Heatpump payback calculator (total cost of ownership)

Thanks all, fascinating! Keep the examples coming!

So from Jan to July this year the UK installed about 30,000 heatpumps, lets say that’s ~60,000 for the year. The target is to reach 600,000 per year by 2028/2030 (seems optimistic?).

In October 2021 a BUS grant funding pot of £450 million was announced. I believe this was used up by October 2023 and a further £1.5bn was announced extending to 2028. That’s enough for 200,000 heat pumps @ £7500/unit. So lets say its 60k units this year, 100k 2025, 150k 2026, 250k 2027 etc. That pot would run out somewhere in 2026.

I wonder what the industry should be targeting for installation cost and what the future grant level should be? and what the implication would then be for SCOP/SPF?

One option might be a heat pump and hot water cylinder with no radiator upgrades approach with R290 heat pumps. I reckon a system with controls setup well might be able to get SCOP of 3.2-3.5 if existing rads can run at 50-55C (at an accurate heat loss!! not inflated heat loss). So lets say installation cost could fall to £7-8k. Perhaps the grant level would fall to £2-3k so net cost to customer around £4-5k. If the unit cost of electric on a agile or special heat pump tariff can be around 18p/kWh and annual heat demand is ~10,000 kWh the spreadsheet calculator suggests a rough 10 year payback which is probably ok?

I wonder if that’s the direction we are heading in as an optimisation of installation cost, unit cost and SPF?

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A 10 year ROI isn’t enough to bring most of the population on the heat pump journey. I think it needs to be both cheaper to run and cheaper or free to install (e.g. expansion of ECO4 scheme) for a majority that just don’t care that much.

Needs much more carrot and a bit more stick, or there’s no chance, and that’s not even considering the supply issues with qualified installers.

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Interesting discussions on costing models.
I do think system changes to use low temperature heating should have happened years ago regardless of the fuel type, and I don’t consider them part of my heat pump project costs.
In terms of my heat pump running costs, our most expensive month was January when the heat pump used almost 500kWh. We have solar PV and we’re on Intelligent Octopus with a battery. I can only use the average cost for the month which was 10.4p (EV charging skews the average rate significantly). That’s £52 for the most expensive month.
June was our lowest heat pump use, 66kWh, most of which would have been at night at 8p, so only £5.

Since then I have improved the system and I’m waiting for a cold month to see the effect, if the COP increase we’ve seen so far continues (getting from SCOP 3 to 4 is the aim) then the coldest month might cost less than last January- it all depends on the weather.

So annually heating and hot water are costing us around £270 plus a bit for VAT, are we including the standing charge? Because that’s now very significant! That’s for a 4-bed semi, around 140m2, and significantly more comfortable than we used to be on gas too.

I estimate our annual demand is around 8000kWh, so we’re saving maybe £250p.a. compared to gas.

Costs of PV and battery? As we have PV, the battery charges “for free” for much of the year, certainly in the shoulder months, and as we get a FIT income the PV earns us an income as well, I consider that pays for these elements.

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An interesting topic. I would say useful but still simple fields to add to HeatpumpMonitor would be total installed cost after grants, annual operating cost for electric, and estimated previous gas cost. That would let others see what is reasonably achievable, and use as goals for their installations.

I feel a reasonable goal is get the heatpump operating cost close to par with nat gas cost. Even that is a tall order with the low cost of nat gas, at least here in US. We used to spend $280-360 annually with nat-gas heating, and used $380 worth of electric annually with ASHP (one winter).

I’m in South East Michigan. Our house had a 60000 btu/hr input nat gas furnace with high temp (~140-180F design) hydronic fin tube rads, central ducted R22 A/C, and a wood stove in central area of the house. It was cheap to operate, because we didn’t use much A/C and nat.gas (w/ wood stove and keeping rest of house generally very cold).

We have had grid-tied solar since 2011, and in 2020-22 added more solar and battery to work better with new grid tariff, and losing net-metering. Around then, we moved separate water heating & A/C meters onto the main service, and also additional electric consumption with an EV. The outflow credit is still ok, with my electrical system set up to outflow usually only on-peak, and only inflow if needed off-peak. 1 kwh of on-peak outflow gets a credit worth 2-3 kwh of off-peak electricity, and that works very good for EV charging, and heating. For heating, usually the demand for heating is overnight anyway, and the hydronic system has some heat storage that can limp through the peak hours if there is heating demand.

