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.

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Bean Beanland
6 months ago

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.

Douglas
Douglas
6 months ago

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.

Dan G
Dan G
Reply to  Douglas
3 months ago

How are you using that much heat? Is your thermostat set to 25 and you have windows open all day?

My 13-year-old three-bed detached requires 30x less heat.

Keith
Keith
6 months ago

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!

John Hardie
John Hardie
6 months ago

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.

Keith
Keith
Reply to  Mars
6 months ago

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.

Clare
Clare
Reply to  Mars
5 months ago

I checked out prices for Octopus as my provider, Neon Reef, has just ceased trading and they were also around 27p per kWh. I think we all need to prepare for a massive hike in prices with the next price cap review. Luckily British Gas, who I have been transferred to have given me a variable rate of 20.68p per kWh which is a big hike from Neon Reef which was fixed rate of 15.97p per kWh until August 22. This is my first winter with ASHP and quite frankly I’m terrified of what my bills will be.

Keith
Keith
Reply to  Mars
5 months ago

E.ON Standard Variable Tariff table dated 1/10/2021 shows prices per kWh vary between 19.121p to 20.948 plus VAT depending on your area and if you pay by Direct Debit. The daily standing charge also varies between 22.197p to 26.090p, again plus VAT and depending on your area. It is being recommended to anyone who is forced to switch because of supplier failure, or if their current contract is coming to an end, to always go for the Standard Variable Tariff as this is the ONLY one that is price capped (but I’m sure you know this). A friend of mine was in this situation of being end of contract and she was being ‘led’ to go for another fixed term/fixed rate deal at a much higher price than SVT. The only way she could get a SVT contract was to telephone her supplier to ask to be put on it. All the online switching options only led to a higher priced contract. Not breaking any rules of course but this is one of the ‘tactics’ energy suppliers are using (path of most/least resistance…..).

Eddy Winko
6 months ago

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.

Zsolt Fejer
Zsolt Fejer
6 months ago

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.

Jon
Jon
5 months ago

Batteries are looking more and more viable. £7k gets a 16kWh battery, which you can charge on a night rate (eg octopus go / go faster) and then most your power will be 5p/kWh, and autum/spring the solar PV will be maximized as any excess during the day can cover heating in the evening. We don’t have batteries yet, but thinking about it (using home energy Scotland loan).

Kevin Lester
Kevin Lester
5 months ago

Have you thought about subscribing to Ripple in order to offset your energy requirements? Personally I think it’s bonkers generating electricity from solar or wind and not being able to use or buy back the power you generated at the price you were paid for it. I know the UK government incentivised the installation of solar PV, and depending upon what FIT tariff you got, like me, it could have been very generous. But people investing now get paid less than a quarter selling the power than what they have to pay to use it at a later date…. In some states in America, you get to offset your power use by what you have exported. I think that is a much fairer way of doing it! And if you buy into a share of a wind farm, then you should get to use your share of the power generated in the same manner!!

Mark Crooks
Mark Crooks
5 months ago

I think that there is a massive lack of understanding regarding ASHPs, with both consumers and MP’s/policy makers.
Marketing messages banding 400-500% efficiency numbers are the headline but this is very misleading as these are rarely hit, especially as the outside temps go below 10ºC.

As the UK Gov is pushing alternative, non gas heating solutions, more people are going to be hit with these higher heating bills.

Perhaps someone on here could pen a letter that we could all copy and send to our MPs that highlighted the issue in a more realistic way and the need to create tariffs for ASHP users?

Bean Beanland
Reply to  Mark Crooks
5 months ago

The Heat Pump Federation is, as you would expect, highlighting to government how damaging the current situation is to those were have been early adopters of the decarbonisation of heat with heat ump technology. We also continue to explore the potential for electricity suppliers to play a part in easing the operating costs for heat pump owners.

Bean Beanland
Reply to  Mars
5 months ago

We, along with all the allies that we can muster, are working on it Mars. I appreciate that it does not help for us, or anyone else, to say that the situation is temporary, but it is. We just can’t tell how temporary at this stage. There are some precedents, which we are trying to use, but I do not have any idea as to the chances of success yet.

Jon
Jon
Reply to  Mark Crooks
5 months ago

Agree about the lack of understanding.

I’m not sure there should be a special tariff for ASPH users over other green incentives, but the crazy high electric grid prices as a whole just now, (driven by various complicated factors) needs to be brought under control for transitioning to clean energy in heating/industry/transport etc, – eg, less tax on electric, more on gas. Battery storage can also bring down costs for users – so maybe funding to help people afford them would be useful

But it’s also inevitable that people get huge bills in winter whatever the fuel. That’s why you should ideally be overpaying in summer, we’ve build up credit in our account that should cover December/January’s huge bill. I’m expecting our heat pump to cost more than gas in December/Jan, but helped by solar PV, should be much cheaper for the rest of the year.

