Are heat pumps more expensive to operate than gas boilers?

Enearly 130 million households across Europe burn nearly 40% of the continent’s total gas consumption to heat their homes. These boilers contribute more than a fifth of Europe’s greenhouse gas emissions to this process.

Many have warned that the dominance of the humble gas boiler threatens to derail global climate goals, while leaving Europe dependent on gas imports and tethered to higher energy costs.

For most European households, the answer is likely to be an electric air source heat pump as governments try to clean up carbon emissions. However, not all households are convinced. Plans to replace millions of gas boilers across the country with little-known devices in the UK have contributed to the culture wars. There are those who believe that heat pumps could play a vital role in the fight against the climate, and skeptics who argue that their benefits are very hot.

According to an industry expert, air source heat pumps cost on average just over £12,500 to buy and install. Photo: Leon Neal/Getty Images

Between these binary positions stand millions of households with little clear information and high financial decisions ahead of them. In a series of articles, we will point out the myths, reality and gray areas surrounding the heat pump agenda. The first in our series asks: are heat pumps more expensive than gas boilers?

Claim

It is true that heat pumps are expensive. In the UK, most households are expected to opt for an air source heat pump, costing on average just over £12,500 to buy and install, according to industry accreditations MCS. This is four to five times the cost of a gas boiler, which is usually between £1,600 and £3,000 depending on the size needed.

The UK government’s heat pump grant scheme puts £7,500 towards the cost of replacing a gas boiler with a heat pump. Similar systems have fueled the spread of heat pumps throughout Europe. In Poland, the government offered households up to €14,420 (£12,403) for green energy solutions, including heat pumps. In Italy, the government launched a short-term “superbonus” scheme covering 110% of the cost of upgrading green houses, including heat pump installations. However, the gap in initial costs is steadily narrowing and some heat pump installations are approaching price parity with gas boilers when grants are included.

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Critics of the introduction of heat pumps have warned that even with government grants, households could face higher energy bills and may have to make expensive home upgrades. In the UK, electricity is about four times more expensive than gas, according to the regulator’s latest energy price cap, which has sparked fears that heat pumps will become more expensive to run overall. There are also concerns that households could face staggering costs to upgrade their radiators or improve their house insulation to ensure their heat pump is effective.

But are these concerns piling up? The Guardian will look at whether all homes are suitable for a heat pump later in this series. To understand the running costs of a heat pump, we drew on the findings of independent experts.

Science

Dr Jan Rosenow, academic and program director of the Regulatory Assistance Project (RAP), regularly analyzes the shift in operating costs of heat pumps compared to gas boilers.

In a recent article for Carbon Brief, he explained that heat pumps have similar running costs to a gas boiler, even though electricity is more expensive than gas because they produce heat more efficiently. On average, heat pumps convert one unit of electricity into 2.5 to 5 units of heat, meaning they use about three to five times less energy than a gas boiler, he said.

In technical terms, the measure used to rate the efficiency of a heat pump over a year is known as the Seasonal Coefficient of Performance (SCoP). Rosenow’s analysis showed that a heat pump with an SCoP greater than 3 would match the running costs of an 85% efficient gas boiler, while an SCoP of 3.2 would match the costs of a 90% efficient gas boiler.

So how do UK heat pumps score? A recent study of 750 homes by Energy Systems Catapult, an independent government-backed researcher, found that heat pumps typically have an SCoP of 2.9. This means little additional operating costs for a heat pump compared to a gas boiler.

The findings are supported by the independent consultancy Energy Saving Trust, which found that running a heat pump would cost £14 a year more than using a new A-rated gas boiler. The same research found that heat pump users would save £340 a year compared to using of an older G-rated gas boiler.

Rosenow and the Energy Saving Trust used the standard energy tariff set by the energy regulator for the UK price cap in their calculations. But Rosenow noted that a new kind of energy tariff designed specifically for heat pump users could tip the balance in their favor.

Studies suggest that running a heat pump in the UK can have little additional cost compared to a gas boiler. Photo: Mark Waugh/Alamy

Octopus Energy has launched a new heat pump tariff, the Cozy Octopus, which charges electricity at a rate of 19.6p per kilowatt-hour, well below the standard tariff cap of 25p per kWh, which applies from April to June 2024. Ovo Energy is offering a capped rate of 15p per kWh to the first 100 households that sign up for the Heat Pump Plus tariff. Thanks to these tariffs, even heat pumps with an SCoP score well below 2.9 would be significantly cheaper to run than a new gas boiler.

Notice

Every country will be different. The economics of a heat pump compared to a gas boiler depend on government subsidies used to reduce initial installation costs and fluctuating electricity and gas costs.

In each country, the benefits of a heat pump depend on its installation. A poorly installed heat pump would not achieve an average SCoP of 2.9, which has been identified in field studies as the key point at which heat pumps achieve parity with gas boilers, and this could quickly erode any expected savings – even with a favorable energy tariff.

Some installers have reported higher than average heat pump efficiency ratings, even in older properties. Photo: Andrew Aitchison/In Pictures/Getty Images

That said, some heat pump installers have reported SCoP levels of around 4 – even in older properties – meaning even greater savings are possible than the current averages Rosenow modelled.

This is an important caveat as it underlines the importance of choosing a reliable heat pump installer to do the job. A good installer should also be able to advise if there is a need to improve the energy efficiency of the home to help keep even the initial installation costs under control.

Verdict

“Heat pumps can save costs over a gas boiler,” Rosenow said. “But only if the system runs with good efficiency and thanks to available grants. In the future, governments need to rebalance electricity taxes and levies to make heat pumps the cheapest heating option.”

The UK government is already looking at ways to reduce electricity costs by moving green charges, which are usually paid through electricity bills, into general taxation or onto gas bills. This would make the savings from choosing a heat pump even greater.

Early signs indicate that heat pumps are already bringing some financial benefits. In one of the UK’s largest independent home heating surveys, around two-thirds (67%) of heat pump households said they were happy with their running costs, compared to 59% of gas boiler owners – even without large-scale energy efficiency gains.

The survey, carried out by innovation charity Nesta, heard the views of more than 2,500 domestic heat pump owners and more than 1,000 domestic gas boiler owners in England, Scotland and Wales over the past winter and is believed to be the biggest ever survey of how households are doing. responded to heat pumps to date.