Heat Pumps for those on a Gas Boiler
We often get asked ‘I have a gas boiler – should I replace it with a Heat Pump?‘
Over the 10 years that we have been installing heat pumps, customers off the mains gas grid (oil, LPG, solid fuel, and electric boilers or storage heaters) have had incentives and fuel saving returns that provide a clear economic benefit for installing a heat pump.
The financial savings have been more marginal for those consumers with a mains gas connection. The price of electricity has generally been 350% to 400% higher than the gas price per kWh, meaning that there has been little if any running cost saving for mains gas customers.
The Energy Price Guarantee from 1st October will freeze prices for 2 years at 10.3p per kWh for gas and 34.0 p per kWh for electricity (Martin Lewis 12th Sept 2022).
These prices mean that if you install a good quality heat pump with a Seasonal Coefficient of Performance in excess of 3.5 then the average home will save around £500 per year by switching from a gas boiler to a heat pump (with caveats around how you use your heating).
We believe that there will only be more incentive to choose heat pumps in the coming years. As the relationship between electricity and gas prices continues to change fundamentally.
Here are some facts to consider:
- The retail electricity price is artificially inflated because it is tied to the wholesale price of gas – even though on average 50% of electricity is generated by renewable sources (most renewables investors are rubbing their hands…). In September 2022 Ofgem are actively consulting on removing this link to the gas price – such a move is supported by large parts of the energy supply industry.
- The government chooses to load the cost of its energy saving and renewable measures onto the electricity price and not the gas price – penalising renewable electricity generation whilst rewarding the burning of fossil gas.
- The continued uptake of renewables and nuclear for electricity generation to decarbonise will continue to reduce the electricity price relative to gas.
- The geopolitical situation is driving up fossil fuel prices.
- Energy supply concerns will push governments to further develop independent renewables and nuclear.
- The government will continue to incentivise the domestic uptake of renewable heating systems (but at a lower level) and will bear down on the use of fossil fuels for heating purposes through regulation – this is already evident from proposed changes to building regulations for new build properties.
The government has launched its 3 year Boiler Upgrade Scheme (BUS) – which offers up to £7,500 upfront grant for both Air Source and Ground Source Heat Pumps.
The BUS scheme for an Air Source Heat Pump will, in most cases, cover 35-50% of the cost of installation.
If we look to the future, the government is actively planning to legislate / regulate away from fossil fuels, meaning subsidies will probably continue to reduce and will mostly be targeted at those in financial hardship.
The Financial Bottom Line
A heat pump will cost from £10 -£15,000 to buy and install.
The government subsidy will currently contribute up to £7,5000 to this cost.
You can save £3,500 (or more for larger properties) in fuel costs vs gas over 7 years by installing a heat pump.
A study by Scottish Power and WWF has shown that an air source heat pump can add £5-£8,000 to the value of your property (plus more for solar panels).
What does that mean for me with a gas boiler?
The decision on upgrading to a heat pump really depends on your outlook and personal circumstances:
I am mainly motivated by environmental concerns
If you are 90% + motivated by the environmental impact of fossil fuels then a heat pump replacement with a green electricity tariff makes sense. Taking advantage of the subsidies whilst they are still available.
I am mainly motivated by fuel security concerns
If this is your main concern, then a heat pump replacement will follow what we believe will be the direction of travel for most governments wanting energy security. Again, take advantage of the subsidies whilst they are available and relatively generous.
I have an ageing gas boiler
If your gas boiler is reaching the end of its economic life then given all the factors weighing against fossil fuels then we believe it makes sense to seriously consider a heat pump replacement whilst subsidies remain relatively generous.
I have a relatively new gas boiler and am primarily concerned about cost.
Your financial decision point is currently marginal. But, if you have surplus(!) funds earning little in the bank, then the direction of travel on fuel prices, climate change and current world events should probably lead you to conclude that the time is right.
What else can I do to reduce energy consumption and costs?
Ensure that you take other beneficial measures that you may need. There are various other beneficial measures that you may implement to help keep costs lower, such as:
Additional insulation measures – draught proofing, wall and loft insulation, pipe insulation (particularly in the attic) and improving windows in particular.
Consider Solar PV and battery storage
Installing a programmable thermostat for your heating system
A low flow shower head to reduce hot water consumption
Please contact us if having considered this, you wish to take your project further.