You may have heard about air source heat pumps as a way to heat your home? You may have a good or a bad impression of them depending on what you’ve read or heard from people you know. I was out to dinner with a friend when I told him what I was doing and he asked me how much he could save getting a heat pump. This is awkward because people assume that like with electric cars, there are great savings on running costs.
I’ve been renovating a 2 bedroom edwardian terrace house and have insulated it very thoroughly to modern standards. I also wanted to install an air source heat pump so contacted Heat geek to obtain a quote. I've watched some of their youtube videos and they come across as very thorough, knowledgable and an excellent "go to" for advice on Heat pumps. They put me in touch with The Heating People who were also excellent in my dealings with them. I had the £350 survey done (taken off bill on completion of the work) which took measurements of the house and all the heating requirements.
I received a very detailed report on costing and the system that was being proposed. The report and the process was great and let me know that even with the £7500 government grant it would need £8,676 to complete the work, thats £16,176 total. This doesn’t include around £500 of electrical work that needs doing. The estimated savings are around £110 per year so It doesn’t make a lot of sense to do it especially on a house that isn’t worth a great deal. I was really disappointed as I’d set my heart on reducing carbon emission and creating a modern and clean green house but I simply don’t have the budget to complete the work. The savings aren’t enough to warrant the expense either so I suspect this is the case for millions of others around the country. I opted to mover the boiler and upgrade the microbore pipe to 15mm which cost £1700. At the moment the numbers don’t stack up for this property.
Heat pumps have SCOP (seasonal co-efficient of performance) of around 3.5. this means that for every unit of electricity you put in, you get 3.5 out. Even on very cold days of -10C, they can extract heat from the outside air and heat your home and give you hot water.
If we were designing an energy grid from scratch, gas wouldn’t even get a look in as a boilers efficiency can only reach 95% which is vastly inferior to a heat pumps 350%.
The main issue is that although heat pumps are 3x more efficient than boilers, electricity is 3 x more expensive than gas. Compounding the problem is that installation will often need a change of pipework and radiators to enable better heat transfer as heat pumps output lower flow temperatures. Better insulation is also required before the government grants are given which pushed the average installation costs north of £12,000 and are often over £20,000.
This puts us in a tricky situation given that heat pumps are supposed to be the next big thing for us to transition to, getting shot of those polluting gas boilers and reducing our carbon dioxide emissions. There are plenty of people who will make a sacrifice to lower their carbon emissions but not nearly enough to meet the governments target of 600,000 installs per year. There are currently only 50-60,000 being installed per year even with the £5000 government grant which has now been increased to £7500.
Much of the literature surrounding heat pumps centre around us lagging behind our self imposed targets and especially our European neighbours. The second largest economy by GDP and the second largest population in Europe and the UK has a woeful record of heat pump installations eclipsed by almost every other country.
Why are we so slow to adopt Heat pumps?
This slow adoption of heat pumps which is often attributed to our poorly insulated housing, lack of awareness and slow training of engineers but while the financial benefits of transitioning are marginal, we don’t have a hope of reaching a low carbon net zero economy. Heat pumps that deliver a clear and irrefutable reduction in heating costs are the sure fire way for people to take notice and install one. In short, affordability trumps decarbonisation for consumers and the government will always prioritise the economy over the environment.
Gas and Electricity history
Every country has its own historical baggage that impacts energy prices and subsequent energy use. As the first country in the world to industrialise in the 18th and 19th century, the UK has a large percentage of old, inefficient houses that are unsuitable for low carbon heating without expensive retrofitting. Policies and initiatives in the 1960s led to a highly developed gas network that at the time was seen as a clean alternative to coal but has left us with a dependance on it. Also discovery of oil and gas in the north sea further increased our dependance through the 70s and 80s.
Added to this, successive governments have applied taxes on electricity that was historically generated through burning coal which even then, was seen as environmentally polluting. Gas was seen as relatively clean and efficient and so has been largely exempt from additional taxes. Electricity is increasingly generated through low carbon, renewable technology like wind and hydroelectric but government policy and pricing hasn’t yet caught up with this.
Electricity pricing is also largely linked to the price of gas. Renewables like wind, solar and hydropower are the cheapest forms of electricity generation and supply around 40-50% of our electricity needs. Unfortunately even with nuclear power, we need fossil fuels, particularly gas, to plug the gap. Like in a penalty shootout, the cheapest forms of generation will be picked first, leaving gas as the last choice that decided the result, i.e the final price.
