps

Essentially, there are three factors to be considered in order to determine the total ground source and air source heat pump running costs:

  •  Air-source heat pumps

  •  the coefficient of performance of the heat pump

  •  the amount of heat needed for your house

  •  the temperature of the heat source

These three elements are intertwined. Although this is influenced by how much that heat source needs to be heated and how much heat is needed for a home, the COP influences overall efficiency.

Let's examine each of these elements separately.

The Coefficient of Performance (COP)

By comparing the quantity of power input to the amount of power output produced by the system under consideration, the Coefficient of Performance (COP) gauges a heat pump's efficiency. Therefore, the system is more efficient the higher the value.

  •  Ground source heat pump: COP of 3.5 to 4.5

  •  Air source heat pump: COP of 2.5 to 3.5

  •  Water source heat pump: COP of up to 5

The true efficiency of the system can be determined by the amount of work it must perform. Given the temperature differences between the outside and inside. The heat pump needs to operate less to achieve the required temperature the closer the two environments are near one another.

A heat pump typically has a COP of 4, which implies that 4 kW of heat are produced for every kW of electricity utilized. It is frequently touted as having a 400% efficiency, which may be deceptive.

Manufacturer efficiency differences in domestic heat pumps are limited. While some air-source heat pumps may have COPs below 2.5 and water-source heat pumps with COPs up to 5, these values are often uncommon.

The COP value typically ranges from 2.5 to 4.5.

The heat pump will require 3,928 kWh of electricity for space heating at a cost of £550 due to the weather scenario, and another £460 for the production of residential hot water, for a total cost of £1,010 per year.

Only 3.5% less would be spent on operating an air source heat pump than a gas boiler.

Your operating costs will go up if you also use the heat pump to generate domestic hot water.

As previously mentioned, the running costs are decreased by 26% when the ground source heat pump is simply used for space heating, but they increase when it also needs to produce hot water above °C.

COP Calculations

Every manufacturer calculates the COP based on a set of standards, which may or may not include factors like circulation pumps and defrost cycles but exclude the electric heater.

In general, heat pumps are made to produce temperatures up to 50 °C. Your operating costs will rise as the system's efficiency declines if your heating requirements are higher than this temperature. You will need to utilize more electricity to produce temperatures of 65 °C or higher, which gas boilers can accomplish. Therefore, it will cost you more to fulfil their heating requirements.

  •  Ground source heat pump: COP of 3.5 to 4.5

  •  Air source heat pump: COP of 2.5 to 3.5

  •  Water source heat pump: COP of up to 5

Your Home’s Heating Requirements

In general, heat pumps are made to produce temperatures up to 50 °C. Your operating costs will rise as the system's efficiency declines if your heating requirements are higher than this temperature.

You will need to utilize more electricity to produce temperatures of 65 °C or higher, which gas boilers can accomplish. Therefore, it will cost you more to fulfil their heating requirements.

The Temperature of the Heat Source

Operating expenses for air source heat pumps depend on a variety of variables. When combined with air convection heating systems or underfloor heating systems, and if the building is already properly insulated, they perform at their best.

While the outside temperature is above 7 °C, an average air source heat pump, such as an air-to-air heat pump or an air to water heat pump, will operate at COP 3 when supplying heat to an underfloor heating system.

The average UK temperature from November to March (1971–2001), according to data from the Met Office, is consistently below 7 degrees, with monthly averages ranging from 4.2 to 6.9 degrees. As a result, the COP will be lower than typical. Given the fluctuations in the ambient temperature, the COP will be close to 2.8.

Additionally, you must think about its physical placement while installing an air source heat pump. If you locate the air source heat pump in an area with lots of natural light and that is uncluttered, allowing the air to flow easily, you will lower the cost of operating the heat pump.

These three issues should be taken care of if you are looking at air source heat pump costs in the UK, since they will help with the heat extraction process and minimize operational expenses for air source heat pumps.

Poor installation that doesn't fully utilize the ground's warmth can be one of the main causes of ground source heat pumps' high operating expenses.

There is unquestionably some heat trapped beneath the ground, and the heat pump will exert more effort to retrieve it if a significant amount, a quick supply, or more heat is required. As a result, ground source heat pump costs soar and the COP plummets sharply.

How Can RHI Reduce the Cost of Your Investment?

It is highly advised to apply for the Renewable Heat Incentive scheme while purchasing heat pumps to reduce your operating costs. You can get paid for the energy you produce with the RHI for a period of seven years.

The RHI's specifics for England, Scotland, and Wales were made public by the UK government in April 2014. There are two programs for the Renewable Heat Incentive:

RHI for domestic use is tax-free. It consists of a subsidy that must be paid for seven years, each quarter.

