EUA tracks “true cost” of green energy switch


Customers typically face a five-fold cost increase to install a heat pump, compared to a hydrogen-ready boiler, according to research from the Energy and Utilities Alliance (EUA).

In mid-November, the EUA published The Upfront Cost of Decarbonising Your Home, in which it sought to analyse the upfront capital costs faced by customers when considering installing new low carbon heating technology solutions for their homes. It found that as well as having a higher cost than a hydrogen-ready boiler, the cost disparity faced by heat pumps also stems from the additional energy efficiency measures needed to ensure it operates efficiently and the need to fit heat distribution measures.

When considering only the costs a consumer would pay for the installation of heating solution equipment, heat pumps are consistently more expensive than hydrogen-ready boilers. Ground source heat pumps (GSHP) cost between £6,059 to £17,114; air source heat pump (ASHP) costs range from £4,859 to £10,054; and hydrogen hybrid heat pumps (HHP) vary from £9,992 to £11,566, depending on the type of property. In contrast, hydrogen-ready boiler costs range across property size from £2,206 to £3,763.

Furthermore, for an appropriately sized heat pump to operate at a level where it can deliver the required level of comfort, home upgrades relating to energy efficiency measures to improve insulation and heating distribution measures are both prerequisites.

Both increase the upfront capital costs of heat pumps, though this varies across property types, with their current level of energy efficiency a notable factor. ASHP costs grow to between £6,052 and £31,067, while the range rises for a GSHP to £7,252 to £38,127. It explained that acknowledging and overlaying the cost of energy efficiency measures across all heating technology solutions, given the fact they are recommended regardless of the choice made, helps to provide a more comparable cost basis for the technology types.

Yet, while this does see the costs for hydrogen-ready boilers and HHP rise to close the cost disparity somewhat, capital costs still remain higher for heat pumps. Hydrogen-ready boiler costs can potentially increase to as much as £21,993 for the largest and least efficient property type, though this still is well below what an ASHP or GSHP would cost.

In the case of heat pumps, there is also a need for a larger surface area of heat distribution methods to produce the same level of comfort, owed to them having a lower output temperature. This could included more radiators, larger radiators or underfloor heating. For radiator upgrades, the upfront capital costs vary once more across property size, from £1,193 in a flat to £2,783 in a larger property. Such upgrades, it was noted, are only needed for ASHP and GSHP, where the outlet temperature is lower. HHP and hydrogen-ready boilers have the same outlet temperature as existing natural gas boiler heating systems.

However, with hydrogen-ready boilers not yet ready to be deployed and it still to take a number of years to decarbonise the gas grid, for a consumer living in a highly efficient, well insulated home who is looking to proactively invest significant upfront cost to immediately reduce their carbon footprint, an air source heat pump remains the only option at present.

This makes it key that the UK government’s “big bet” on there being significant reductions to the cost of heat pumps over the next 5-10 years is tracked and assessed over time against low carbon alternatives. Therefore, the report marks the first in a series to do exactly this, with the EUA stressing the importance of continuing to progress a diverse range of heating solutions as well – regardless of the timing of these cost reductions.