Subsidies
The government doesn’t officially subsidise fossil fuels, but they do offer tax relief totalling over £5.7 billion for new oil and gas investment. They have also approved over 100 new oil and gas fields in the north sea which is what the “Just stop oil” campaign opposes.
The government clearly want a nice little earner from these new oils fields as they raised the profits tax by 25% which brings the combined tax to 65%. However this is still below the global average of 70%.
Green levies
These were introduced in 2001 as a climate change tax. Levied onto electricity as at the time this was the most polluting of the energy sources. Coal still formed a large part of the energy mix so it made sense to tax this to encourage greater use of the cleaner, less polluting gas. The levy amounts to around 8-9% of peoples energy bills so while significant, isn’t the main issue in high energy prices.
The money raised goes towards funding upgrades to renewable technologies, better insulation and financial support for the most vulnerable. I think that most people would agree that these things are worthy things to raise money for.
All these factors have led to some of the cheapest gas prices in Europe paired with one of the most expensive electricity prices. Other European countries, the nordic countries especially, are adopting heat pumps much faster than the UK purely because the financial incentives to do so are much greater. Their housing stock needs fewer modifications and their gas networks are not as well developed which means a heat pump makes much better financial sense.
What matters is the ratio between electricity and gas prices. Where electricity is less than 3 times the price of gas, the financial incentive to adopt a heat pump is greater as their running costs dip below those of gas.
The UK has an electricity price that is 3.6 times that of gas per kWH which is the biggest difference in the whole of Europe bar Hungary. Unsurprisingly Hungary has a very poor uptake of heat pumps just like the UK. The key factor in heat pump adoption is the affordability relative to alternative methods. In this case I have pitted the price of gas against the price of electricity. The UK is a more extreme example of this there we are right at the bottom of the table.
Price of electricity relative to gas as of February 2023 (SOURCE HEPI)
Country | Gas Price (Euros/kWh) | Electricity Price (Euros/kWh) | Gas/Electric multiple |
Sweden | 30.1 | 31.8 | 1.1 |
Portugal | 15.6 | 21.1 | 1.4 |
Bulgaria | 10.2 | 15.3 | 1.5 |
Spain | 16 | 24.1 | 1.5 |
Switzerland | 17.3 | 27.7 | 1.6 |
Slovenia | 10.5 | 17.4 | 1.7 |
Austria | 20.9 | 36.1 | 1.7 |
Netherlands | 17.6 | 33.5 | 1.9 |
France | 13.7 | 26.7 | 1.9 |
EU | 13.1 | 28.3 | 2.2 |
Ukraine | 2 | 4.4 | 2.2 |
Luxembourg | 9.7 | 21.4 | 2.2 |
Germany | 22.3 | 49.5 | 2.2 |
Italy | 20.9 | 48 | 2.3 |
Denmark | 17.3 | 40.5 | 2.3 |
Romania | 6.3 | 16.3 | 2.6 |
Czech Republic | 15.4 | 41 | 2.7 |
Latvia | 10.8 | 29.5 | 2.7 |
Croatia | 5.2 | 14.4 | 2.8 |
Greece | 10.9 | 30.2 | 2.8 |
Estonia | 9.6 | 27.3 | 2.8 |
Lithuania | 9.2 | 27.5 | 3.0 |
Ireland | 16.1 | 49.9 | 3.1 |
Slovakia | 6.1 | 19.7 | 3.2 |
Belgium | 10.8 | 35 | 3.2 |
Poland | 7 | 22.7 | 3.2 |
Great Britain | 13.5 | 48.5 | 3.6 |
Hungary | 2.5 | 9.2 | 3.7 |
The worst thing about heat pumps isn’t their performance. It isn’t that you need to add home insulation, the low levels of training or even public awareness. The worst thing is the government policies that consistently skew energy prices that make green energy less competitive than it should be.
The true cost of fossil fuels aren’t being reflected in the price we are being charged. The destruction of the environment due to global warming has not been added onto the cost of fossil fuels. If they had been, the choice would be an obvious one, and we would be transitioning to a low carbon economy, much much faster. Politically, fossil fuels are difficult for governments (especially British ones) to wean themselves off from but this is exactly what they must do.
