Will my heating bill increase if we get a heat pump?

I was asked this question by a householder who is in the process of considering making the switch from a gas boiler to a heat pump, in part due to a desire to reduce their carbon footprint. After an exchange where I learned their current situation and thoughts, they asked:

“One thing that keeps going through my mind are the electricity costs for the heat pump. We are billed for 40,000 kWh of gas, which is a lot. How much would it cost us for the electricity to run a heat pump?

Also, can we install a solar PV system that would be able to generate at least some of the electricity we need?“

I replied as follows:

“It depends in part on the extent of the fabric measures you do implement, although I understand that you have decided not to execute the ‘deep retrofit’ that an architect recommended due to the huge cost, for your 17th Century home. Can I just make it clear that your architect is ill-informed in saying that deep retrofit is essential before you consider a heat pump.“

No change in heat demand

“Let’s assume your current gas boiler has been operating at 80% efficiency.

That means the actual current delivered heat energy is 0.8 x 40,000 kWh = 32,000 kWh, which is then the actual heat demand! (You say that the bulk of this is on space heating, so I am ignoring the complication of the split in energy use between water and space heating, for simplicity).

Let’s assume in first instance that you don’t reduce this amount in the short term (through insulation etc.), in order to make a like for like comparison.

Let’s also assume that you achieve a SCOP (Seasonal Coefficient of Performance) of 3 (by the way, my listed house has a predicted SCOP of 3.6, so better than 3. So, for the calculation below, this can be regarded as a conservative estimate, as long as your system is professionally designed and installed; and remembering that the system as a whole may require some radiators to be upgraded).

That would imply the amount of electrical energy required would be 

= 32,000/ 3 = 10,700 kWh (rounded up)

I am going to use capped prices (as at Autumn 2022) to get a ‘worst case’ for you at least this winter.

At the current capped rate of 34p/kWh for electricity this would mean an annual cost of

10,700 kWh x 34 p/kWh = 363,800p = £3,638 using the heat pump system

The cost of using the current boiler, with 10.3/p/kWh for gas, would be:

= 40,000kWh x 10.3p/kWh = 412,000p = £4,120 using the gas boiler.

This calculation (with its assumptions) implies that the running costs would be less for the heat pump than with the gas boiler.

This might at first surprise you given the higher unit cost of electricity, but it rather demonstrates the impact that much higher efficiency has on running costs.

Obviously, this will change if/ when the unit prices change, but not necessarily in a bad way. If, as has been muted, electricity costs from renewables are decoupled from the costs of gas station generated electricity (which is dependent on world market costs, which then tends to drive up the costs of all domestically generated electricity irrespective of source. Then in future, we could see a drop in electricity, and this would be a progessive reduction as the grid gets greener and greener over time). “

After fabric measures

“It would also be different if – as would be prudent – any measures are undertaken like loft insulation to reduce heat demand. You said you planned some measures. As my essay explained, there is a trade-off between insulation (and other fabric measures) and a heat pump, which depend in part on your overall retrofit budget. All I suggest is that you leave some money in the pot to get a heat pump, but that’s not to say that fabric measures are not important, far from it.

Suppose that following loft insulation and other fabric measures you decide to implement, the actual heat demand of 32,000kWh was reduced by 20%, to 25,600kWh.

With the same SCOP, that would imply the amount of electrical energy required would be

= 25,600/ 3 = 8,500 kWh

At the current capped rate of 34p/kWh for electricity this would mean an annual cost of

8,500 kWh x 34 p/kWh = 289,000p = £2,890 using the heat pump.”

With domestic solar PV

“Solar energy peaks in summer whereas heating requirements peak in winter (but both are middling during Spring and Autumn, the ‘shoulder’ months). Nevertheless, one could reasonably expect – thanks to the ‘shoulder’ months – that the home grown electricity would reduce the heat pump running costs by roughly 25% (only a professional house survey, taking into account the orientation of panels, tree shading, etc., would answer this question precisely).”

Summary

“With your current gas boiler your annual heating costs are: £4,120

With a professionally designed and installed heat pump system and no insulation measures your annual running costs should be no more than: £3,638

With a 20% reduction in heat demand following cost effective insulation/ draught proofing, the heat pump annual system running costs would be: £2,890

With solar PV, let’s assume a further reduction in costs of 25% giving the heat pump system annual running cost of: £2,168

I hope that helps.”

(c) Richard W. Erskine, 2022