New research conducted by Baxi Heating, part of the heating appliances giant BDR Thermea Group, has found there is an ongoing affordability gap between low-carbon heat pumps and traditional gas boilers. Although the UK government are targeting an installation of around 600,000 heat pumps every year, Baxi points out that the higher running costs will inevitably obstruct progress towards the large-scale uptake of low carbon heat sources within the UK.
The report found the average running cost of a low-carbon air source heat pump is £236 more a year than a gas boiler, but still £282 less than an oil-fired boiler. In terms of installation, the report found the following costs: £7060 for an air source heat pump, £1500 for a gas boiler, and £3350 for an oil boiler.
Baxi points out that the affordability gap in running costs can be explained in part because of a 25.5% environmental levy on electricity. This means that, since heat pumps use electricity, the technology is penalised with higher environmental taxes even though they reduce carbon emissions.
Baxi’s report also shows that affordability is central for customers: 66% of respondents said that saving money was the most attractive reason for transitioning to a heat pump; however, 40% of respondents also said the prospect of higher running costs was a disincentive for the technology.
“Heat pumps could play their part as we decarbonise the nation’s heating, but we need to bridge this affordability gap,” said Karen Boswell OBE, Managing Director of Baxi UK & Ireland. “A Green Heating Credit would be fairer to heat pump users who are investing in decarbonising their heating and it is fair to consumers using traditional forms of heating as it won’t affect their heating bills. It also leaves room for alternative low carbon heating technologies such as hydrogen to emerge.”
Baxi’s proposed £250-a-year Green Heating Credit attempts to bridge the gap in the running costs of heat pumps, as experienced by consumers, thereby refunding the additional levy for their electricity use. While the government’s Clean Heat Grant supports householders with up to £4000 offered towards the installation of a heat pump (from May 2022), running costs of the pumps have still not been accounted for.
