Are heat pumps more expensive to run than gas boilers?

<img class="caas-img has-preview" alt="Some households are confused about the potential benefits of heat pumps.Illustration: Owen Price/Getty Images; Comosite: Guardian Design” src=”https://s.yimg.com/ny/api/res/1.2/z7ZSGpDcqp3X3RzXNynTCA–/YXBwaWQ9aGlnaGxhbmRlcjt3PTk2MDtoPTU3Ng–/https://media.zenfs.com/en/theguardian_763/bcf6e1048618c3b78af292fe0e91dfa7″ data-src=”https://s.yimg.com/ny/api/res/1.2/z7ZSGpDcqp3X3RzXNynTCA–/YXBwaWQ9aGlnaGxhbmRlcjt3PTk2MDtoPTU3Ng–/https://media.zenfs.com/en/theguardian_763/bcf6e1048618c3b78af292fe0e91dfa7″>

Some households are confused about the potential benefits of heat pumps.Illustration: Owen Price/Getty Images; Comosite: Guardian Design

Every year about 130 million households across Europe burn almost 40% of the continent’s total gas consumption to heat their homes. Those boilers contribute more than a fifth of Europe’s greenhouse gas emissions in the process.

Many have warned that the dominance of the humble gas boiler threatens to derail global climate targets, while keeping Europe reliant on gas imports and shackled to higher energy costs.

For most European homes, the answer is likely to be an electric air source heat pump, as governments try to clean up carbon emissions. But not all households are convinced. In the UK, the plans to replace millions of gas boilers across the country with the little-known devices has fed into culture wars. There are those who believe heat pumps could play a vital role in climate action, and sceptics who claim their benefits are a lot of hot air.

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In between these binary positions stand millions of households with little clear information and high-stakes financial decisions ahead. In a series of articles, we will highlight the myths, the realities and the grey areas around the heat pump agenda. The first in our series asks: are heat pumps more expensive than gas boilers?

The claim

It is true that heat pumps are expensive. In the UK, the majority of homes are expected to opt for an air source heat pump, which costs on average just more than £12,500 to buy and install, according to industry accreditors at MCS. This is four to five times the cost of a gas boiler, which usually falls 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 schemes have spurred the uptake of heat pumps across Europe. In Poland the government offered households up to €14,420 (£12,403) to fit green energy solutions, including heat pumps. In Italy, the government launched a short-lived “superbonus” scheme covering 110% of the cost of green homes upgrades, including heat pump installations. However, the gulf in upfront costs is narrowing all the time, with some heat pump installations getting close to cost parity with gas boilers once grants are included.

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Critics of the heat pump rollout have warned that even with government grants, households could face higher energy bills and may need to undertake costly home upgrades, too. In Great Britain, electricity is about four times more expensive than gas, according to the regulator’s latest energy price cap, which has raised concerns that heat pumps will cost more overall to run. There are also concerns that households may face eye-watering costs to upgrade their radiators or improve their home insulation to ensure their heat pump is effective.

But do these concerns stack up? The Guardian will tackle the issue of whether all homes are suitable for a heat pump later in this series. To understand the running costs of a heat pump we have drawn on the findings of independent experts.

The science

Dr Jan Rosenow, an academic and a programme director at the Regulatory Assistance Project (RAP), regularly analyses the shifting running costs of heat pumps compared with gas boilers.

In a recent paper 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 at a more efficient rate. On average heat pumps turn one unit of electricity into 2.5 to 5 units of heat, meaning they use about three to five times less energy compared with a gas boiler, he said.

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To get technical, 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 has shown that a heat pump with a SCoP of more than 3 will match the running costs of an 85% efficient gas boiler, while a SCoP of 3.2 will match the costs of a 90% efficient A-rated gas boiler.

So how do heat pumps in the UK score? A recent study of 750 households by the Energy Systems Catapult, an independent government-backed researcher, found that heat pumps typically have a SCoP of 2.9. This implies a small extra cost to running a heat pump compared with a gas boiler.

The findings are backed up by the Energy Saving Trust, an independent advisory group, which found that running a heat pump would be £14 a year more expensive than using a new A-rated gas boiler. The same research found that heat pump users would save £340 a year compared with using an older G-rated gas boiler.

Rosenow and the Energy Saving Trust used the standard energy tariff set by the energy regulator for Great Britain’s price cap in their calculations. But Rosenow has noted that a new breed of energy tariff designed specifically for heat pump users could tip the balance in their favour.

Octopus Energy has launched a new heat pump tariff, Cosy Octopus, which charges electricity at 19.6p a kilowatt hour, well below the standard tariff cap of 25p a kWh, which is in place from April to June 2024. Ovo Energy has offered a limited rate of 15p a kWh to the first 100 households to sign up to its Heat Pump Plus tariff. These tariffs would make even heat pumps with a SCoP score well below 2.9 significantly cheaper to run than a new gas boiler.

The caveats

Each country will be different. The economics of a heat pump compared with a gas boiler rely on the government grants used to lower the upfront cost of installation, and the fluctuating costs of electricity and gas.

Within each country the benefits of a heat pump hinge on its installation. A poorly installed heat pump would fall short of the average SCoP of 2.9 identified in field studies as a key point at which heat pumps reach parity with gas boilers, and this could quickly erode any expected savings – even when using a good value energy tariff.

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

This is a significant caveat because it underlines the importance of choosing a reliable heat pump installer to undertake the work. A good installer should also be able to advise on whether any home energy efficiency upgrades are needed to help keep upfront costs of installation in check, too.

The verdict

“Heat pumps can deliver cost savings over a gas boiler,” Rosenow said. “But only if the system runs at a good efficiency and because of the grants available. In the future, governments need to rebalance the taxes and levies on electricity to make heat pumps the lowest-cost heating option.”

The UK government is already considering options to lower electricity costs by moving the green levies usually paid through power bills into general taxation or on to gas bills. This would make the savings from choosing a heat pump even greater.

Early signs suggest that heat pumps are already yielding some financial benefits. In one of the UK’s largest independent home heating surveys about two-thirds (67%) of households with a heat pump said they were satisfied with their running costs compared with 59% of gas boiler owners – even without extensive energy efficiency upgrades.

The survey, by the 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 last winter and is thought to be the largest investigation into how households have responded to heat pumps to date.