With energy bills surging, is now the time to think about a heat pump?
High energy costs and financial support are tipping the balance towards heat pumps.
This April, many people will face a cost-of-living squeeze. Rising energy prices are making everything from filling up our cars to heating our homes much more expensive. According to the Bank of England, UK inflation could hit a 40-year high of 8% in 2022.
For some homeowners, this is leading to a rethink on renewables. The recently published UK Energy Security Strategy had disappointingly little to say about home energy efficiency. But energy efficiency measures, including renewable technologies, are becoming increasingly popular due to new government incentives and the likelihood of further increases in energy prices. This means that more people are now considering installing heat pumps to help bring their bills down and tackle climate change.
High energy costs and financial support are tipping the balance towards heat pumps
As gas and electricity bills rise, the payback period for renewables such as solar panels and air and ground source heat pumps is falling. Analysis from the environmental think tank Regulatory Assistance Project (RAP) shows that the running cost of a heat pump is now £261 a year cheaper than for a gas boiler. This is reducing the payback periods on renewable installation costs.
Installation costs are coming down too. Chancellor Rishi Sunak announced a new 0% VAT rate for home insulation and low-carbon technologies in his March 2022 Spring Statement. This replaces the previous 5% rate and applies to both materials and installation costs.
Plus, homeowners in England and Wales will be able to apply for a grant from the UK Government Boiler Upgrade Scheme (BUS) from April. This scheme subsidises air source heat pump installation by £5,000 and ground source heat pumps by £6,000.
As cost-effective as gas?
According to RAP, the cut in VAT combined with the new BUS grant cuts the average cost to install an air source heat pump to £4,975. This compares to an average cost of £2,700 for a gas boiler.
Together with lower running costs, this means that installing a heat pump in homes in England and Wales could, for the first time, have the same lifetime cost as installing a gas boiler. But bear in mind you may have to make other changes to your home - such as installing extra insulation - for a heat pump to be effective.
In Scotland, Home Energy Scotland offers a £2,500 loan plus up to £7,500 cashback for heat pump installation.
Is a heat pump right for you?
Even with grants and VAT reductions, some will find the reduced cost of installing a heat pump hard to afford without more financial help. Plus, heat pumps aren’t suitable for all homes yet, and finding qualified, trusted installers can be difficult. The BUS grant is welcome but installing a heat pump can still be complex and expensive.
How can Snugg help?
We’re developing a new platform that makes it simple and affordable to install energy efficiency measures in your home. A one-stop-shop for homeowners, it will provide information on what to install, and help you navigate the Boiler Upgrade Scheme, other local authority grants and the affordable finance options available. It will also provide a link to high-quality, qualified installers.
We’re looking for people to help test our new platform. Sign up to keep up to date with the latest information about Snugg and help test our innovative ideas.
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