Energy prices are going up, but did you know that a well-designed heat pump uses between three and four times less energy than a gas boiler and could save you money on your bills this winter?
Ofgem have just announced the latest energy price cap increase which comes into effect in October. Ofgem report that the average customer’s gas bill will rise to £1,902, with customers paying 15p per unit of gas and 28p per day in standing charges.
In comparison, switch from gas to a heat pump and the equivalent cost could be £1,575 – a saving of £327!
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Let’s look at the energy cost first:
New gas boilers are required to be at rated as at least 92% efficient. However, most boilers in the UK are oversized and not set up to condense properly, leaving a gap of around 10% efficiency¹. Let’s split the difference and assume your new gas boiler is 87% efficient. With the average household (according to Ofgem) using 12,000 kWh of gas for their heating and hot water, an 87% efficient boiler is creating 10,440 kWh of useable heat. You’re paying for the whole 12,000 kWh though so with the new price cap this will cost £1800.
In contrast, a heat pump is between 300% and 400% efficient. A heat pump uses electricity to drive a compressor which pulls existing heat from the surrounding air and uses it to heat your home. Harvesting this existing heat rather than generating it through burning fuel is why heat pumps are a renewable technology. The efficiency of a heat pump depends on several factors, including how cold the air is outside. You can read more about heat pump efficiency here.
Based on the latest price cap, a heat pump only has to be about 300% efficient to cost the same to run as a gas boiler. However, for this calculation we’re going to use 345% as at Evergreen Energy we believe this is very achievable for well-designed installations, providing both heating and hot water². This means that the equivalent energy cost for the heat pump would be £1,575.
So for the energy cost you are saving £225 by having a heat pump. But what about the other £102?
Well this depends on whether or not you want to keep your gas supply. If you have a gas cooker then you will need to either keep your gas supply or swap it out for an electric induction hob and electric oven.
If you are able to get off gas completely then you no longer have to pay the standing charge, saving you £102!
You just need to ask your energy supplier to disconnect you.
What about the standing charge for electricity?
- Yes, there is an equivalent standing charge for electricity and under the new price cap this will be £168 per year
- However, as a customer switching to a heat pump you will already be paying this for having electricity supplied to your home
- The standing charge is a fixed amount per day as part of your tariff, it doesn’t matter how much you use – so if you switch to a heat pump you’ll be getting more for your money
But aren't energy prices going to come down?
Hopefully energy prices will come back down in the future. However, they are not forecast to be reduced back to pre-October price cap levels for some time and may go up again before coming down³. However, even when they do drop, gas prices will likely remain high compared to electricity. Some of the cost of electricity is made up of green levies which the government look likely to transition onto the gas price instead in the coming years to incentivise the switch to low carbon heating⁴.
So there you go! Heat pumps are now both the greenest and the cheapest way to heat your home and could save you over £325 this winter.
This is before adding things like solar panels into the mix. If you already have solar then getting a heat pump is a great way to use more of the electricity you generate. The average solar installation of 3.6kW can offset your hot water heating for a large part of the year. Every unit of solar energy you can self-consume is a unit you don’t need to buy from your energy supplier.
Future proof your home and save money on your heating bill with a heat pump designed and installed by Evergreen Energy.
Get a quote today.
² According to the MCS product directory, the Midea 10kW output heat pump (model number: MHC-V10W/D2N8-B) has a SCOP of 3.78 (378% efficiency over the year) at a design temperature of 500C. However, we must factor in account the lower COP of the hot water production and legionella cycle.
Excerpt from Net Zero Strategy (p148): Rebalancing energy prices: Clean, cheap electricity is an everyday essential. We have seen the impact of over reliance on gas pushing up prices for hardworking people but our plan to expand our domestic renewables will push down electricity wholesale prices. However, current pricing of electricity and gas does not incentivise consumers to make green choices, such as switching from gas boilers to electric heat pumps. We want to reduce electricity costs so we will also look at options to shift or rebalance energy levies (such as RO and FiTs) and obligations (such as ECO) away from electricity bills over this decade. This will include looking at options to expand carbon pricing and remove costs from electricity bills while ensuring that we continue to limit any impact on bills overall. We know that in the long run, green products are more efficient and cheaper, and we are putting fairness and affordability at the heart of our approach. We will launch a Fairness and Affordability Call for Evidence on these options for energy levies and obligations to help rebalance electricity and gas prices and to support green choices, with a view to taking decisions in 2022.