How heat pumps could become cheaper than gas boilers, according to scientists
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Research in the UK has found no real difference between the cost of running a heat pump and a gas boiler in the UK, making it a more viable low-carbon option for more homes.
Found that the total cost of ownership (TCO) of installing, maintaining and running a heat pump comes to £16,861 over a typical 15-year lifespan, in contrast to £15,640 for a gas boiler – a difference of £1,221.
said total heat pump costs are likely to reduce in the coming years to the point where they match, or even undercut, the cost of gas boilers.
Dr Rosenow, who has advised Ofgem, the International Energy Agency and the European Commission, claimed the cost difference between heat pumps and gas boilers was less considerable than he had anticipated.
With heat pumps expected to become more cost-effective to purchase, more energy-efficient and lower in installation costs - as the burgeoning industry develops - that disparity is anticipated to diminish further in the years to come.
"What really took my attention was how the overall cost added up, and to my surprise, the figures were almost identical," he observed.
I was anticipating the overall costs to be significantly higher, taking into account every factor. But that wasn't the case. And this is a typical installation from a few years ago.
If you did it with more recent installations, I would expect heat pumps to be even cheaper now, although it's difficult to be certain without some data. However, I would expect the price difference to have decreased.
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Over a person's average 15-year exchange with a particular payment card
Heat pumps cost:
Upfront costs (equipment and installation): £4,588
Running costs: £10,631
Maintenance costs: £1,643
Total: £16,861
Gas boilers cost:
Upfront costs: £3,000
Running costs: £10,997
Maintenance costs: £1,643
Total: £15,640
Source: Jan Rosenow/iScience
Dr. Rosenow says it's very difficult to predict at what rate installation costs will decline and when they will do so.
Research forecasts that the cost of installing heat pumps will reduce by as much as 25 per cent by 2030, as more choices become available.
Cutting the majority of the disparity between total costs for heat pumps and gas boilers.
Dr Rosenow stresses, nonetheless, that his heat pump calculations also account for the £7,500 government grant that is currently available to most heat pump purchasers, without which the cost discrepancies would be significantly greater.
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to buy and install.
One way experts suggest the Government could make them cheaper would be to address the running costs – particularly the tax on electricity bills.
Running on electricity, they collect heat from the air outside the building, bringing it inside and raising it to the desired temperature - using the same technology as an air conditioner, but operating in reverse.
But because most of the heat is transferred from one source to another instead of being generated, they are up to three to five times more efficient than conventional heating methods such as gas central heating.
However, a significant amount of the efficiency advantage that heat pumps have over gas heating is lost because electricity is much more costly than gas – with the UK possessing the highest priced electricity in Europe compared to its gas price.
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The main reason for the difference in electricity and gas prices is largely due to the fact that about three quarters of the levies - such as funding new solar and wind farms and boosting energy efficiency measures - are actually included in electricity bills rather than gas bills (which have the remaining quarter).
The cost of transmitting and distributing electricity is higher than that of transporting gas - high-voltage power lines, transformers and substations are more costly to construct and maintain than gas pipelines, which can transport large amounts of gas over long distances at a relatively low expense.
While not much can be done to lower the transmission costs of electricity, taking the charges off electricity bills and putting them into standard taxation could significantly cut the cost of electricity.
This, in turn, would decrease the expense of operating a heat pump, both independently and in comparison to a gas boiler.
Dr Rosenow estimates that removing the green levies from electricity charges and adding them to the general tax burden would lower the total cost of an average heat pump to £15,287, before any potential reductions resulting from declining installation prices - in contrast to the £15,640 required for a gas boiler.
This would have the added advantage of raising more of these levies from those paying the higher rate of tax – although it's likely to be highly controversial, particularly since Chancellor Rachel Reeves has ruled out most tax rises.
In an alternative scenario, the green levies on electricity bills could be applied to gas bills instead, a move which Dr Rosenow suggests would result in a household gas boiler costing a total of £17,958.
Potential changes to the costs of heat pumps and gas boilers under various levy regimes:
Gas boiler now: £15,640
Heat pump now: £16,861
Heat pump – if levies shift from electricity to general taxation: £15,287
Gas boiler - if levies shift from electricity to gas: £18,040.33
Source: Jan Rosenow/iScience
But there will be some cases – such as an elderly person living alone in a large house, who uses a moderate amount of electricity but a significant amount of gas heating – which would need to be "very carefully considered" if you shifted levies to gas bills, he notes.
Dr Rosenow suggests that many people would see transferring the levies into general taxation as a fairer solution.
Dr Harrison, from the Mott MacDonald engineering consultancy, said that historically by placing most green charges on electricity bills governments have created "an incentive for consumers to favour gas over electricity".
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“The biggest benefit of heat pumps for consumers would happen if you were to pass on the electricity costs to gas prices, but that would be a problem for the many people still on gas supplies at the time,” he said.
Another option could be for the Government to reduce the financial burden of high heat pump costs and lower the risk of losses when moving house, for example, by offering low-interest loans guaranteed by the government "to offset consumer risks and make heat pumps more appealing upfront and on an ongoing monthly basis, compared to purchasing a new boiler".
Jess Ralston, of the Energy and Climate Intelligence unit research group, said: "This is the first report of its kind and helps put to rest some of the misconceptions surrounding the costs of a heat pump."
“Removing support for electricity in some form would have a positive effect, and it would encourage more homes to adopt heat pumps, which would bring about energy bill stability and independence for us. It would be fairer to shift them into general taxation instead.”
'll help make them less expensive and more environmentally friendly to run, by implementing improvements from new insulation to solar and heat pumps.”
We'd like to assist people in getting a heat pump, as they are three times more efficient than gas boilers, allowing families to save approximately £100 per year by making the most of a smart tariff.
We're also making them more accessible by offering £7,500 towards the cost, and we've just announced plans to simplify the installation process by easing planning restrictions.
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