What’s making Heat Pump take-up so sluggish?

I have recently become fascinated by heat pumps and have been surprised by why take-up in the UK remains stubbornly low… despite global installations running at in excess of 18 million a year. In fact having recently installed a condensing boiler myself I am perhaps my own case study!

The Green Heat Spread

Logically there is a tipping point whereby the difference between the cost of gas and the cost of electricity becomes small enough that with a reasonably performing heat pump generating heat from electricity becomes cost effective.

Using this idea I have had a go at coming up with a measure for when it becomes economically favourable to install a heat pump – you could call this measure the ‘Green Heat Spread‘. The Green Heat Spread compares the cost of an electric heat pump system to a gas based system using the best available technology for each to see how running costs compare.

So what is the Green Heat Spread in the UK?

Currently in the UK gas costs on average 4.46p/kwhr and electricity 17.36p/kwhr (using BEIS data). A typical domestic air source heat pump uses about 1 unit of electricity for 4 units of heat (called the Coefficient of Performance or COP) and a Gas Boiler has an efficiency of around 80%. If you crunch these numbers you come up with a cost of 4.3p for each unit of heat for the air source heat pump vs 5.6p for heat from the gas boiler. So a slim benefit overall with a Green Heat Spread of +1.2p. That basically means running a heat pump should be 1.2p cheaper than a gas boiler for each KWHr of heat produced.

If we look to our neighbours and see whats going on there its interesting to compare this figure to our European neighbours. Its clear from the red line below that there is a substantial variation in the incentive to heat domestic buildings using a heat pump across Europe. The highest Green Heat Spreads are in Sweden and the lowest in Germany and the United Kingdom.

Green Heat Spread vs Electricity and Gas Prices across Europe.

Therefore logically you would expect some kind of correlation between the Green Heat Spread and the prevalence of heat pump installations. The figure below shows the heat spread as compared to the number of heat pump installations (adjusted for population) and there seems to be a good correlation (driven in particular by Sweden to the right!).

Heat Pump Installations against Green Heat Spread

But in the UK that doesn’t tell the whole story. The UK government has sought to heavily subsidise Air Source Heat Pumps through the Renewable Heat Incentive. Currently the rate per KWHr of heat generated from an Air Source Heat Pump stands at 10.6p/KwHr. If we adjust our graph accordingly suddenly the uptake looks disproportionately less in the UK than it should be.

Green Heat Spread adjusted for RHI

Why the low uptake?

Having personally gone through this journey myself recently there are some factors in the UK which I believe push against the rapid role out of heat pump technology.

  • Property Efficiency Performance – I recently presented and shared a blog about the dire state of the UK property stock. The majority of homes are ‘D’ rated or worse. Its really difficult to get a heat pump to perform well in a property that needs radiators at 80+ degrees to keep the house warm. Replacing existing radiator systems is just too costly or disruptive for most people to consider.
  • The cost of installation – with typical costs of £6000 to £8000 for an air source heat pump the delta to a gas boiler at around £1500 is substantial and unattractive for most even with generous government subsidy. If you take into account the cost to improve insulation and install a lower temperature radiator system – these costs become prohibitive.
  • Not attractive to landlords – around 38% of UK properties are rented with little incentive for landlords to install the technology.
  • Public Awareness – A Recent UK Government Public Attitudes tracker highlighted that only 27% of the public were aware of Air Source Heat Pumps. More concerning than this was a reduction in public awareness of any renewable heating technology from 64% in 2017 down to 52% in December 2018.
  • Gas Cookers are very common in the UK and despite there being little between the two in terms of cooking performance. The commonly used phrase to describe really doing well…now were cooking on gas‘ which originates from gas board adverts nearly 80 years ago – shows how entrenched the idea of cooking on gas flame really is!

The above challenges show that new pricing models may need to be developed to encourage substantial further uptake. Selling heat as a service presents some opportunities for the provision of equipment however whether this can be stretched to include energy efficiency measures remains to be seen. (Watch out for this trial in Bristol!)

The recent ban on gas boilers in new build properties presents some interesting opportunities in the new build sector however this is unlikely to make much impact in the short term on the overall situation as the existing housing stock remains stubbornly committed to the white box on the wall.

We need to think radically about shifting the dial on green heating… making the case compelling to switch over encouraging consumers to take the leap beyond their current reliance of gas.

Now were cooking on gas

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