Air source heat pumps: how the costs and savings stack up

The lowdown as householders are being urged to replace their old boilers with greener alternatives

Householders are being encouraged to ditch their old gas and oil-fired boilers and replace them with new clean, green heat pumps.

In the run-up to the Cop26 climate summit, the UK government has set out plans to offer grants to help households install air source heat pumps and other low-carbon heating systems over the next three years.

Central and hot water heating accounts for about 20% of the UK’s carbon emissions. An air source heat pump running on renewable electricity will heat a home much more sustainably, which is why ministers are encouraging consumers to make the switch.

In simple terms, an electric heat pump works like a reverse fridge, extracting warmth from the outside air, the ground or a nearby water source before concentrating the heat and transferring it indoors. They can usually be found outside a home, and they look like a standard air-conditioning unit.

About 85% of UK homes use gas boilers for heating, making it one of the most polluting sectors of the economy. The fossil fuels used in our homes for heating, hot water and cooking make up more than a fifth of the UK’s carbon emissions, meaning low-carbon alternatives are critical if the UK government hopes to meet its climate targets.

Jillian Ambrose

What are they and how do they work?

In simple terms, an air source heat pump works like a reverse fridge, extracting warmth from the outside air before concentrating it and transferring it indoors to provide central heating and hot water. The pumps look like a standard air-conditioning unit and need to be situated outside the home. They will work at temperatures of minus 15c and lower, although the colder the outside temperature, the more electricity they need to consume to heat your home. Ground source heat pumps work in a similar way but collect the heat from pipes running underground. These are more efficient but are harder to retrofit to existing homes unless you are prepared to dig up your garden.

Running water from a tap
An air source heat pump extracts warmth from the outside air before concentrating it and transferring it indoors to provide hot water and central heating. Photograph: Jenny Dettrick/Getty Images

What does it cost to install one?

Don’t believe some of the quoted prices that have appeared in recent days, someone with a family-size three-bed house and larger can expect to pay £8,000-£15,000 in total to install a complete air source system, while fitting out a bigger home will cost more. Alongside the pump, that price will include a new hot water tank and labour. The final bill will depend on whether your existing radiators are large enough or need to be replaced. You are also advised to upgrade your home’s insulation at the same time, which could add considerably to the final bill, depending on your home’s construction. Fitting a ground source pump will cost much more – typically upwards of £15,000.

What financial help is there?

This week the government announced it will be giving households grants of £5,000 to help them install ASHPs, with the total money allocated enough to cover 90,000 homes. There will be grants of up to £6,000 available for ground source heat pumps.

The grants will be available from April 2022, and details of how consumers will apply are yet to be published. The scheme will operate for three years. It is highly likely that it will be oversubscribed, meaning those who can fulfil the criteria quickest will receive the grants.

What has been less publicised is the fact that you can already apply for funding via the Renewable Heat Incentive (RHI). Buyers have to pay for the work upfront and then reclaim the RHI payments, which are paid quarterly for the first seven years of ownership. The total paid to a household under the RHI depends on the measure installed, the home energy performance and the type and age of the boiler being replaced. Those replacing an old oil-fired boiler receive the most – typically £9,000. If you replace an old gas boiler in a family-size house you can expect to receive a total £7,000. There is a calculator on the Gov website.

To gain the RHI money you must use an MCS-accredited installer and there is a somewhat torturous application process. The RHI will close to new applications on 31 March 2022.

What do air source heat pumps cost to run?

People ripping out an inefficient old oil-burning boiler should reduce their annual energy bill by going for an ASHP – but not by a huge amount. Those taking out a gas boiler are highly unlikely to see any savings and could well end up paying more each year. Octopus Energy says in a poorly insulated home it will cost as much as 40% more to run a heat pump rather than a traditional boiler. This is because the cost of electricity includes carbon taxes and subsidies to support low-carbon energy projects. Green groups have called on the government to move these levies on to gas bills instead to encourage households to turn their backs on oil and gas.

Do they work as well as a conventional boiler?

