how do heat pumps work?

The running costs of heat pumps - how much will you save?

It’s well documented that heat pumps offer significant savings in comparison to traditional heating systems because of their low running costs. It’s estimated that heat pumps can save you from 25 %to 40% on your heating bill which is certainly worth exploring. Yes, the initial purchase may set you a bit slightly, but with a few calculations, you’ll be able to work out that you’ll be significantly better off in the long term.

Firstly, the money you’ll save depends on the heating system you’re replacing. The more inefficient your heating system is at present, the more money you’ll save in the long run. If you’re going from an oil boiler or an LPG boiler (essentially any fossil fuel boiler) you’ll make huge savings, however, the saving from electric systems to heat pumps is slightly smaller.

Heat pump running cost factors

To find out whether you’ll save money on your heating bills, you’ll need to access four main influencing factors:

  1. The amount of heat your home requires
  2. The cost of electricity
  3. The efficiency of the heat pump
  4. Your outdoor climate

Factor 1 - How much heat does your home require?

The first calculation you’ll need to do is to work out how much energy you’ll need to heat your home. Of course, the larger your home is, the higher the heat demand will be, however, the heat demand for your home depends on the efficiency of your home. UK homes, especially older homes, are not particularly efficient and require a fair amount of heating, especially in the colder months. This is why it’s so important to firstly consider insulation and draft proofing before you consider upgrading to a heat pump. When your home is performing as efficiently as it can, you can expect a larger running cost saving when the heat pump is installed.

Factor 2 - How much does electricity cost?

The running costs of all heating systems generally go hand in hand with the current cost of electricity and the more efficient your heating system is, the cheaper the running costs will be. 

Electric boilers can generally be installed more cheaply than gas boiler systems but a standard unit of electricity (kWh) costs (at the time of writing) 3 times more than a unit produced by gas. This means electric heating systems cost much more than gas systems.

It’s advisable to have a look at your monthly electricity bills and see how much you’re paying per kWh. Firstly, you may be able to get a much better deal elsewhere by using price comparison websites. Secondly, combined with the knowledge of how much electricity a heat pump can produce per kWh, You can then carry out a calculation to see how much you’ll save.

For some tariffs, electricity costs vary depending on the time you’re using energy.

For example:

  • Economy 7 - this is a tariff that has a lower price per kWh based on the time of use. Electricity prices are higher at night than they are during the day. This is the only issue - you’ll need to make sure that you pay close attention to electricity usage during peak periods as the unit price can be significantly higher.
  • Economy 10 - you’ll again pay cheaper prices during off peak times. There will be 10 hours during a 24 hour period in which your electricity will be cheaper (sometimes up to half the standard amount) so using appliances during these times (or having a heat pump only active during these times) will reduce the ongoing costs significantly.

You may even want to consider combining a heat pump with another renewable source of energy such as solar panels. This means that you’ll need a lower amount of electricity provided by your heat pump and make an even higher saving on your running costs.

Factor 3 - The efficiency of the heat pump

A crucial factor in reducing running costs with a heat pump system is a rating system known as the Coefficient of Performance of CoP. This is defined as the ratio of energy required to run the pump in comparison to the energy the pump will emit. A ground or air source heat pump as a COP of around 3 (so for one unit electricity needed to run the pump, 3 additional units of electricity are generated). In comparison, a boiler will produce a CoP of 0.85 on average so heat pumps are a clear winner in this department. In general terms, this means that a heat pump is up to 4 times more efficient than a traditional heater.

Want to find out more information? Find out:

Factor 4 - Your outdoor climate

Heat pumps, especially air source heat pumps, are only as efficient as the outdoor temperature dictates. The heat pump will raise the temperature of the outside air to the required temperature so it makes sense that if the air outside is warmer, the heat pump would require less energy to reach the required temperature. If the difference between the outside air and the required temperature is larger, the heat pump will need to work harder to reach the required temperature. In the case of a ground source heat pump, this isn’t as much of an issue as underground temperatures generally remain at 10 degrees Celsius throughout the year so we can say that the energy savings here are more predictable.

Bonus Factor The RHI scheme

A heat pump actually produces far fewer carbon emissions than all alternatives. This is itself won’t save you money on your bills, however, the government offer cash incentives in which they will pay you for green energy supplied to the grid - reducing your running costs. This is called the RHI scheme or the renewable heating initiative. For homeowners, you can receive quarterly payments for up to 7 years if you have a renewable source of heating installed in your home (air source heat pumps, solar panels, water source heat pumps, ground-source heat pumps, deep geothermal heat pumps etc). You can see how much you’ll be due to save on the table below:

running costs of heat pumps


This shows that whilst a ground source heat pump could cost up to £18,000 to install, you could in theory claim saving of over £3,000 a year. Over the course of 7 years, this will total close to £21,000. This combined with reduced energy bills would actually turn a profit over this time, more than covering the cost of installation.


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