In fall 2022, I tore out the nat-gas furnace boiler, and replaced it with an 85gal plastic lined water heater tank (meant for DHW, but good enough as a buffer tank) and heated only with resistance elements, only with off-peak electricity. Worked fine, we were stingy with the thermostats, and it cost only $360 for the season for the electricity. That’s if we paid $.12/kwh, but it was banked credits, and we did actually not spend anything on nat-gas. Earlier in the year, I replaced the nat-gas range with an induction range, and turned off the nat-gas service. The cost for the heating change was <$1000, with a cheap used tank, new circulator, fittings, etc. We avoid ~$300/yr in nat-gas cost, so that’s very good payback, only because the simple electric resistance boiler was so cheap, only about 3 years. Technically the range was also required to abandon gas, ~$1000, so we spent $2000 to abandon nat-gas to save say $300/yr. Even with that, 7 years is pretty good. That’s not including cost for the PV & batteries which make the electric ‘free’… Payback wise, could’ve stopped there for the best economic payback, but I would like to have more heat, and burn less wood.

In 2023, I installed a split ASHP system which provides A/C to the air handler unit, and provides hydronic heating via a refrigerant to water coil. The outdoor unit is a ‘cold-climate’ GreeFlexx/MideaEVOX MrCool badged R410a w/ EVI, and my rudimentary datalogging measurements for hydronic water flow, delta T & electric consumption indicate SCOP in the low 3’s. It is a 3ton 36000btu/hr capacity, but setting it at 2ton gets better COP. Again DIY, with some used or discount parts, total cost after $2000 tax credit was $5650. It used $380 worth of electricity for the winter. So this payback, ($1000 initial install + $5650) / $300 avoided gas cost is about 22 years!


The green line cCOP is ‘cycle’ COP integrated over each run cycle, and the SCOP is integrated since the little ESP32 has been last reset. The openenergymonitor is very neat, but I made this basic ESP32 meter and use my other existing IOTstack logging with it. Here’s more about the monitor and the DIY ASHP system. https://www.reddit.com/r/DIYHeatPumps/comments/189mlyy/diy_airtowater_cop_measurement/

This summer, I installed a conventional R410a mini-split in the garage, since it would be nice to take the edge off the worst summer and winter days. We still had some extra banked electricity credit after last winter’s heating season. Hopefully soon, I will get to more improvements to the house hydronic system: replace some fin tube with radiant wall & floor loops to get more emitter capacity at low water temps, add a second 85 gal buffer tank.

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Hi all. I’m in the UK.
Great thread.

I’m just staring my heat pump journey.

I have 9.24kwp solar, installed in July 2023.
15 panels south
7 west.
Solaredge 6kw homehub inverter
10kwh solaredge battery.
Install cost of 18.5k.
I added the 25 year warranty on the inverter.
Solar prediction of 8.4Mwh per year

My house is 306m²
9"solid brick
New roof in 2013. Fully insulated.
Windows fitted in 2013. K glass argon filled.
I’m installing 116m² of insulation in the crawl space on the ground floor. Ybs superquilt. Fun job!

Why all this work? To bring down the overall running cost of a 100 year old house.

I’ve had 2 HP quotes.

One quote was 20.5k for two mitsubishi 11kw HP in a cascade system. Plus a 200 litre HW tank.
To pay is 13k
Heat loss guess is around 20kw.

I use around 32000kwh of gas per year. 2k in gas.

HP scop is 3.5 running @ 50c. - 3 to + 21.

Predicted electric usage is 7300kwh @ 15p is £1095. I’m on Agile tarrif.

This months average cost of electricity 16p. The last week or so has been rubbish for solar and Agile prices have been high.

If I include solar into the equation I’d reduce my heat cost by over 50%, I’d hope. Amazing!

I’m all about the long term saving. Wife more about the environmental benefits.

I’ll have a read on the forum and try and educate myself a little more.

Thanks all.

Alan.

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Welcome!

Just a friendly tip: multifoil/‘superquilt’ type insulation simply doesn’t work, and is borderline fraudulent. The insulation values quoted cannot be achieved in the real world, for manifold reasons.