Non-Domestic RHI is a subsidy that will be paid out in 20 years.

These plans have unique prices, joining requirements, guidelines, and application procedures.

The expected yearly domestic RHI payments for each low-carbon heating system are broken down in the following table:

Estimated Annual Domestic RHI Payment

Technology Type* 1 Bedroom 2-3 Bedrooms 4+ Bedrooms
Ground-Source Heat Pump £1,703 £2,555 £3,619
Air-Source Heat Pump £874 £1,310 £1,856
Biomass Boiler £560 £841 £1,192
Solar Thermal** £185 £295 £425
* RHI figures are based on the estimated annual heat demand. In the given example, the estimates are 8,000 kWh,
12,000 kWh, and 17,000 kWh. The figures are based on the latest tariff rates (Q1 2021-22) by Ofgem
** RHI payment for solar thermal is based on the deemed annual generation figures listed on the Micro generation Certification Scheme (MCS) Certificates. In the given example, the estimates are 900 kWh, 1,400 kWh, and 2,000 kWh

You may end up saving a sizable sum of money throughout the course of the system. The average salary you could receive over the period of RHI, which is seven years, is estimated in the table below.

Estimated Average RHI Payments over 7 Years

Technology Type Installation Cost 1 Bedroom 2-3 Bedrooms 4+ Bedrooms
Ground-Source Heat Pump £20,000 - £35,000 £11,921 £17,885 £25,333
Air-Source Heat Pump £8,000 - £18,000 £6,118 £9,170 £12,992
Biomass Boiler £10,000 - £19,000 £3,920 £5,887 £8,344
Solar Thermal £4,000 - £5,000 £1,295 £2,065 £2,975

*The RHI payments are based on the figures in the table 'Estimated Annual RHI Payment

The tariff rate is adjusted to the Retail Price Index each year on April 1st. Both of the programs must be administered by Ofgem.

What Heating Systems Are Covered by the RHI?

There are four main renewable heat technologies that are approved for the program under the RHI scheme. As follows:

  •  Air-source heat pumps

  •  Geothermal heat pumps

  •  Pumps that heat water (in some cases)

  •  Biological Boilers

  •  Thermal solar panels!

Customers will pay a different rate for each kilowatt-hour of generated thermal energy. For ground source heat pumps, the current residential RHI tariff is 21.16p/kWh, while it is 10.85p/kWh for air source heat pumps.

A household Energy Performance Certificate (EPC) is necessary to participate in the RHI program. An EPC provides data on a household's energy usage and advice on how to reduce energy waste and save money.

The Department for Business, Energy, and Industrial Strategy (BEIS) set heat consumption limits, which went into effect on September 20, 2017, because domestic RHI payments are funded by the government.

This is done to assist make sure that subsidies offer good value for the money. These requirements apply to biomass plants, ground source heat pumps, and air source heat pumps.

Annual Heat Demand Limit

Technology Type Annual Heat Demand Limit
Air-Source Heat Pump 20,000 kWh
Ground-Source Heat Pump 30,000 kWh
Biomass Boiler 25,000 kWh

The heat demand of your property is covered by these heat demand restrictions. Any property whose heat demand exceeds the applicable heat demand limit will receive payment in the same amount as if their heat demand were compliant with the applicable heat demand restriction.

After RHI expires on March 31, 2022, the UK government is planning to introduce the Clean Heat Grant program as a substitute. The new program intends to offer assistance for expanding the use of heat pumps.

How Can You Apply?

You can phone or submit your application online to Ofgem. You can request a digitally aided application over the phone. With the assistance of an advisor, you can complete your application and afterwards receive the required information via mail.

Every time you sell, buy, or rent a property, this certificate is a must. The majority of those who want to participate in the home RHI must meet this condition, which is also a part of the Green Deal Assessment. During your Green Deal evaluation, a consultant will explain to you how much money you can save and which renewable heating system is appropriate for your home.

The installation requirements for renewable heating systems vary depending on the city council. Don't be afraid to get in touch with your local council if you have any questions; they will establish whether you require planning approval before beginning installation.

We can assist you if you are prepared to purchase a heat pump but are unsure of your best selection. Fill out the contact form at the top of this page to let us know about your requirements and preferences.

When we get back to you, we'll ask you some more questions and put you in touch with other UK suppliers of heat pumps. You will receive up to 4 free, non-obligatory quotes!

As per UtilityKing the best energy suppliers are:

  •  Best overall service | Scottish and Southern Energy.

  •  Best at resolving complaints quickly | EDF.

  •  The largest supplier | British Gas.


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