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How well suited are heat pumps to UK homes and how economical are they?

Space heating and hot water in UK homes account for more than 20% of the country’s total carbon emissions. This has prompted efforts to encourage a move away from high carbon natural gas boilers, which are currently the predominant choice, towards heat pumps. As with any consumer technology, building trust and confidence in this alternative to home heating, including widening knowledge of how heat pumps work, will be essential to increase their uptake. It is also important to understand how policy can enable their cost-effective roll-out.

How well do heat pumps work in cold climates and energy-inefficient buildings?

A heat pump uses technology similar to that used in a refrigerator, to transfer heat from a heat source (usually at a lower temperature, such as from the outside air or ground) to where the heat is needed, for example inside a building. Extracting heat from cooler outside air is possible because heat energy is available when the temperature is above what is known as ‘absolute zero’, i.e. -273°C. This means that heat pumps can meet the heat demand of buildings even in very cold weather, with appropriate adjustments to their size and design. In Europe, the four coldest countries have the largest share of heat pumps: Norway (60% of households), Sweden (43% of households), Finland (41% of households) and Estonia (34% of households). Crucially, while the efficiency of heat pumps is lower when the temperature of the heat source drops (i.e. the outside air or the ground), they are still more efficient than gas boilers and electric resistance heaters. Because ground temperature varies less than air temperature across a year, ground-source heat pumps offer higher efficiency than air-source heat pumps in cold climates.

When it comes to energy efficiency, in the same way that a gas boiler can be used to heat an energy-inefficient building, a heat pump can also be used in less efficient buildings, if sized correctly. However, as with all heating technologies, installing a heat pump in energy-efficient buildings offers maximal benefits in terms of reducing heating bills and avoiding energy wastage. Improving the energy efficiency of buildings should therefore be of utmost priority regardless of the type of heating system – be it heat pump, boiler or district heating network.

How do the efficiency and versality of heat pumps compare with alternative heating technologies?

Because heat pumps do not themselves generate heat (instead using energy to extract heat from a source such as the surrounding air or the ground, and then amplifying and transferring that heat to buildings), heat pumps are more efficient than conventional heating technologies. For comparison, the ratio of heat output to energy input for a typical heat pump on a winter’s day in the UK could be around three, while for a gas boiler and an electric resistance heater this ratio is 0.8 and one respectively, which means they need more energy to supply the same level of heat.

Heat pumps are also versatile in that they can be configured to cool buildings by extracting heat from the inside of buildings to the outside air or ground.

How can heat pumps be made more cost-competitive?

It is helpful to understand what key cost elements contribute to the economic competitiveness of different heating systems. Upfront, there is the cost of buying the heating technology and any other components needed for the heating system, such as radiators, and the cost of installation. Running costs include the cost of energy needed by the heating system to operate, and the cost of maintenance.

Currently, the upfront cost of a heat pump ranges from around £9,000 for a flat to £13,000 or more for a larger house, which is greater than that of a gas boiler (which cost between £1,500 and £4,500). The large-scale deployment of heat pumps is expected to reduce this upfront cost (mainly through reducing the installation cost). However, it is unlikely that this will bring down the cost to the level of a gas boiler and the current higher upfront cost of heat pumps is recognised by the sector as a significant barrier to their large-scale deployment. In recognition, the government is providing a grant of £7,500 towards the cost and installation of a heat pump in England and Wales through its Boiler Upgrade Scheme.

How much a heat pump costs to run depends mainly on its electricity consumption and the electricity price. While heat pumps are almost three times more efficient than gas boilers, consuming less energy to provide the same amount of heat, the key determinant in the cost competitiveness of heat pumps is ultimately the difference between electricity and gas prices available to consumers. Currently, the domestic gas price in the UK is below the EU median, while the domestic electricity price is above the EU median. Increasing the cost-competitiveness of heat pumps therefore requires levelling the playing field between gas and electricity: for example, by reforming the electricity tariff and rebalancing electricity and gas taxes, which the government has indicated it intends to do.

Overall, heat pumps are proven technologies that operate effectively even in cold weather. Policies that enable the large-scale uptake of heat pumps through supporting the development of a supply chain and reforming electricity and gas tariffs will help make this technology a cost-competitive option for decarbonising the heat sector in the UK.

Authors and contacts

This background briefing was written by Meysam Qadrdan, Cardiff University, with editing and review by Caterina Brandmayr, Georgina Kyriacou and Esin Serin.

It was produced as part of a UK-focused ‘myth-busting’ project between the LSE and Imperial College London Grantham Institutes. The series of ten explainers will be published as a single volume in spring 2024. The project is designed to deepen understanding of climate change action among current and prospective decision makers, the policy community and the public in the UK in the run-up to the 2024 general election.

Media enquiries: grantham.media@imperial.ac.uk
Policy enquiries: c.brandmayr@imperial.ac.uk