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Air source heat pumps are not a new invention (they have been around since the 1950s) but they are having a recent increase in popularity. This is mainly due to the push towards more renewable energy sources. One thing that can sometimes put people off from taking the plunge is the price point of air source heat pumps. There is no doubt that there are higher upfront costs than for gas boilers, and there are several reasons for this.
Here we will examine why air source heat pumps are so expensive, how their price compares to other heating systems, their running costs, and how you can reduce the cost.
Explore further: How Much To Install Air Source Heat Pump System
An air source heat pump system is designed to absorb heat from the outside air and use it to heat your property.
There is an outdoor unit with an evaporator coil that contains a refrigerant liquid. The heat in the outside air heats the liquid which then evaporates into a gas.
The gas moves to a compressor which compresses it to further increase the temperature and is then passed on to an indoor heat exchanger which contains a condenser coil. This condenses the gas, which releases its heat into the property and turns it back into a liquid to begin the process again.
The heat is usually transferred to the property using radiators or an underfloor heating system.
Take a look: How Does An Air Source Heat Pump Work
Ground source heat pumps use the same mechanism to absorb and transfer heat but they differ in where the heat is sourced from. The refrigerant liquid is heated by the heat present underneath the ground.
Explore: How Much Does It Cost To Install Ground Source Heat Pump
An air source heat pump is more expensive to buy and install than other heating systems. On average, you can expect to pay between £9,000 and £15,000.
Learn more: How Much To Install Air Source Heat Pump System
Air source heat pumps are cheaper than ground source heat pumps, but they are still several times the cost of a gas boiler. Let's take a look at why.
Heat pumps are more difficult to install than gas boilers and other traditional heating systems. Our homes already have the structure to house a gas boiler or something similar, so their installation is relatively simple.
A heat pump does not fit as easily into the existing central heating system, so its installation is more complex. It will require specialist professional work, and will often require modifications internally. This could include changes to pipework, replacing radiators, the installation of a hot water tank or cylinder, electrical work, and structural modifications.
Out of the average cost of £9,000-£15,000 for an air source heat pump, £3,000-£5,000 goes on installation costs. For gas boilers, this is £1,000-£2,000, and for oil boilers, it is £1,500-£3,000.
Ground source heat pumps will entail even higher labour costs because they require outside groundwork such as drilling or trenching on top of any internal modifications needed. The installation costs of a ground source heat pump are £10,000-£15,000.
Heat pump technology is quickly becoming more sophisticated. While they aren't a new invention, they are at the forefront of the new drive towards renewable heating methods and, as such, there is a demand for better technology.
For instance, research and development may be focused on creating quieter heat pumps or heat pumps that can reach higher temperatures. In comparison, gas boilers are already highly developed with less demand for innovation.
Because the technology is new and is still being developed, the cost is still high. You will often see this with new technologies. Smart TVs, for example, were very expensive when they were first developed, but they have come down in price now that the technology is established.
We live in the UK where the outside air can get quite cold. As such, we require heat pumps that can still work efficiently in the cold.
Air source heat pumps can extract heat from the outside air even when it is well below freezing, and as low as -15 to -20. More sophisticated cold weather models can extract heat when the outside temperatures are as low as -25 to -30.
High-efficiency models that work well in cold temperatures will have a high initial cost due to their enhanced engineering and superior technology.
They can be worth it, however, due to long-term savings. The more efficiently an air source heat pump can extract heat, the lower the running costs, and the lower the electricity costs to power the machine.
Market forces have a large impact on how much things cost. The dynamics of supply and demand, economies of scale, market competition, supply chain logistics, and manufacturing costs all affect the prices of air source heat pumps.
We are in a moment of flux with demand for this type of renewable heating technology. Whereas demand for air source heat pumps has historically been relatively low, now with the push away from fossil fuel heating methods and government incentives for renewable energy, demand for this technology has increased.
Because demand has been low, the forces of supply and demand mean that the cost of an air source heat pump has remained high. It also means that there have only been a small number of manufacturers and suppliers in the UK for this type of technology, so there hasn't been the market competition needed to reduce the price.
The manufacturing costs have also been affected. Because air source heat pumps aren't manufactured at a high scale, the cost of making them has remained high. The supply chain needed to move their parts and the finished product around the country also isn't well developed, which makes it more expensive.
All of this is likely to change. The UK government is committed to net zero carbon emissions by 2050, with a ban on the installation of new gas boilers by 2035. So demand for heat pumps of all kinds will increase, which will impact all of the factors that are currently keeping the price high.
