Boris Johnson’s net zero plan to replace millions of gas and electric boilers with controversial new heat pumps could cost taxpayers £115billion if the government’s upgrade program is rolled out to all homes, warned a report.
Installing a new air source heat pump costs an average of £10,500. With the government providing a £5,000 grant for homes with sufficient insulation and reducing VAT from 5% to zero, households would be left with a bill of £4,975.
The government has encouraged people to replace their traditional boilers with heat pumps to reduce carbon emissions, but the high initial cost will mean few households will be able to afford the new technology, despite government assistance.
As part of its Boiler Upgrade Scheme, the government has allocated £450m to be spent via £5,000 grants, meaning only 90,000 households will be eligible for the grant.
The Taxpayers Alliance said extending the current scheme – and its £5,000 grants – to all gas network households would cost taxpayers £115billion.
Analysis shared with MailOnline this week by the Regulatory Assistance Project (RAP) environmental think tank has found that soaring gas costs mean heat pumps are now up to £261 a year cheaper to operate than a gas boiler.
However, when the cost of installation is taken into account, it could take up to a decade for the heat pump to be cheaper, and only if it lasts the fullest of its estimated lifespan of 20-25 years, while the gas boiler lasts the minimum of its service life of 10-15 years.
Air-source heat pumps (pictured in Kent last year) cost between £5,000 and £12,000 to install, depending on the size and insulation of the home
A report has warned that Boris Johnson’s net zero plan to replace millions of gas and electric boilers with controversial new heat pumps could cost taxpayers £115billion if the government’s upgrade program is rolled out in all homes.
Heat pumps vs gas boilers
AIR-SOURCE HEAT PUMP
- Installation costs: £4,975 (with grant of £5,000 + without VAT)
- Annual running cost: £723 to £964
- Average life: 20 to 25 years
- Installation cost per year: £249 (20 years) to £199 (25 years)
- TOTAL COST OVER 10 YEARS: £12,128 (installation £2,488 [presuming 20yr life] + current £9,640)
- Installation costs: £2,700
- Annual running cost: £984
- Average life: 10 to 15 years
- Installation cost per year: £180 (15 years) to £270 (10 years)
- TOTAL COST OVER 10 YEARS: £12,540 (installation £2,700 [presuming 10yr life] + current £9,840)
- This makes a heat pump £412 cheaper over 10 years
Data provided by the regulatory assistance project
Figures revealed in the study showed that a new gas boiler costs an average of £2,700 to install and £984 to run per year, while a heat pump costs between £723 and £964 per year in depending on how effective it is, plus the almost £5,000 for installation.
The RAP said the 54% increase in the energy price cap to an average of almost £2,000 a year from this week has changed head-to-head running costs, which means that an efficient heat pump can be cheaper than a gas boiler, but only after the initial installation costs have been removed.
Craig Mackinlay, Tory MP for South Thanet, criticized the planned rollout of heat pumps, telling the Telegraph: ‘Spending billions on technology that is clearly not ready is the wrong priority for the government.
“This money will almost certainly go to the wealthiest households at a time when our primary focus should be on lowering bills for as many people as possible. If there is money available, a broader home insulation program would be a better plan and could reduce emissions further.
The RAP said gas boilers typically have a lifespan of ten to 15 years and modern heat pumps 20 to 25 years.
This means that, if spread over the lifetime, the annual cost of a capital investment for a gas boiler is £180 and for a heat pump it is £249, assuming lifetimes possible life of 15 years for a gas boiler and 20 years for heat pumps. .
But if the assumption of 10 years for a gas boiler or 25 years for a heat pump is made, the heat pump would cost £199 a year and the gas boiler £270 in terms of investment costs – this which makes the heat pump cheaper.
An air-source heat pump looks like an air conditioning unit on the outside of buildings and works like an upside-down refrigerator, using electricity to extract energy from the outside air to provide heating to homes and hot water.
There are also heat pumps which draw energy from the ground or water, but these tend to be more expensive and can cost between £13,000 and £35,000 depending on the size of the system required.
Because they extract heat from the environment – which they can do even at low outside temperatures – they produce around three times the energy they use, making them much more efficient than a gas-fired boiler. gas.
Electricity in the UK is increasingly powered by low carbon sources such as wind, making heat pumps a cleaner alternative to burning gas while also reducing local air pollutants , such as nitrogen dioxide, emitted by boilers.
While the new government grant will provide £5,000 for an air source heat pump, the amount is increased to £6,000 for a ground source heat pump, for homes in England and Wales with sufficient insulation.
VAT is also removed for clean tech installations, as well as insulation to make homes more comfortable, which will reduce the initial upfront cost. Energy company Octopus has confirmed that with the £5,000 grant it will offer heat pumps at a similar price to gas boilers, meaning they could cost around £3,000 to install.
All heating technologies – including gas boilers – work more efficiently and save homeowners money if their home is well insulated – upgrading insulation to save energy being a key element reducing emissions from buildings. It’s something campaign group Insulate Britain focused its protests on last year.
A recent government study found that all homes in the UK, from Victorian mid-terraces to 1960s apartment blocks, are suitable for heat pumps. But energy experts estimate that only around a fifth of homes, or some 4.8 million, are suitable for a heat pump today. Another 30%, or 8.4 million, need minor changes such as attic and cavity wall insulation, which they say will also reduce bills.
Air source heat pumps absorb heat from low temperature outside air into a fluid to heat your home and hot water. They extract renewable heat from the environment, which means that the heat production is greater than the electricity input
Geothermal heat pumps circulate a mixture of water and antifreeze around an underground pipe. Heat from the ground is absorbed into the fluid and then passes through a heat exchanger, and running costs will depend on the size of the house
Heat pumps, which use electricity to generate heat from air, ground or water, have very high initial installation costs
Owners have also been advised that as heat pump radiators operate at a lower temperature than gas, they may need to swap out some of the older single panel radiators to ensure that are large enough to heat the room sufficiently.
These can normally be replaced by double or triple panel radiators which fit in the same location.
Underfloor heating works well with heat pumps as it works at a lower temperature than radiators, so it will continue to work in homes that have the system – but there is no need to install it.
Boris Johnson acknowledged earlier this week that people are “worried at the moment about installing geothermal or air-source heat pumps to heat their homes”.
A spokesman for the Department for Business, Energy and Industrial Strategy told MailOnline: ‘We are spurring millions of people to get heat pumps by the end of the decade by reducing the price of heat pumps. installation up to £5,000 and reducing VAT to 0%.
“We are working with industry to further halve the cost of heat pumps by 2025 and achieve parity with boilers by 2030 as the technology develops, ultimately making them the preferred option. more affordable.”