The cost of being green

by Mars

As the headlines from COP26 vanish from news-tickers, it’s a good time to reflect and take stock of our personal sustainability journey. Our air source heat pump is about to embark on its third winter and it’s the first time that financial sustainability has entered the equation from a heating perspective.

This time last year, we were paying just over 11p/kWh for our electricity, and this made our air source heat pump extremely cost-effective to run. And we needed that, because January and February were both extremely cold, and we ended up consuming a lot of electricity to keep the house warm.

But before I continue, let’s put a few things in context. Other than reducing our carbon footprint, another major consideration for switching from an oil boiler to a heat pump was that the running costs were supposed to be significantly cheaper. For two years, that has very much been the case.

As part of the running cost forecasts, the initial projections were based on an electricity tariff of 14.5p/kWh and oil at 50p per litre with each fuel going up a few percentage points each year to account for inflation.

I voiced my apprehension about running costs in February this year, and dreaded what would happen if electricity tariffs hit 17p and what that would mean for our heat pump’s running costs. Here we are almost ten months later, and electricity tariffs have hit record highs. Due to the fact that our previous electricity supplier went bust, our new tariff with E.ON (who we were reassigned to) is a worrying 23.17p/kWh with a ludicrous 28.04p per day for the standing charge.

For some added context, in the first week of November last year (2020), we used 307kWh of electricity to run our heat pump. This meant that with our 11p/kWh tariff we paid about £33 for heating that week.

In the first week of November this year, we used 256kWh of electricity (we’ve used less because it’s been milder than last year) at a running cost of £59. That means that we’re staring down the barrel of £240 for our heating in November when it’s been relatively warm – we paid £118 for our heating in November last year.

What makes this even scarier is that in January this year, when temperatures plummeted, we consumed 2,231 kWh of electricity just for the air source heat pump (72kWh per day). On our 11p/kWh tariff our heating cost £245 for that month. If we get another cold winter (which is very likely) based on similar consumption our heating will cost a staggering £513 for the same usage under the new tariff. That simply isn’t financially viable for us.

With kerosene maintaining at 50p per litre, it would cost us less than £250 month to heat the house. That’s the conundrum. Reduce your carbon footprint by paying double for your heating. Frankly, I’m not sure that the current state of affairs is a great selling point for people considering making the switch to heat pumps.

I’ve heard several heat pump experts philosophically say that high temperature heat pumps are the future, and if the energy to power them is green, it doesn’t matter how much power they draw because they’ll be producing 100% green heat. I obviously agree with this top line assessment, but where the argument falls flat is that if electricity is double the price of oil (or any other fossil fuel) the financial incentive to be green will probably not be enough for most households in the UK to make the switch.

Heat or eat should not be the option that households are presented with.

At some point, which I believe must be sooner rather than later, financial sustainability must align with environmental sustainability, and the government must play an active role in this, which they have been reluctant to do. I am staggered that there isn’t a heat pump tariff for homeowners. I know that Good Energy have supposedly launched one, but the last time I checked their tariffs weren’t that attractive, and you can’t switch suppliers at the moment anyway. This is an initiative that must be driven by government given their strategy to decarbonise home heating in the UK using heat pumps.

I think it’s going to be a tough financial winter for most homeowners in the UK, but I think that heat pump owners are going to be particularly hard hit, and having spoken to energy market analysts and forecasters, it is very unlikely that there will be any tariff respite until spring.

I have received scores of emails from concerned heat pump owners in recent weeks that are scratching their heads on how to make their heat pumps more efficient and cheaper to run. The only way to do this is to drop the flow rates (thus consuming less electricity), but this will make the house cooler so it may entail wearing extra layers as we head into December and the new year.

Please leave a comment below about your tariffs and how they will affect your heating running costs this winter. Alternatively we’d love you to join the conversation about electricity tariffs on Renewable Heating Hub.

9 comments

Bean Beanland 24 November 2021 - 09:26

Is there any more that you can do on insulation and draft proofing to further reduce your heat demand? This is a very significant problem for heat pump owners and for the UK’s overall plans for decarbonisation, and everyone in government knows it, but it’s a politically charged issue, of course, because most people still rely on fossil fuels for heat and hot water. Which constituency would any politician choose to upset.

That said, a heat pump tariff (even if subsidised by government) would not cost the tax payer that much at the moment, because there are still relatively few heat pumps in domestic settings at the moment.

