has been told.
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of a heat pump with that of a gas boiler in the UK finds little difference between the two – opening the door to more homes choosing the low-carbon option.
, found that the total cost of ownership (TCO) of installing, maintaining and running a heat pump is £16,861 over a typical 15-year lifespan, compared to £15,640 for a gas boiler – a difference of £1,221.
, said total heat pump costs are likely to fall in the coming years to the point where they cost the same – or even less – than gas boilers.
Dr Rosenow, who has advised Ofgem, the International Energy Agency and the European Commission, said the cost difference between heat pumps and gas boilers was smaller than he expected.
With heat pumps expected to become cheaper to buy, more efficient and less expensive to install – as the fledgling industry grows – that difference is expected to narrow further in the coming years.
“I was surprised to find that, for the total cost, the numbers almost matched, it’s basically almost the same,” he said.
“I was expecting to find that with everything in, total costs would be quite a bit higher still. But that wasn’t the case. And that’s for average installation, installed a few years back.
“If you did it now with more recent installations, I would expect heat pumps might possibly be even cheaper now, although its hard to tell without having the data. But I would expect the gap to have at least narrowed.”
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Dr Rosenow says its very difficult to predict how much installation costs will decline and when.
has found that heat pump installation costs will drop by up to 25 per cent by 2030 as more options come to the market.
. This would close most of the existing gap between total heat pump and gas boiler costs.
Dr Rosenow emphasises, however, that his heat pump calculations also take into account the £7,500 government grant currently available to most heat pump buyers, without which the cost differences would be much higher.
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to buy and install.
One way experts say the Government could make them cheaper would be to address the running costs – specifically taxes placed on electricity bills.
Running on electricity, they take heat from the air outside the building, bringing it inside and amplifying it to the required temperature – using the same technology as an air conditioner but in reverse.
But because most of the heat is transferred rather than generated, they are as much as three to five times more efficient than conventional heating technologies like gas central heating.
However, a lot of the efficiency benefit heat pumps have over gas heating is lost because electricity is much more expensive than gas – with the UK having the most expensive electricity in Europe, compared to its gas price.
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The gap between electricity and gas prices is largely because about three quarters of the levies – such as to fund new solar and wind farms and to improve energy efficiency – sit on electricity rather than gas bills (which have the other quarter).
Electricity also has higher transmission and distribution costs – with high-voltage power lines, transformers and substations more expensive to build and maintain than gas pipelines, which can transport large quantities of gas over long distances relatively cheaply.
While little can be done to reduce the transmission costs of electricity, taking the levies off electricity bills and putting them into general taxation could significantly reduce the price of electricity.
This, in turn, would reduce the cost of running a heat pump both in its own right and compared to a gas boiler.
Dr Rosenow estimates that taking the green levies off electricity bills and putting them onto general taxes instead would reduce the total cost of the average heat pump to £15,287 before any further reductions based on falling installation costs – compared to £15,640 for a gas boiler.
This would have the added advantage of increasing the amount of these levies paid by higher-rate taxpayers – although it is likely to be politically contentious, especially since Chancellor Rachel Reeves has ruled out most tax increases.
Alternatively, the green levies on electricity bills could be shifted to gas bills – a move that Dr Rosenow estimates would push the total cost of a gas boiler to £17,958.
Dr Rosenow says that, for the average customer, paying the levies through r gas rather than r electricity bill “won’t make that much of a difference” as the overall cost won’t have changed.
But there will be some cases – such as an elderly person living alone in a big house, who uses a small amount of electricity but a large amount of gas heating – which will need to be “very carefully considered” if you shifted levies to gas bills, he points out.
Dr Rosenow argues that many would regard shifting the levies into general taxation as a more equitable solution.
“If it came out of general taxation, higher income households make more of a contribution. A lot of people would say its a more progressive way of paying these levies, that putting them on bills is regressive because the people who have low incomes proportionately pay more of r income towards those levies compared to those who are on higher incomes,” he added.
Dr Harrison, of the Mott MacDonald engineering consultancy, said that by historically putting most green levies on electricity bills governments have created “an incentive for consumers to prioritise gas use over electricity”.
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“The greatest consumer incentive for heat pumps over boilers comes if you flip the electricity levies onto gas, but that would impact adversely the very large numbers of consumers still on gas at the time,” he said.
Another solution could be for the Government to reduce the burden of the high heat pump costs further and to reduce the risk of losses on moving house – for example through low interest loans with a government guarantee “to de-risk consumer investments and change the conversation to upfront and ongoing monthly payments looking compelling for heat pumps compared to getting 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 dispel some of the myths being spread around the costs of a heat pump”.
“Shifting levies away from electricity in some form would be positive and help to get more heat pumps into more homes, so that we can have energy bill stability and energy independence. It would be fairest to move them into general taxation.”
will make them cheaper and cleaner to run, rolling out upgrades from new insulation to solar and heat pumps.”
“We want to help people get a heat pump as they are three times more efficient than gas boilers, enabling families to save around £100 a year by using a smart tariff effectively.
“We are also making them more affordable by providing £7,500 towards the cost and have recently announced plans to remove planning constraints to make them easier to install.”
