How Much Does an Air Source Heat Pump Cost?

Air source heat pump costs have recently become the subject of many discussions on the home energy efficiency front, as the Boiler Upgrade Scheme opened for applications last November. The Scheme offers a grant of £5,000 towards the cost of buying and installing an air source heat pump.

The Scheme seemingly goes to show that the Government has air source heat pumps firmly in their radar as a solution for energy efficient home heating systems of the future. And for the first time in history we are looking at a heating system for our homes that does not combust any fuel but rather moves heat from one place to another. 

Although the resultant heat in our homes may feel the same, the way we need to design and manage the heating systems is a lot different and is also a lot less forgiving. So accurate design and good installation is absolutely crucial to ensuring an air source heat pump runs efficiently — and running costs are what they should be.

In this expert guide we explain how much an air source heat pump costs, the factors which influence the cost of installing one, and how to work out potential running costs.

How Much Does an Air Source Heat Pump Cost?

The cost of air source heat pumps can vary considerably. The materials price (excluding installation) is influenced by brand and output capacity. 

"The cost of an installation is different for every property. It is dependent on factors such as size of the property, age of the property and the type of installation. An air source heat pump could cost in the range of £9,000 - £15,000," say the experts at NIBE. 

Installing an air source heat pump in an existing home can aid to the complexity too — and consequently the costs rise. Installation can, in some instances, cost nearly £30,000 when you factor in the price of a completely new radiator system and new pipework.

Is an Air Source Heat Pump More Expensive Than a Gas Boiler?

Yes, the cost of a heat pump and the installation is more expensive as compared with installing a gas boiler. (This is the case for installation in both new and existing homes.)

Putting the costs into real context is not easy but the following costs (consisting of the system cost and installation) can be used for guidance:

• Combi-boiler: £2,000 - £4,000
• System boiler with cylinder: £5,000 - £9,000

While a gas boiler is cheaper to buy and install, the carbon savings are potentially much higher with an air source heat pump and the long-term running costs should also be better, especially if combined with solar panels and/or selective electric tariffs that optimise off-peak cheaper rates. 

An air source heat pump is also typically less expensive to install as compared to other renewable heating systems:

• Ground source heat pump: £16,000 - £25,000
• Biomass boiler: £14,000 - £19,000

What Factors Impact the Cost of an Air Source Heat Pump?

The main factors which influence the cost of buying an air source heat pump – ie the cost of the heat pump equipment rather than installation – are: 

• Size of heat pump
• The brand and quality 
• The controls and pipework complexity.

Smaller heat pumps will be suitable for smaller properties and well-insulated low-energy homes. A low-energy eco house may need around 10 Watts per square meter of finished floor area (1kWh for a 100m2 home) up to around 70 watts per square meter (7kWh for a 100m2 home), for instance.

As the heat load increases so does the need for larger capacity units and bigger volume cylinders. These will, in turn, add to the upfront costs of installing an air source heat pump in your home.

What's more, larger properties may also need a bigger heat pump, or even more than one unit, which can in turn require a hydraulic design which is more complex.

The below table illustrates how the size of the property and the insulation levels impact the size of air source heat pump required:

What's more, a higher heat requirement could also mean higher flow temperatures and therefore higher running costs.

Why Does it Cost More to Install an Air Source Heat Pump in an Existing Home?

There are a number of reasons why installing an air source heat pump in an existing home is more complex – and therefore more costly – as compared with installing one in a new build. These reasons include:

• Heat pumps must have a dedicated hot water cylinder to produce hot water for bathing and showering. Many existing homes may have combi boilers that have no hot water cylinder. This addition of a hot water cylinder could add cost and disruption, and will also take up more space in the home. 
• Many homes have a gravity feed water system that has a number of tanks in the loft that provide a small amount of pressure to the water system and also allow for expansion of water as it heats up in the central heating system. This ‘open vented’ system will need to be changed to a high pressure ‘unvented’ system and many of the pipes may need to be moved and/or replaced. 
• To ensure a heat pump works efficiently, it's advisable to improve the thermal performance of your home. This will ultimately mean insulating your home, perhaps in the form of internal or external wall insulation, loft insulation and so on. This work will invariably add to the cost of your project.
• If you have existing electric storage heaters then a complete wet central heating system will need to be installed, also adding a lot of disruption and cost. 
• Air source heat pumps have a fan unit that is installed on the outside of the home. As such the central heating and hot water pipework needs to be connected to that point. A boiler is usually installed on the inside of the home and the pipework needs to get from the boiler position to the new air source heat pump position as well as routing to the control valves. If the current boiler is in a central position such as a landing airing cupboard, back boiler in a fireplace or in a kitchen cupboard, then the pipework will also need to be mapped and rerouted to the heat pump connection position.
• There may also be a cost in removing the existing boiler. In the case of oil or LPG, the removal of fuel storage tanks, concrete base and fuel pipework will need to be factored in. 