It’s of little comfort this year, but the backdrop here is the potential to start removing fossil fuel boiler options from off-gas properties completely, starting in 2026. Within the consultations, which close in early January, the rural communities should set out the case for both access to affordable capital and for heat pump friendly tariffs. The justification for government action on both is that part of any investment that an individual makes in heat pump technology is for the “common good”, in contributing to Net Zero 2050.

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Douglas 24 November 2021 - 11:04

I commented before on the cost of running our ASHP last winter when the temperatures went negative and we were paying over £400 per month for electricity at around 14p per kwh, now it’s around 21p. Checked a few days ago and the days cost was over £10 and outside temperature was around 5 degrees at its lowest. If costs are high this will be the last winter I rely on the ASHP as we will be fitting an oil boiler before next winter and switching over in November. We live in a 18 month old very well insulated 4 bedroom house.

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Keith 24 November 2021 - 11:37

We have the same problem, albeit on a much smaller scale as we have a new build property (a 2020 built bungalow with an EPC ‘A’ rating).

We’re all electric and use surprisingly less kWhs than our EPC suggests (EPC says 10,900 kWhs but actually we’re under 8,000 kWhs). We also managed to hook a 1-year, fixed price Octopus Go contract in May 2021 that will see us through the Winter and Spring at a cost of 15.97p/kWh during the day and 5p/kWh between 00:30 and 04:30.

So far, so good, until I looked to see what the tariff price would be if I took the same contract out now. It’s still 5p/kWh for the ‘night’ hours but the day rate has gone up 51% to 22.45p/kWh. Ouch!

The government has to do something urgently to shift subsidies around so that electricity doesn’t have to carry the full cost of getting renewable energy into the UK or not only will more energy companies risk going bust but more homeowners will suddenly find they are fuel poor!

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Mars 24 November 2021 - 12:13

Thanks for sharing Keith. 22.45p/kWh is tough going. Heat pump owners are all in the same boat this winter and it’s going to be heavy going – yesterday’s heating and electricity cost us £16, which is nothing short of crazy.

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John Hardie 24 November 2021 - 11:52

We had our heat pump commissioned in December 2020 when electricity prices were 14.5p per KWh . Our tariff changed to 18.5p on Feb 1 2021. Off peak with EDF was half of that for 10 hours every night and from 21.00 Friday until 7.00 Mondays. I considered using a single tariff at that point which would have been about 16p with a lower daily standing charge.
I investigated other providers (many of which have now gone bust), and there was little or no discernible difference.
Prices are now hovering above 27p per Kwh, and it is becoming more difficult to reconcile our decision to go down the heat pump route.
Our all electric car (MGZS) has saved us a fortune in fuel, servicing and road tax. With this saving and the RHI we are probably no worse off for the year than before. As Mars has suggested, it is time for a tariff for heat pump used to be introduced or at least the Green Tax on electricity dropped.

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Mars 24 November 2021 - 12:09

Hi John. Thanks for leaving a comment. 27p/kWh is above the price cap amount for most of the country. This is a very useful link to see the price cap for your area: https://r6fd51uoetngaqh-db202106081427.adb.uk-london-1.oraclecloudapps.com/ords/r/apex_live/energy-price-calculator/home?session=113813051176619

If you’re above the cap amount, I’d raise it with EDF and if they don’t respond take it to OFGEM.

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Keith 24 November 2021 - 13:07

Mars, I understand the cap is only for the direct, or Standard Variable Tariff (SVT) charged by suppliers. I suspect John is on an EDF ‘package’ deal that gives a lower price at night.

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Eddy Winko 24 November 2021 - 12:07

I wonder if anyone has provided you with a comparison with a ground source heat pump in the UK? I know my cousin in Austria runs one and her annual electricity bill was around 2000 euro, this will probably increase this year as electricity has increased in price throughout Europe, but it still sounds more reasonable than the figures you are quoting. The house is a new build (6 years old) with around 200m2 of floor space.
I’m just waiting for a grant to install our own, I know for sure that we would never go ASHP based on what you have reported, especially with our cooler climate.
It was also interesting that my Aunty just had a wood pellet boiler installed to replace an old wood burner, this was supported by a grant from the Austrian government. They also installed an ASHP in the basement of the house to heat water in the summer, which is turned off once the boiler kicks in during the colder months.

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Zsolt Fejer 24 November 2021 - 15:03

It was definitely an easier choice for us as our home was running on electric storage heaters.
So we’re comparing those electricity prices to the ASHP running costs which must be more favourable.
Although it would have been possible to install a gas or oil system. But to get gas main to the house would have been another few grand. Getting an oil tanks was absolutely out of the question.

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