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The running cost of domestic heat pumps in the UK

The relative price of electricity is the most important factor determining the economic competitiveness of heat pump running costs in the United Kingdom.

• Because the UK has historically had such a high electricity-to-gas price ratio (EtGPR), field trials, demonstrator projects and desktop modelling of monitored performance have failed to demonstrate that heat pumps can compete with efficient gas boilers in terms of running costs (ceteris paribus).
• In unexceptional circumstances – i.e., in situations representative of the wider existing UK housing context – a heat pump is approximately 36% more expensive to run than an efficient gas boiler, all else being equal.
• In ideal situations – i.e., homes where an appropriately sized heat pump can achieve a seasonal performance factor (SPF) of around 3.0 – a heat pump is approximately 9% more expensive to run than an efficient gas boiler, all else being equal.
• Over the last twenty-five years, heat pumps have steadily become more competitive in terms of running costs as the technology, installation and setup have improved;
• A heat pump will generate economic savings for consumers (when compared to the cost of running an efficient gas boiler) if the electricity-to gas price ratio is no more than 3:1 and the heat pump achieves a seasonal performance factor (SPF) of 3.0 or higher.
• The addition of photovoltaics (PV) and battery storage compensates for the high electricity-to-gas price ratio in ideal situations, rendering heat pumps less expensive to run than efficient gas boilers, all else being equal.

Author(s): Nicholas Harrington
Published: 25 March 2024
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