Air Source Heat Pumps and Costs Explained
The boiler replacement scheme provides a £7,500 grant towards the install of a heat pump. The exact costs will depend on the size of the heat pump and the changes needed to your home. Green Squirrel experts can asses this for you for free. Government support is currently available with the which takes a significant chunk off the total bill. Heat pumps can also be much more efficient than gas boilers when installed and used properly, in well-insulated homes with the right sized radiators.
How much does an air source heat pump cost to install with Green Squirrel Energy?
Air source heat pumps (ASHPs) differ in size and installation cost which is why Green Squirrel provide a free home survey to ensure your install cost and return on investment is clear. For most installations the £7500 grant will cover over 50% of the cost of the heat pump, new radiators and all labour and installation costs.
The Energy Savings Trust says that air source heat pumps tend to cost between £14,000 and £19,000 to install. Green Squirrel Energy are a professional team of expert installers who provide a free survey and are confident we provide very competitive prices with excellent service. It’s worth getting a free quote for your own home from the Green Squirrel Team.
How much does an air source heat pump cost to run?
Heat pumps use electricity and the use of solar and/or battery storage make the use of heat pumps much cheaper.
Alan Little Director of Green Squirrel Energy and proud owner of a Mitsubishi Heat Pump, states: ”Our household could more than 50% on running costs with a heat pump compared to our old gas boiler. This required the heat pump installation to be of high quality, the efficiency of the heat pump to be high and for us to be on a suitable tariff. Our recent investment in battery and solar has resulted in even further savings.
How to calculate air source heat pump savings
An air source heat pump can save you money if it is well-designed and properly installed. To get a better idea of how much a heat pump might cost to run, you can make a rough calculation using your own data.
Below is an example of the running costs for the system installed for Mrs Little in Cheshire who installed a heat pump in December 2023.
Existing heating and hot water costs using gas
Gas consumption is 14,322KWh for Mrs Little’s family for heating and hot water in her home. There are no other gas appliances as Mrs Little uses electricity for cooking.
From 1 April 2024, the average price cap for gas is 6.04p per kWh, or £0.06 per kWh, so the annual cost of gas consumption is 14,322 x £0.06 = £859.32
From 1 April 2024, the gas standing charge is £0.31 per day, so the annual standing charge cost is 365 (days) x £0.31 = £113.15 or £113.
That makes the total gas bill for heating and hot water is £972.47
What's your heat demand?
To calculate the cost of running a heat pump, you need to work out your household heat demand using your current annual gas consumption and boiler efficiency.
A new A-rated gas boiler must be a minimum of 92% efficient; however, studies have shown that the actual in-use performance is generally lower. Older boilers are also less efficient, so we’ve assumed an average of 85% efficiency.
Current gas consumption is 14,322kWh but, as only 85% of that is being turned into heat, we calculate actual heat demand at 11,500 x 0.85 = 12,173.7kWh.
Potential heating and hot water costs using a heat pump
The heat pump owned by Mrs Little is a Mitsubishi Ecodan which have been designed and installed to achieve maximum efficiency. The COP (Coefficient of Performance) is the term used for efficiency. The heat pump installed has achieved a SCOP of 4.4 (440% efficient). This means that for every kw of electricity consumed the environmental yield ensures a very efficient system.
To deliver the heat demand of 12,173kWh, the amount of electricity required will be 12,173 ÷ 4.4 = 2,766kWh.
From 1 April 2024, the price cap for electricity is 24.5p per kWh, or £0.25 per kWh. So the annual cost of electricity for heating and hot water is 2766 x £0.25 = £691.64
We’ve assumed that all households already pay the standing charge for electricity, so there’s no need to add this.
Cost of running the Heat Pumps with Battery Storage?
Storing electricity in a battery by my energi means that Mrs Little can access low cost electricity an Octopus tariff suited to Mrs Littles needs.
From the cost of off peak energy is electricity is 9p per kWh, or £0.25 per kWh. So the annual cost of electricity for heating and hot water is 2766 x £0.09 = £248.94.
Cost of running the Heat Pumps with Solar Battery Storage?
Storing electricity in a battery by my energi means that Mrs Little can access low cost electricity an Octopus tariff suited to Mrs Littles needs. The solar power system Mrs Little installed in her home covers more than 100% of the annual energy requirements and generates a small income. A
From the cost of off peak energy is electricity is 9p per kWh, or £0.25 per kWh. So the annual cost of electricity for heating and hot water is 2766 x £0.09 = £248.94.
The electricity generated can be sold to the grid, used on production or stored in the battery for later use.
Which is cheaper?
Annual heat demand
(kWh)
12,173
Efficiency
0.85
Annual energy use
(kWh)
12,173.7
Energy price per kWh
(from 1/07/2024)
£0.06
Annual cost of energy
for heating and hot water
£730.38
Annual gas
standing charge
£113
Total annual bill
for heating and hot water
£843.38
Annual heat demand
(kWh)
12,173
Efficiency
4.4
Annual energy use
(kWh)
2766
Energy price per kWh
(from 1/07/2024)
£0.25
Annual cost of energy
for heating and hot water
£691.50
Annual gas
standing charge
N/A
Total annual bill
for heating and hot water
£691.50
Annual heat demand
(kWh)
12,173
Efficiency
4.4
Annual energy use
(kWh)
2766
Energy price per kWh
(from 1/07/2024)
£0.09
Annual cost of energy
for heating and hot water
£248.94
Annual gas
standing charge
N/A
Total annual bill
for heating and hot water
£248.94
Annual heat demand
(kWh)
6160 / 6013 from solar
Efficiency
4.4 / 4.4
Annual energy use
(kWh)
1400 free solar / 1366
Energy price per kWh
(from 1/07/2024)
£ 0.00 / £0.09
Annual cost of energy
for heating and hot water
£0 / £122.99
Annual gas
standing charge
N/A – N/A
Total annual bill
for heating and hot water
£0 / £122.99
In this example, running a heat pump would cost you £151.88 less per year without solar or battery storage. This is due to the efficiency of the system.
