Heat Pumps Today

10 How Heat Pumps are going to save you money It comes as no surprise that the UK is living through uncertain times, and so the Government has stepped in to try and curb the e ects of the cost-of-living crisis through the Energy Price Guarantee (EPG) – protecting customers from the recent significant increases in wholesale gas prices by limiting the amount suppliers can charge per unit of energy used. Interventions This Government intervention is an additional measure temporarily replacing the Energy Price Cap, set by Ofgem , which was the pre-existing cap on prices that energy suppliers could charge consumers for each kWh of energy they use. Ofgem’s price cap calculation was legally required to be based on evidence from the market of true costs faced by suppliers and did not involve any government-funded subsidy, whereas the Energy Price Guarantee results in lower prices to consumers, with the Government subsidising the di erence from public expenditure. However, it is unrealistic to suggest that these interventions have solved the issues many consumers faced, with typical households expected to pay around £2,500 per year H P A and the UK facing some of the highest energy bills in Europe. Savings for consumers The HPA has thus been keen to outline and investigate the further savings that households can make with heat pumps. Analysis by Gemserv on behalf of the HPA investigated running costs at EPG prices. It found that full electrification of heating and hot water in the home with a low carbon heat pump can save consumers on average £400 per year, (also assuming a switch to electric cooking and the disconnection of the gas supply) even with boilers performing at relatively high eŽciencies. This saving increases to around £500-600 per year when the heat pump and heating system are particularly well designed and achieving their highest eŽciencies. These costs are based on a base boiler eŽciency of 0.84 according to latest BEIS research findings around in-situ boiler performance. These current assumptions by BEIS also reveal the potential additional savings that can be made in households when replacing a boiler with an eŽciency level of 0.90 – with savings here amounting to around Written by the Chair of the HPA £98 per year. This will be the minimum eŽciency level for new boilers from 2025 based on consultation plans, and so now is a good time to be thinking about making the switch. Whilst it is worth remembering that electricity prices have increased, higher support o ered by the EPG will succeed in keeping costs for gas and electricity roughly the same, and the relative overall increase in costs is actually higher for gas. Cost competitiveness has also increased as heat pump rollout speeds up through schemes such as the Boiler Upgrade Scheme and a growing installer base. Rising energy costs have resulted in lower eŽciencies being required to produce savings with heat pumps. Energy costs driving response Seasonality can account for some of the change and consumers will be increasingly looking at renewable options for heating their home and have been responsive to changes in energy costs. However, the eŽciency of a heat pump required for cost parity with a gas boiler is still 48% lower than this time last year – and this is despite the EPG coming into place. February | March 2023