Cost comparison – running costs of a heat pump

We often get asked to compare the running cost of a heat pump with that of a gas boiler, or electric storage heater. Of course its not easy as there are so many variables between house types, sizes and levels of insulation, not to mention user behaviour in the home.

However there are two clear ways to measure the difference, the first is efficiency, and the second is the actual amount paid for the gas/electricity being used. This will give a guide and simple comparison between heating systems, which can then be applied to typical/average energy useage in the home.

 

Efficiencies

Daikin’s standard heat pumps run at 3.6 SCOP – which is the Seasonal Coefficient of Performance – which is the recognised average measurement that shows how effective the heat pump is on an annual basis, ie through the seasons, so in the summer it will perform really well, less so in the colder months, but overall it will achieve 3.6.

This means that a heat pump is 360% efficient, and to get an accurate running cost comparison you need to compare it the efficiency of a gas boiler. Of course gas boilers come in many sizes and ages, but all will have an energy rating, similar to this:

Energy ratings.jpg

This is based on the SEDBUK standard, which means Seasonal Efficiency of a Domestic Boiler, similar to a heat pump SCOP. In 2005, it used a letter to score boilers, which was upgraded in 2009 to an exact percentage score, with the 2 systems shown above.

While some very old boilers will be Band G, most boilers due for replacement will be 10-15 years old, and its important to note that from 2010, all new boilers installed had to have an efficiency rating of 88% or higher.

For the purposes of this running cost comparison, we’ll assume that the boiler efficiency is 90%, but of course it could be a lot lower.

Energy Prices

Establishing energy prices across the different energy providers used to be an incredibly difficult process, that changed on a daily basis. Dozens, if not hundreds of energy providers, several tariffs, energy plans and payment methods made working prices out wasn’t easy.

However, now we’re in the middle of an energy crisis, virtually all energy providers have to operate and sell at the ‘price cap’, even if energy is costing them considerably more to purchase. This means that every provider has exactly the same tariff, there are no deals to be had, even fixed rate deals are higher than the standard tariff. For running cost comparisons this makes the process considerably easier.

1st April Price Cap

The new price cap from 1st April 2022 is 7.34p for gas and 28.34p for electric. There will be tiny marginal differences between energy providers, but as a rule these costs can be used for cost comparison purposes.

Cost comparisons – gas boiler to heat pump

So an SCOP at 3.6 means heat pumps are 360% efficient, and for every £1 of energy put in, £3.60 comes back out. In comparison an old gas boiler will at best be 90% efficient – so you’re comparing 90% efficiency with 360% - a big difference.

Of course gas is considerably cheaper than electric (7.34p against 28.34p), so we need to apply some real time costs to enable a true comparison:

  • Adjusting 28.34p to show the impact of 360% efficiency would mean 7.87p
  • Adjusting 7.34p to show the impact of 90% efficiency would mean 8.15p

So the result of this is that the heat pump is slightly cheaper to run, and in practical terms the resident shouldn’t see a lot of difference in their energy bills switching from gas boiler to heat pump.

Cost comparisons – electric storage heater to heat pump

Looking at electric storage heaters now, electric heating is usually considered to run at 100% efficiency as 100% of the electricity purchased goes into useable heat. Of course over time, this may change if the unit isn’t running as efficient, but for this comparison, and taking into account that some storage heaters being replaced may not be that old, we’ll assume the electric heating is 100% efficient.

  • The heat pump is still 360% efficient, and using electricity at 28.34p – but adjusted to be 7.37p
  • The electric storage heaters, are at best 100% efficient, but use 28.34p – and adjusted its 28.34p

So the result of this is that heat pumps are almost 4 x more efficient and cheaper to run than electric storage heaters, which will result in significant savings.

Conclusion

So there is a good case to show heat pumps are considerably cheaper to run than electric storage heaters, and very similar to gas boilers, with slight savings expected. Of course its important to add that to achieve the savings the heat pump needs to be designed and installed properly – and the property needs to have good levels of insulation, and follow the fabric first approach.

Nick Huston – Future Energy Business Manager, Daikin UK

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