Olly
Olly
5 months ago

I am considering converting from a mains gas boiler to an ASHP, and long term cost is obviously important. I understand that the cost of electricity has shot up compared to oil, which can certainly pose a dilemma for those with oil tanks. For me using a gas boiler, the rising cost of gas seems to make the proposition to move to an ASHP no worse that before. Wholesale gas prices are rising, and it is the cost of gas that is pushing up electricity. I got a quote from British Gas for gas or electricity only tarrifs in the South East:
8.06p per kWh gas
31.8p per kWh electricity
I think with with a COP of ~3.95, the prices are the same. I am considering the Ecodan R32 Ultra Quiet PUZ Monobloc Air Source Heat Pump (11.2kw), and indications are that my property might be fine with 40oC flow temperature, so I hope the annual average COP of 4 would be achievable. The South East is fairly warm on average, so ASHP vs GSHP is a tough call for efficiency, ignoring the installation price.

Obviously I am ignoring the large outlay cost of the ASHP, but I am putting this down to “doing the right thing”, going green and understanding that I am paying a premium to be a relatively early adopter. Indications are that the tax system might help reduce the taxation on electricity and move to emitting fuels.

Regarding CO2 emissions, I am working on:
0.184kg of CO2e per kWh Natural Gas (ignoring boiler efficiency)
0.0582kg of CO2e per kWh of electricity (2020) with heat pump COP of 4.0
0.038kg of CO2e per kWh of electricity (2023) with heat pump COP of 4.0 https://www.icax.co.uk/Grid_Carbon_Factors.html
It seems like in 2023 my heating will be 20% the emissions of my current gas boiler.

Does all this sound reasonable, or am I missing some unknown factor that detaches my cost and emissions estimates from reality? Also is the Ultra Quiet really 42db at 1 metre under significant load? E.g. heating up the hot water?

Any input/thoughts/feedback welcome

Olly
Olly
Reply to  Mars
5 months ago

Thanks Mars. Will do. I guess my takeaway for this blog post was that the cost of heating for us gas users is going up along with electricity, so the cost of going green is relative to whether you are using oil or gas as the starting point. I’ll take the specifics to the other forum

Keith
Keith
Reply to  Olly
5 months ago

Hi Olly,

Don’t know if you have reposted this on the Renewable Heating Hub yet but I thought I would send my reply as it may be helpful to you.

We too have an 11.2kW Ecodan ASHP and whilst it was installed with a flow temp of 45C we have had this lowered to 40C to try and improve the heat pumps efficiency. It still is able to heat our 200 sq. m. bungalow to our satisfaction in all cases (other than a brief spell of -10C last winter where we did add an LPG mobile room heater for a few days).

We have the benefit of UFH and, as you don’t say what type of emitters you have (or will have) I can’t say our situation is the same as yours. I think your expectations of a COP of 4 (or even 3.95) are very optimistic. The best we have got from our is 3.64 and, whilst we’re happy with that, to get much higher you need to move into Ground Source Heat Pump land I think where 4 is achievable.

Of course there may be specifics of your proposed installation that mean you could get a higher COP but having had 4 years working on the Domestic RHI scheme for Ofgem I didn’t see ASHPs regularly getting any better than our performance.

We also benefit from an electricity tariff of 15.97p/kWh until May 2022. By then Winter will be over and even if prices don’t fall by then we will have seen the worst of this year’s crazy prices out.

If you do go ahead with the ASHP and want to get financial support from the Domestic RHI you would need to get it installed and make your application before the scheme closes in April 2022. I would also seriously consider solar PV as that can make a real difference to your bills. Generation is low in Winter but even on the not-so-sunny days it can still generate enough for us to export to the grid at times during the day (depending on outside temperatures of course).

Last point to make, we live in East Anglia and in an open countryside location. Behind us is a big open field and the wind blows straight at us at times. I estimate that can make it feel 10C colder on windy days. The bungalow is brand new and so has the latest standard of wall and loft insulation. Our EPC has been upgraded to an ‘A’ since we had the solar PV installed so we should be ‘position A’ for a heat pump.

Good luck if and when you go ahead. Environmentally it’s absolutely the right decision, economically it’s a bit up in the air right now as all I can compare our costs against is our last house in London which had a gas boiler when the price of gas was below 3p a unit. Oh those were the days!

Olly
Olly
Reply to  Keith
5 months ago

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