If you gas boiler is less efficient, or you install a more efficient heat pump that exceeds 440% efficiency, then you will begin to see cost savings if you switch to a heat pump.
Changes in energy prices will affect future comparisons. If gas prices continue to rise at a faster rate than electricity, then the running costs of a heat pump will be more attractive than a gas boiler in years to come.
Payback Period
The length of time required for an investment to recover its initial outlay in terms of profits or savings. If insulation costs and saves £55 a year its payback period would be two years.
Mrs Little in the example provided saved £721 per year. The install cost is subsidised by the boiler upgrade grant which is available to most home owners.
Other Factors
Replacing A Gas Boiler
If you have an old boiler anyway then this would require replacing then the return on investment can be considered with this considered.
Running Costs
A well installed heat pump can save 32% on your energy bill. Exactly how will it performs will depend on your property.
Home Batteries and Solar
A heat pump is much cheaper to run and costs with solar of power stored in a battery are driven down futher.
Improved
EPC rating Increase. Your EPC will
Property value
The government policy is to stop gas boilers being installed from 2030. A property that is already future proofed with an efficient heat pump could be significantly more attractive as a purchase.
Future Changes
Future changes to gas prices and National Security
The UK is extremely vunerable to energy price variations and it is simply better to have less reliance on outside suppliers of gas.
Reduce your environmental Impact
Switching to renewable energy is a positive impact to the environment. Mrs Little has moved to being gas zero, and massively reduced her carbon impact on the environment at the same time as removing a 1970,s , ineffiecint cylinder, removing very old radiators and replacing them with modern new radiators. As the boiler had already become unreliable and obsolete the overall improvement was massive.
Climate Change
Director of Green Squirrel Energy Alan Little states “sitting back and waiting for climate disaster is not a option for me. Join us on our Green Road to a better future.
Heat pump costs using specialist energy tariffs
The calculation above assumes you’d run a heat pump on a standard, variable price-capped electricity tariff. This wouldn’t be particularly cost-effective when compared to a gas boiler.
However, energy companies such at Octopus energy offer specialist tariffs that significantly discount the electricity used to power a heat pump – with one of these in place the calculations quickly swing in the favour of those with heat pumps.
The graph below, supplied by Dr. Rosenow of the Regulatory Assistance Project demonstrates how much you’d expect to pay with one of these tariffs, depending on how efficiently your heat pump was running, as compared to paying for gas for a boiler.
The graph shows that running costs for a heat pump can be less than those for a boiler if you’re on a heat pump tariff and your heat pump setup is efficient.
For example Mrs Littles heat pump with a SCoP of 4.4 could be paying as little as £122.99 for the same amount of energy that would cost £843.88 a year from a gas boiler – a saving of £721.79
This is based on:
- a total household gas use of 12,173 kWh for heating and hot water)
- price-capped gas costs of £0.0604/kWh, £823/year for an 85% efficient gas boiler
- price-capped electricity costs of 24.5p/kWh
- standing gas charges of £109.5/year
- specialist OVO electricity tariff of 0,09p/kWh using a battery storage system
- specialist Octopus Go electricity tariff of 9p/kWh
How to calculate your own savings
To calculate how much your own home might cost to heat with a heat pump, you can use the following formula:
heat demand x 1/heating efficiency x fuel price (+ annual standing charge) = annual heating cost
Heat demand: You can find your fuel consumption (in kWh) on your energy bills. If you use gas for cooking, deduct around 2.5% to calculate how much is used for heating and hot water. Multiply this by the heating efficiency (if your boiler is 85% efficient, multiply by 0.85). This is your annual heat demand (for heating and hot water in your home).
Heating efficiency: If you know your boiler’s efficiency, you can use that figure. If you know the make and model, you can check the efficiency in the product characteristics database. New gas boilers must be at least 92% efficient, but an older one may be much less efficient. Boilers often run less efficiently than rated.
Are there any other costs?
If you plan to replace your gas boiler with an air source heat pump, you may also consider swapping your gas cooker for an electric one. Retaining a gas supply just for cooking will mean the standing charge is disproportionately high.
If you terminate your gas supply, you may have to pay for removal of the meter. The cost varies according to supplier. If you don’t remove the meter, you must continue to pay a standing charge.
Getting your heat pump through Green Squirrel
Green Squirrel Energy offers a free survey with no obligation. We provide a performance estimate and information on how to maximise savings. Our specialist team provide installation and aftercare. We have a ‘Warm Home Promise’ means it will give you your money back if your heat pump doesn’t reach an agreed temperature for your home. In addition to this we are small professional team of experts that plan your system to maxmise efficiency.
Why getting your heat pump through us
We are MCS (Microgeneration Certification Scheme) certified
We follow a code of conduct known as RECC (Renewable Energy Consumer Code). This means we never use high-pressure selling techniques.
We are .
MCS hosts a database of MCS-certified contractors you can check.
Financing a heat pump
While you can get 0% APR loans for boiler installations from energy companies and installers that let you pay off your heating system over several years, this isn’t as commonplace for heat pump installations. Green Squirrel provide a very competive price which is often more comptetitive.
Finding an installer
Green Squirrel Energy pride ourselves on our team of expert installers. Former Royal Marine Simon Fagan prides himself on high standards of installation. Simon in the technical lead and quality manager for all our installs and leads. Alan Little is the Director and owner of Green Squirrel Energy and is your dedicated install manager and can be contacted on 07955 022128 to discuss your needs.