A properly installed ASHP system, which is the right size for the property, should keep house warm on the coldest winter days. They typically operate at 55C rather than the 60-80C that gas boilers will often work at, which is why they can require bigger radiators. They work particularly well with underfloor heating and are designed to keep indoor spaces at a steady temperature with gentle top-ups through the day.

What are the downsides?

An air source heat pump
Air source heat pumps will work at temperatures of minus 15c and lower, although the colder the outside temperature, the more electricity they need to consume to heat your home. Photograph: KBImages/Alamy

The biggest problem is that a great many UK homes are not suitable for an ASHP. Flat owners have struggled to get permission, and that’s assuming the installer has found a way to make a system work inside a confined space. Retrofitting a system with an existing boiler is not for the faint of heart on the basis that much of the plumbing will need to be replaced. You will also need a place to store a water tank.

There have been concerns over the reliability and longevity of some systems. Mitsubishi pumps appear to be well regarded, as do those coming out of Scandinavia, and, more recently, the Northern Irish supplier, Red. Some installed in coastal towns have suffered premature wear because of the high salt content in the air.

Is it worth it?

If you are gutting and restoring a house and putting in a whole new heating system along with a major insulation upgrade, installing an ASHP – or, even better, a ground source pump – along with underfloor heating is a no-brainer. Equally, if you are currently running an old boiler that needs replacing anyway.

Whether you will want to rip out a perfectly good, modern gas boiler will largely depend on how keen you are to move to zero carbon heating, the level of your home’s insulation and, if your insulation is poor, whether you are prepared to see your bills rise.

Is it worth waiting for an alternative technology to emerge?

Possibly. A great deal of investment is being put into community ground source heat systems, where whole roads, estates and tower blocks are plumbed into a central ground source that runs under the road. Simon Lomax, who runs Kensa Heat Pumps in Cornwall believes these offer a much better long-term solution as they are more efficient and durable, and don’t have many of the downsides of ASHPs. Hydrogen is the other great hope. Trials and schemes are testing whether the highly flammable element can be used safely.


Miles Brignall

The GuardianTramp

Related Content

Article image
A three-bed house with £500 energy bills? How you too can slash your costs
With gas and electricity bills burning an ever larger hole in people’s pockets, it makes sense to consider every possible solution. We talk to the homeowners who have seriously cut their energy costs

Patrick Collinson

22, Oct, 2016 @5:59 AM

Article image
Heat pumps: have a cosy home without warming the planet
Home owners can get help from government schemes but do they really cut costs?

Patrick Collinson

28, Nov, 2020 @7:00 AM

Article image
Is it worth switching to LED lights and fittings?
I’ve heard the claims but I’m not yet sold. Please convince me

15, Jul, 2017 @5:59 AM

Article image
The energy efficiency 'savings' that are just hot air

Energy Saving Trust to downgrade claims for savings on new boilers and loft insulation

Patrick Collinson

18, Jan, 2014 @7:00 AM

Article image
‘It’s been brilliant’: air source heat pump will recoup cost for owner
Wendy and Steve Knight could not be happier after changing an oil-fired boiler for a greener option

Miles Brignall

23, Oct, 2021 @7:00 AM

Article image
Home insulation: how to stop your bills going through the roof
Guardian Money writer gets independent advice on his home’s energy efficiency

Miles Brignall

12, Feb, 2023 @7:00 AM

Article image
Low energy bills come rain or shine from solar and wind power
Feed-in tariffs from solar and wind can bring huge returns – despite recent research showing energy-saving measures have often disappointed

Ruth Jackson and Patrick Collinson

25, Jan, 2014 @7:00 AM

Article image
Burning issue: Are wood-burning stoves going to get the chop?
With the government aiming to clean up the UK’s air quality, wood burners and open fires are likely to come under scrutiny

Miles Brignall

26, May, 2018 @6:00 AM

Article image
Gas goes green as suppliers opt for carbon neutral sources
Electricity has long led the green energy market, but now both utilities are coming under the eco umbrella

Miles Brignall

23, Apr, 2016 @6:00 AM

Article image
Passivhaus: how to insulate your home against soaring heating bills
Properties are built or retrofitted to exacting ‘energy and comfort standard’ for maximum efficiency

Donna Ferguson

19, Feb, 2022 @10:00 AM