A new paper from the Global Warming Policy Foundation reveals that heat pumps are uneconomic in the UK. The findings call into question the Net Zero heating plans of energy minister Grant Shapps who has today called for every home to be equipped with a heat pump by 2050.
The economics of heat pumps are driven by the ‘gain’, the amount of heat output per unit electricity input, and by the ratio between electricity and gas prices. New data from the Energy Systems Catapult reveals that the typical heat pump delivers a gain of 2.8, but the price ratio is 4. This means that the majority of people will find a heat pump more expensive to run than a new gas boiler.
Moreover, nobody will see an overall payback once the capital cost is taken into account. The paper also shows that the cost of reducing carbon dioxide emissions using heat pumps is much higher than estimates of the cost of the damage due to global warming.
The paper’s author, Andrew Montford, said:
As renewables make the grid progressively less efficient, heat pumps are becoming steadily less economic. They already make no sense for consumers or for the economy. And they also make no sense as a decarbonisation tool because the heat pump medicine is worse than the global warming disease.”
• The economics of heat pumps are driven by the ratio of electricity and gas prices, and the heat pump ‘gain’ – the units of heat energy emitted for each unit of electricity used.
• Heat pumps are mostly deployed in countries with very cheap electricity.
• In the UK, the electricity:gas price ratio has been increasing for many years, as increasing penetration of renewable energy makes the grid progressively less efficient. The ratio is currently around 4.
• Heat pump gains have been improving, but only slowly. The median for an air-source heat pump is around 2.8.
• Thus, even taking into account inefficiencies of gas boilers, the majority of people will find a gas boiler cheaper to run than an air-source heat pump.
• Although substantial grants are available to install heat pumps, once the (net) capital cost is taken into account, almost nobody doing so will see an overall payback.
• To assess the overall economic effect of installing a heat pump, the capital cost before grants has to be incorporated into the calculation. If this is done, it is found that no heat pump installation is economic.
• The marginal abatement cost of reducing emission through heat pumps is over £300/t CO2, several times more than estimates of the damage caused by global warming.
• Installing heat pumps is therefore a mistake, on every measure.