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Home & garden.

30 Mar 2022

Air source heat pump costs and savings

How much does it cost to install an air source heat pump, and how much could it save you on your heating bills?
Which? Team
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It can cost between £7,000 and £13,000 to install an air source heat pump, so you'll want to consider how much you might save on your energy bills.

Read on to find out if the savings you could make from an air source heat pump are enough to justify the cost.

How much does an air source heat pump cost to install?

Air source heat pumps (ASHPs) differ in size and complexity, so pinpointing an exact price is difficult. To find out more about the types available, read our introduction to heat pumps guide.

The Energy Saving Trust (EST) estimates it can cost between £7,000 and £13,000 to install an air-to-water pump in your home. 

The quantity of heating and hot water your household uses will determine the size of the heat pump you need, which will in turn affect the installation cost.

You'll also need to allow for the cost of any extra work such as upgrading your radiators or installing a hot water storage tank. You might also need extra insulation.

From April 2022, the Boiler Upgrade Scheme offers a grant of up to £5,000 to install an air source heat pump in homes in England and Wales. 

How much does an air source heat pump cost to run?

The heat pump runs on electricity, but exactly how much energy it uses depends on:

  • the size of your home
  • how well insulated your home is
  • the temperature you want your home to be. 
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The payback time (how long it takes to recoup the upfront installation cost in energy savings) depends on:

  • the type of heating system you're replacing
  • whether you get a grant to help pay for installation
  • how efficiently your system works (including how well the heat is dispersed and your home retains it)
  • the price you pay for electricity
  • how you use the heat generated by the pump.

Estimated bill savings when replacing gas, oil, LPG or electric heating

Based on energy prices as of March 2022, you could save up to £1,410 a year by replacing an old inefficient (G-rated) LPG boiler with an efficient air source heat pump. 

Old (G-rated) gas boilerOld (G-rated) oil boiler
New electric storage heaters
Old electric storage heatersOld (G-rated) LPG boiler
Figures above show potential annual savings of installing a standard air source heat pump in an average sized, four-bedroom detached home compared with the current heating systems stated. Figures courtesy of Energy Saving Trust website. Based on fuel prices as of March 2022.

But if you’re replacing a newer heating system, an air source heat pump could actually be a little more expensive.

  • Replacing a new (A-rated) gas boiler – £205 bill increase 
  • Replacing a new (A-rated) oil boiler – £290 bill increase

How to calculate air source heat pump savings

An air source heat pump can save you money, if it is well designed and installed. However, with energy prices rising, estimates of potential savings can quickly become outdated. 

To get a better idea of how much a heat pump would cost to run, and whether it would be cheaper than your existing heating system, you can make a rough calculation using your own data.

We've worked out an example, below, for a typical household currently using a gas boiler.

Woman on laptop sat with man holding papers

Existing heating and hot water costs using gas

Typical household gas consumption is 12,000 kWh a year. 

Gas used for cooking makes up around 2.5% of the total (300 kWh), so the typical quantity of gas used for space and water heating is 11,700 kWh a year.

From 1 April, the average price cap for gas is £0.07/kWh, so the annual cost of gas consumption is 11,700 x £0.07 = £819. 

From 1 April, the average gas standing charge is £0.27 per day, so the annual standing charge cost is 365 x £0.27 = £98.55.

The total gas bill for space heating and hot water (excluding cooking) is £917.55.

What's your heat demand?

To calculate the cost of running a heat pump, you need to work out your household heat demand using your current annual gas consumption and boiler efficiency.

A new A-rated gas boiler must be a minimum of 92% efficient; however, studies have shown that the actual in-use performance is generally lower. Older boilers are also less efficient, so we've assumed an average of 85% efficiency.

Current gas consumption is 11,700 kWh but only 85% of that is being turned into heat, so actual heat demand is 11,700 x 0.85 = 9,945 kWh.

Potential heating and hot water costs using a heat pump

A typical air source heat pump should generate three or more units of heat for each unit of electricity it uses. We've assumed a COP (Coefficient of Performance) of 3.0 (i.e. 300% efficient).

To deliver the heat demand of 9,945 kWh the amount of electricity required will be 9,945 ÷ 3 = 3,315 kWh.

From 1 April, the price cap for electricity is £0.28/kWh, so the annual cost of electricity for heating and hot water is 3,315 x £0.28 = £928.20.

We've assumed that all households already pay the standing charge for electricity, so there's no need to add this.

Which is cheaper?

Annual heat demand
EfficiencyAnnual energy use
Energy price per kWh
(from 1/4/2022)
Annual cost of energy
for heating and hot water
Annual gas
standing charge
Total annual bill
for heating and hot water
Gas boiler9,94585%11,700£0.07£819.00£98.55£917.55
Air source heat pump9,945300%3,315£0.28£928.20N/A£928.20​​​​

In this example, the annual costs are very similar: Gas boiler £917.55 vs. electric air source heat pump £928.20.

If your gas boiler is less efficient, or you install a more efficient heat pump, then you will begin to see cost savings if you switch to a heat pump. 

However, if you replace an inefficient gas boiler with a new, efficient gas boiler, this may be slightly cheaper to run than an air source heat pump.

Changes in energy prices will affect future comparisons. The gas and electricity price caps rise by different amounts in April. Gas rises from £0.04/kWh to £0.07/kWh - a 75% increase - while electricity rises from £0.21/kWh to £0.28/kWh - up 33%.

If gas prices continue to rise at a faster rate than electricity, then the running costs of a heat pump will be more attractive than a gas boiler.

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Calculate your own savings

To make a similar calculation using your own data, use the following formula:

heat demand x 1/heating efficiency x fuel price (+ annual standing charge) = annual heating cost

Heat demand: You can find your fuel consumption (in kWh) on your energy bills. If you use gas for cooking, deduct around 2.5% to calculate how much is used for heating and hot water. Multiply this by the heating efficiency (i.e. if your boiler is 85% efficient, multiply by 0.85). This is your annual heat demand (for space heating and hot water).

Heating efficiency: If you know your boiler's efficiency, you can use that figure. If you know the make and model, you can check the efficiency in the product characteristics database. New gas boilers must be at least 92% efficient, but an older one may be much less efficient. The efficiency of an air source heat pump is typically between 2.5 and 3.5. If you're thinking of installing a specific model, you can find the COP in the manufacturer's product specification. 

Fuel price: From 1 April, the average capped price for gas is £0.07/kWh and electricity is £0.28/kWh, but this varies by region and payment method, so check your bills to find your unit price.

Are there any other costs?

If you plan to replace your gas boiler with an air source heat pump, you may also consider swapping your gas cooker for an electric one. Retaining a gas supply just for cooking will mean the standing charge is disproportionately high. 

If you terminate your gas supply, you may have to pay for removal of the meter. The cost varies according to supplier. If you don't remove the meter, you must continue to pay a standing charge.

Whether or not you decide to get an air source heat pump, it's worth making sure you're on the best energy deal for you. Use Which? Switch, to compare gas and electricity prices.