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Heat pumps: The true costs of more sustainable home heating

It’s not often something that sounds as dull as a domestic heating incentive makes headlines.

But after a winter of record-breaking energy bills, many of us are keen to cut costs - so it was the perfect time for the government to announce households in England and Wales could apply for a grant to help pay for the installation of a more efficient heating system.

The one-off £5,000 grant will help households replace less efficient gas boilers with low-carbon heat and will be available from April 2022.

But is the deal too good to be true? We boil down the details so you don’t have to.

How does it work?

It may seem hard to believe in the depths of winter, but there’s heat in the air and ground, and it can be used to heat our homes.

As the name suggests, a heat pump takes low-temperature thermal energy from outside your home and pumps it up to a higher level, to be used throughout your house.

There are many types of heat pumps, but the ones that you’re likely to see heating homes are the air source pumps, ground-source pumps and hybrid systems.

  • Air-source pumps: Use a fan to pull in cold air from outside the home and warm it up to be used in your radiators and hot water.
  • Ground-source pumps: Use pipes to pull in heat that the ground has absorbed from the sun’s rays. Ground source heat pumps extract this heat energy, using a series of underground pipes filled with a mixture of water and anti-freeze, storing it much like a fridge working in reverse.
  • Hybrid systems: Act as a middle ground, allowing you to continue using your existing gas boiler alongside a heat pump - meaning that you don’t have to replace your current boiler, while still cutting your emissions substantially


While heat pumps can cost more to install upfront than a gas boiler, over time they usually work out cheaper to run, especially if your house is well-insulated.

The UK government wants to phase out our less environmentally-friendly gas boilers for low-carbon options, including those heat pumps - and from April 2022, households are being offered grants worth £5,000 to make the switch.

But, like any offer, there are a couple of catches.

While a £5,000 grant seems like a decent chunk of money, the average air-source heat pump costs between £6,000 and £18,000

Critics warn that the scheme doesn’t go far enough to start meeting our 2050 net zero carbon pledge.

The grant is expected to fund around 90,000 pumps in England and Wales over the next three years, which sounds good - until you realise there are 25 million homes across the UK with gas boilers.

Not exactly a massive impact for households struggling with rising gas and electricity costs.

Then there’s the cash to consider.

While a £5,000 grant seems like a decent chunk of money, the average air-water source heat pump costs between £8,000 and £21,000, depending on the size of your home and the kind of pump installed.

While it’s easier to put one in a new house, it’s possible to retrofit them at older properties. So, after the grant you will probably need to fork out the rest.

But you could apply for another grant that could help when it comes to replacing an old system with an environmentally-friendly one - the Renewable Heat Incentive (RHI).

You’ll have to pay for the work up front, though, then reclaim the payments quarterly over seven years.

Find out about green alternatives to gas boilers here.

Just one more thing

What you might not realise, though, is that there could be a huge list of additional work needed first.

Your home will need high levels of insulation for starters, which millions still don’t have, including old homes with solid walls that don’t allow insulation in cavities, and double glazing if you don’t already have it.

These are not cheap things to fix.

The Green Homes Grant was supposed to have helped address some of these issues - by paying £5,000 for up to two thirds of the cost for energy efficiency improvements like double glazing and sourcing energy from greener sources.

But the £1.5bn scheme closed early in spring 2021, having affected just 10% of homes it promised.

In other words, we’ve been burned by this kind of thing before - recently too - and we’re all a bit wary.

Plus, the system itself may need upgrades to things like your radiators and underfloor heating specifications.

If your home isn’t well-insulated, the truth is that a heat pump could cost you far more to run than a traditional gas system.

So it’s essential to do your sums carefully.

We know the cost of gas has, and will continue, to skyrocket.

The future is… fuzzy

We know the cost of gas has, and will continue to, skyrocket.

Our energy bills have already suffered and Ofgem - the energy regulator - is expected to increase the energy price cap by a massive 40% by April 2022 - as the rise in wholesale prices forces far higher household bills.

Faced with a trend like that you’d expect to recoup your heat pump costs fast, as long as your home is well insulated.

But there are few hard and fast figures out there yet.

It’s increasingly clear that this is a compelling solution for those who are currently or imminently renovating or building a home - but the pros and cons for the rest of us are difficult to determine.

Some homeowners are instead choosing to wait to see what technology emerges in the not-too-distant future.

As with other technology like solar, photovoltaic panels, whose costs have fallen dramatically over the years, there is plenty of speculation that the cost of these heat pumps will drop too.

Others, watching the huge amount of money being piled into the development of new renewable technologies right now, are waiting to see if hydrogen will present a better solution for example - a technology that could largely work across our existing gas systems.

Additionally, some are betting on communal ground source heat pumps stretched out under our roads.

There’s no doubt the future is renewable, but what exactly that future looks like is still a bit of a hot topic.

3 things to do
right now

1

Check how well insulated your home is, including in the roof, cavity walls, windows and even under your floors.

2

Find out about alternative routes to eco home improvements, particularly the Renewable Heat Incentive (RHI)

3

If you decide to apply for a heat pump grant, get all your ducks in a row now. The straightforward, well-organised, ready-to-go applications will be the successful ones when the scheme opens.

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Please Note

Don’t forget that while you may think that this article is brilliant, it is intended for information purposes only and should not be mistaken for financial advice or recommendations.

3 Things

Don’t forget that while you may think that this article is brilliant, it is intended for information purposes only and should not be mistaken for financial advice or recommendations.

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