With all these factors, weighing up whether you should swap a boiler for a heat pump, is a decision not to be taken lightly. 

There is another caveat, particularly in newer existing properties: if there is microbore pipe (10mm) to the radiators then the pipework may need to be replaced. The smaller pipe can often not carry enough heat and the pressure drops within the pipework simply make the heating system unworkable or very inefficient.

Replacing this pipework can be both costly and disruptive.

Are Air Source Heat Pumps Expensive to Run?

Let's say your home requires 12,000kWh per year and the efficiency of the heat pump is 300% then you will require 4,000 units of electricity to power the heat pump. At around 28p per kWh (electricity) that is a running cost of £1,120 per year. 

However, if the efficiency of the heat pump is 400% then you will use 3,000 units of electricity at a cost of £840 per year.

So how do you establish how much energy your home will require, to in turn establish the running cost of an air source heat pump in your home?

To begin, heat pump installers that are installing in accordance with Microgeneration Certification Scheme (MCS) standards will evaluate the insulation and airtightness levels in the home and produce a room by room heat loss calculation. (MIS 3005 is the MCS installer standard for heat pumps and includes said heat loss calculation tool within it.)

This calculation should be able to determine the maximum heat load at the design outdoor temperature as well as the amount of energy required to heat the home seasonally. 

If the insulation is optimised and the emitters (radiators or underfloor heating) are also designed for low temperatures, then the flow temperature of the heat pump can be lower and therefore the efficiency will be higher. As such, the heat pump will cost you less to run.

Typically you can expect efficiencies of between 200% (at high flow temperatures of around 55°C) to around 400% (at low temperatures of around 35°C).

Hot water requires higher temperatures than space heating and as such the efficiency of a heat pump will be lower for hot water preparation than space heating.

As such, once you have the figure for space heating an allowance must also be made for heating hot water. Allow around 50 litres of hot water per person per day. 

To work out how much energy your home will use you can use a free spreadsheet calculator on MIS 3005 if you have some experience of spreadsheets. When you know the heat loss you will then be able to factor in the efficiency of the heat pump. 

The installer has traditionally done the design work as well as the installation work but MCS has now changed to allow for specialist designers and specialist installers to undertake this (rather than one person trying to be Jack of all trades).

How Much Could I Save with an Air Source Heat Pump Grant?

To begin, with the recently announced VAT cut (which now means you pay 0%), you could save between 5% and 20% depending on the extent of the installation and how you purchase the heat pump. 

There have been a number of heat pump grants available over recent years, from the ill-fated Green Homes Grant, which was scrapped shortly after its introduction – it offered monies towards the upfront cost of a heat pump – to the Renewable Heat Incentive.

The Renewable Heat Incentive was designed to help pay back the capital cost of a renewable heat technology with quarterly payments over a seven-year period. This scheme was closed in March 2022, but has been replaced with the Boiler Upgrade Scheme.

The Boiler Upgrade Scheme, which is now open for applications, could also potentially pay an incentive of £5,000 for an air source heat pump installation.

Formerly known as the Clean Heat Grant, the Scheme – which was announced by government in autumn 2021, as part of its Heating & Building Strategy – the Boiler Upgrade Scheme launched in April 2022.

What is the Payback Period of an Air Source Heat Pump?

If you are introducing an air source heat pump into an existing home, the payback on an air source heat pump will largely depend on the actual cost of the swap, taking into account any grant payments you may receive as well as also accounting for how much you would have spent on a replacement boiler.

The running costs also need to be evaluated against the fuel that you are replacing. If you currently have a gas boiler running on natural mains gas, then there will currently not realistically be any financial saving. Against heating oil and LPG, the payback could be better but that does depend on the cost of those fuels.