Another factor that will increase demand for air source heat pumps is the government grants available.
While the upfront cost of an air source heat pump compared to a gas boiler is very high, government grants can help to reduce it.
The Boiler Upgrade Scheme is designed to encourage UK households to replace their fossil fuel heating systems with a renewable alternative. It will cover a large portion of the cost of an air source heat pump, ground source heat pump, and, sometimes, a biomass boiler.
If you are eligible for the scheme, you will receive £7,500 towards the cost. So for an air source heat pump, this will mean that your upfront cost will be closer to £1,500-£7,500.
To be eligible, you will need to own the property in England or Wales. It doesn't have to be your main home. You will still be eligible if it is a business premises or you rent it out to tenants. You must be using the air source heat pump to replace a fossil fuel system, and you must have a valid energy performance certificate (EPC) for the property.
Dig deeper: How To Apply For Air Source Heat Pump Grant
There is a similar scheme available in Scotland that provides grants and interest-free loans towards the cost of clean energy.
For heat pumps, you could receive a grant of £7,500 towards the cost and you will also have the option of an additional £7,500 as an interest-free loan. If you live in a rural area in Scotland, there is a £1,500 rural uplift.
So in total, for non-rural areas, you could receive £15,000, and for rural areas, £16,500. In the majority of cases, this would fully fund an air source heat pump.
The situation with running costs can be more complicated. There is no doubt at all that heat pumps are many, many times more efficient than gas boilers.
Modern condensing gas boilers will have an efficiency of 90-98%. This means that they will convert 90-98% of the fuel used to power them into heat. For oil boilers, the efficiency is a little lower at 85-95%.
Heat pumps, on the other hand, are on average between 300% and 400% efficient. This means that for every unit of electricity used to power them, they will produce three to four units of heat. The efficiency of air source heat pumps is slightly lower than ground source heat pumps because the air temperatures fluctuate more than ground temperatures. But even at the lowest outside temperature, you can expect efficiency of at least 250%.
So what does this mean for your energy bills? This all depends on the price of electricity and your insulation levels. The energy efficiency of air source heat pumps is fantastic but electricity is expensive. Much more expensive than gas.
For a poorly insulated home, this could mean that your energy bills are around the same for a gas boiler or an air source heat pump. If you are replacing an oil boiler, you will still see a drop in your energy costs.
To get the most energy efficiency and lower energy bills out of your air source heat pump, your home needs to be properly insulated. Older homes in the UK will often have poor insulation whereas new builds will be insulted well.
Insulation will affect the running costs of every type of heating system but the impact is greater for air source heat pumps. When insulation is poor, you get heat loss. This will make the temperature inside drop and you will need to produce more heat to bring it back to your desired temperature.
This is fine for gas and oil boilers that are designed to get hot quickly and cycle on and off, but air source heat pumps are designed to stay on constantly at lower temperatures. When they are forced to produce more heat to tackle heat loss, they need to work harder than they normally would, which reduces their efficiency and increases electricity costs.
If you need to install new insulation, this will increase the upfront cost. You can, however, apply for a government grant to cover the cost.
You can apply to the Great British Insulation Scheme. Through this scheme, you can get free or cheaper insulation if your home is poorly insulated. It will need to have an EPC rating of D to G. In England, the property will need to be in council tax band A-D, and in Scotland and Wales, it will need to be in A-E.
If you live in Scotland, you can also get help with insulation through the Home Energy Scotland Scheme (the same scheme that provides grants and loans for heat pumps). Through this, you can receive 75% of the cost of insulation up to £7,500. There is a rural uplift of an additional £1,500 if you live in a rural area.
We understand that the cost of air source heat pumps can seem daunting. We will work closely with you to figure out the most cost-efficient way of installing a heat pump in your home and we will also apply for the Boiler Upgrade Scheme on your behalf if you are eligible. We will give you insulation advice and help to keep the costs within your budget.
All of our engineers are highly qualified and we strive to ensure that your heat pump model is highly rated and efficient and that our installation is to the highest of standards.
Air source heat pumps have high initial costs compared to traditional heating systems like gas boilers. This is for a variety of reasons including the use of sophisticated technology, market forces, and installation costs. As demand for this technology increases, these costs are likely to go down. For now, the government provides grants that will cover the bulk of the cost to you so you won't end up paying much more than you would for a gas boiler.
