My heat pump journey part six: will a heat pump save me money?
Do it right and replacing your gas boiler with an air source heat pump will reduce your energy bills.
This is the sixth, and final, story in my heat pump journey. Part one is about preparation, especially insulation. Part two is about the survey to see if a heat pump was possible. Part three is about the installation day itself. Part four looks at tailoring cabinets to accommodate a heat pump. And part five is about life with a heat pump.
Will a heat pump save me money? It’s the question everyone asks, and for good reason.
We’re in a cost of living crisis and very few people have ‘spare’ money to invest in eco-friendly measures that take decades to pay for themselves.
This idea in itself is a bit mad. If you’re a homeowner and you set aside a budget for a new bathroom or kitchen, the old one probably worked adequately.
Unless you bought a wreck, chances are that you’ve chosen – or will chose – to spend a five-figure sum improving one of these rooms, not out of sheer necessity. It might add value to your home but it’s a choice.
And perhaps eco-friendly improvements should be seen in the same way: your heat pump or solar panels might be out of sight but they can still be a positive choice, a proud upgrade.
I hope that buyers will increasingly read the EPC (Energy Performance Certificate) and care about a home’s green credentials.
After all, if you’ve fitted the right energy-saving tech then it’s one less thing for them to do!
A generous grant to upgrade
In column two, I covered the initial cost of a heat pump. There’s a generous £7,500 government grant towards it, called the Boiler Upgrade Scheme (BUS).
Anyone in England can apply for the BUS if they’re replacing a gas boiler with a heat pump.
I found that it brought the cost of a heat pump installation down enough to be comparable to a new gas boiler.
It’s impossible to predict how long the BUS will be in place. And it is generous, so I think now-ish is a good time to upgrade.
If you have a working gas boiler, you don’t need to replace it straight away, but do have the thought experiment…
Plan ahead
Start the process of figuring out where you might put a heat pump (you need space for a water tank indoors, plus a unit outdoors, so it’s bulkier than the combi boiler you may be replacing).
This way, when your boiler dies you have a plan!
If you don’t have a plan then there’s a risk you will hurriedly replace like with like. That would tie you to fossil fuels for another decade and you’d miss out on the BUS grant.
If, like me, you need to replace a broken-down boiler then it’s money you have to spend anyway.
The key thing is to have a survey to check your home’s suitability.
As detailed in column one, I had already insulated the hell out of my house.
I’d insulated it far more than most homeowners do. It intuitively made sense to me, to insulate it over the years.
Just like reaching for a cardigan on a chilly day, my first thought is always to keep heat in, so I maxed out on insulation every time I made a home improvement.
So despite living in a 1930s end-of-terrace, the house was broadly ‘heat pump ready’.
This is what a heat pump survey will establish for your home – is there enough insulation and will you need any new radiators or pipework?
The thought experiment
If you don’t want to make the switch just yet, but you are having the thought experiment, my advice is to max out on insulation and get heat pump ready.
You might even want to get a heat pump survey to make informed choices.
And if you’re getting new radiators anyway: supersize them.
That doesn’t mean they have to be huge, it might just mean they discretely have more panels (like, triple rather than single or double).
You won’t visually notice the difference, but it’s important because heat pumps circulate water at a lower temperature than gas boilers (around 45-50°C rather than 65-70°C).
In a sense, all homes are ‘heat pump ready’.
You can put a heat pump into any home and the survey just figures out how powerful a heat pump you need and how many radiators need to be supersized.
But, in practice, what you really want to know is whether a heat pump makes sense in your home.
Will your home be warm enough and will your energy bills be the same or better?
There’s no point generating loads of eco-friendly heat just to have it go out of the window.
No more gas standing charges
Standing charges are increasingly seen as problematic. You pay a daily fee (around 34p a day at the time of writing) for having gas, even before using any.
For example, a person in fuel poverty might not use their gas central heating and hot water for two weeks, go to the shop and put £10 on their pre-payment card, put the card in the meter… and find that they only have just over half of their £10 left because nearly £5 was eaten up by the standing charge.
It seems unfair to charge people even when they’re not using fuel. Pay-as-you-go seems fairer.
So one of the things that gave me joy – and immediately saved me money – was getting rid of my gas meter! My hob is electric (an energy-efficient induction model) and I don’t have any gas fires, so the boiler was my only appliance using gas. And now it was being removed.
The meter removal was a separate appointment, a few weeks after the gas boiler was removed and the heat pump was fitted. An Octopus Energy engineer came and capped off the gas, removing the meter completely.
I got a little bit of space in the cupboard under the stairs back.
But, more importantly, I no longer pay gas standing charges. That’s a saving of around £124 a year, based on the rates at the time of writing.
The gas meter is removed, saving me £124 a year on standing charges
The energy prices paradox
Beyond that, the running costs bring up an interesting paradox.
Heat pumps use electricity to bring in heat energy from outdoors, even in cold weather. Read column one to understand how heat pumps work.
The paradox is that heat pumps are up to 500% efficient (no, they’re not magic, it just means that for every unit of electrical energy they use, they gather five units of heat energy from outdoors) whereas gas boilers are around 90% efficient (one unit gets you 0.9 units of heat).
But electricity costs around four to five times as much as gas. So your energy bills will be a little less, but not radically less.
For now, that is. Wholesale electricity prices are pegged to gas prices.
The rationale is that we use fossil fuels to generate electricity at peak times. So when demand is high, gas-powered energy plants generate the last bit of electricity needed.
But long term it makes no sense to tie these prices together.
Gas is a fossil fuel and finite, so its cost will surely increase – whereas more and more of our electricity is renewable and, as the tech improves, generating it gets cheaper.
For example, gas prices soared when Russia invaded Ukraine, so electricity prices soared too, simply because the prices are connected. Yet we’re building more and more solar panels and wind farms in the UK.
But I still save £600 a year
In the long term, I don’t think electricity prices will stay tied to gas prices, or at least the ratio will get better – so long term, I expect my bills to go down further, thanks to the heat pump.
But in the meantime, I save by not paying a gas standing charge, so £124 a yea – and my monthly direct debits have gone from £213 to £170, which is a further saving of more than £500 a year.
I’ll have to live with the heat pump for more than a year to be sure of the annual bills – but I’m definitely saving money already and I estimate it’s around £600 a year in all.
Save even more with solar
Heating your home for free is the dream, of course. So consider combining your heat pump with solar panels that generate the electricity they need. Team your solar panels with other tech, like an electric vehicle or a battery, to save even more.
Also, some forward-thinking local authorities offer interest-free loans for green home improvements. If you use your savings to repay the loan, you’re basically improving your home – and going greener – for free. And after the loan is repaid it’s all savings…
Until next time!
This is the final column in my heat pump story.
Thank you for joining me on this journey.
I’m really proud of the neat, expert installation by Octopus Energy, the elegant way Jonathan Maker has hidden it and, of course, of saving energy – I hope you feel inspired enough to have the thought experiment.
This was always about coming off fossil fuels, at a time of climate crisis, in an ordinary suburban home that’s nearly a century old.
I do think that one day we will look back and find it quite weird that we used to pipe gas into our homes.
But it is also about saving money on our energy bills – and inspiring others to do so too.
I hope to return with more advice and inspiration. I am already having a new thought experiment about adding solar panels, so watch this space!
Main image: Paula Smith
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