So What Now?
The current situation for heat pumps doesn’t look particularly rosy but there is some good news, and some even better news on the horizon.
Heat Pumps are getting more efficient
Crazy SCOP (seasonal co-efficient of performance) figures of over 4 (400%) are regularly being achieved in new systems from Heat Geek accredited installers. The latest technology being developed by the leading manufacturers like Valiant, Viessman, Daikin Hitachi or Bosch are squeezing even greater efficiencies that reach 500-600%. With these numbers getting a heat pump becomes much more appealing.
These increases in efficiency is coupled with certain manufacturers saying that they have developed high temperature heat pumps that can directly replace a gas boiler without the need to insulate or change the pipework and radiators. Others are sceptical but it all sounds very promising.
2) Prices are coming down
The banning of gas boilers being installed in new homes from 2025 will accelerate the demand for heat pumps. With around 200,000 extra heat pumps being fitted this will will feed into more installers with more experience, lower prices for the unit and installation as processes are streamlined. We’re already seeing competition hotting up between British Gas and Octopus in vying for the cheapest heat pump install that are being touted as the same price as a gas boiler. I tried getting an appointment with Octopus but it seems my house isn’t standard enough for them to fit one. “It looks like you may require a a larger heat pump or a more customised system design than we offer right now”. Speaking to an anonymous professional in the industry, they suspect the promotion is a data gathering exercise.
I figured the sticker price of £3000 was too good to be true but it is inevitable that costs will tumble over the next few years.
3) Environmental awareness is acute
Back in the 90s when i was doing an Environmental science degree, many people still saw it as the preserve of hippie tree huggers. There was still a lot of scepticism about the threat of global warming and that any changes would be far too expensive to implement.
Unfortunately the past few years have seen the world suffer from record temperatures and unprecedented wild fires and flooding around the world. On the positive side though, Climate skeptics have been silenced by the overwhelming evidence (and possibly personal experience). Near universal understanding of the threat and the growing will to reduce our impact on the environment is starting to translate into actions that mean we will achieve a more environmentally friendly economy.
4) Heat pumps are starting to look… err sexier.
Bear with me but heat pumps typically look like an industrial fan placed round the back, where no one can see them. Utilitarian, ugly and unloved. This has started to change as manufacturers are realising that people often have to place them in full view and want them to look a bit more high tech and flashy. The same transformation has happened with all other appliances in the home, we now have a washing machine and drier that looks like it was built by NASA and a coffee machine that has clean and stylish lines.
Far from being shallow, it is the design aesthetic that will be important in how the technology is perceived and received into homes where people may have doubts and lack any knowledge of heating.
So this is the positive side of things that make heat pumps a growing source for our heating needs. There is however one other stakeholder that has had a large influence on the energy market and the choices we make and that is the Government.
Without a clear, consistent and concerted effort by the government to support renewables and reduce the price of green energy, net zero targets will remain out of reach way past 2050. The best way we can do this is by making it clear that we won’t support or vote for political parties that don’t have cleaner energy policies.
The reality is that every technology has a curve of uptake and for Air sources heat pumps we are going from Innovators into early adopters.
A new technology that fundamentally changes the way we heat our homes; we’ve been here before. Being keen on taking the long view on new technology, I looked at the introduction of gas boilers to homes throughout the 20th Century. Boilers have had over 100 years to improve their efficiency and safety and like low carbon heating today, had their doubters and critics who said they were expensive, complicated and downright dangerous.
People dug their heels in saying, what’s wrong with coal? It heats my house perfectly well, I know how much i’m spending, I buy it up front, it create a cozy room and its part of my routine. There were fears it would prompt the breakdown of the family as everyone wouldn’t have to gather round the fire. George Orwell even wrote a rousing article in 1945 entitled “the case for the open fire” thinking its decline would trigger a breakdown of the family.
That kind of panic seems absurd now, but to be fair on the safety aspect, If I was living in the 1950s and someone said they wanted to pipe a highly flammable gas directly into my house, I’d have a few reservations! . These reservations would have been exacerbated by a string of high profile explosions that occur every year since gas has been used. Unfortunately gas explosions though are still happening, with 12 people in the past 5 years losing their life and 178 people injured. Despite some resistance, gas has become commonplace, the price of boilers has come down (relative to inflation) and they have become cleaner and safer.
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