Best practice guide to insulating suspended floors: A Best Practice Approach To Insulating Suspended Timber Floors | Ecological Building Systems

I recently did a budget version of the above guide, substituting the expensive membranes and airtightness tape for much cheaper alternatives, and using Dritherm 32 mineral wool insulation instead of expensive hemp. Let me know if you’d like a list of materials.

I went to a multifoil supplier’s website, and IIUC, their product is not insulation - despite the fact they refer to it with that word - but rather a radiant barrier.

The giveaway here is the need for an airspace on at least one side (preferably both sides) of the reflective surface.

Do I Need an Air Gap on Both Sides of Multifoil?

To gain optimum performance from our multifoils, it is essential to have an airspace either side of the product. If an airspace either side isn’t manageable, then at least one airspace is vital.

Ref: https://www.multifoil-insulation.com/


A radiant barrier has no R-value. Unlike insulation, which slows conductive or convective heat transfer, a radiant barrier - as its name suggests - slows heat transfer from a radiant heat source. RBs work best at reducing heat gain in warm/hot climates.

Ref: Ref: https://www.energy.gov/energysaver/radiant-barriers


Calling a radiant barrier insulation is grossly incorrect, as it has essentially no insulating properties.

That said, a radiant barrier can improve the performance of insulation.
Ref: Benefits of Combining Radiant Barrier and Traditional Insulation

Radiant barriers aren’t fraudulent. They do indeed work.
Calling a radiant barrier insulation is what’s fraudulent.

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What is the “rule-of-thumb” cost for a heatpump install (replacing the old gas/oil boiler in an existing house) in the UK? I realize there’s of course quite a range, but in Germany that number is around 35k€. My own quotes were in that range and national statistics of installs in the last years also average around that. Depending on circumstances, you can get up to 70% of that back as a grant (on average 50%, capped at max install cost of 30k, so max 15k grant). That still means people pay 20k€ out of pocket, which is massive. Just from looking at this thread it appears this average is less in the UK. Is that assumption correct or do we just get a distorted picture in this thread?

That does seem very high @Andre_K, 35k€ = £29k? I would say average install cost in the UK before the grant is £12.5-15k.

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Those German costs are insane.

I’d say UK costs with an independent installer are between £10-20K.

Most installs are done by the big energy companies however (Octopus, British Gas, EDF), often at loss-leader cost (under £10K including radiator upgrades).

We also have the £7.5K BUS grant, which is claimed by the installer on your behalf, so the consumer only pays the difference.

I know one person who paid £1.5K total for a full Daikin install, with radiator upgrades, via Octopus.

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Yep, that’s correct.

Definitely insane. Yet you argue with any professionals on german forums they claim these prices are completely justifiable. I claim bullshit - there are cost of living differences between UK and Germany but not by more than 100%.

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Thanks all for the information.

I’ll be installing as their recommended method.

I did look at other products but decided on the ybs mostly because of ease of installing the product in a restricted space. All work will be in the crawl space. Some areas are quite restrictive. I have 116m² ground floor area to cover.

I’ve already covered 14m². Took me 4 hours just for that! By the end I’ll be whizzing through no doubt.

I’ve spoke to a few heat pump installers and they’ve said it will improve heat loss survey results. That’s good enough for me to crawl around for the next few days. :slightly_smiling_face:

One other argument I’ve heard for high prices is the legal requirements for installation standards. For example, 100% insulation thickness for any pipes within an unheated basement room, and I’m sure there are loads more. For reference, this is how my indoor- and outdoor installaltion looks like. Would there be any huge differences in how a similar heat pump would be installed in the UK?


The best ROI I can cobble together in today’s circumstances is:
A Heat Geek installation for £13,500
A SCOP of 4
The OVO heat pump tariff of 15 p/kWh
The BUS of £7,500
With all of this together, payback could be around 7 years. But that raises the questions of how long the generous BUS and OVO tariff will be available for.

Getting bill savings to exceed finance repayment (which is Nesta’s vision for how mass uptake could be achieved) is another challenge, since the interest adds several thousand to the cost side.

I should point out that the spreadsheet calculates interest simply as [interest rate] x [loan period] x [loan amount], which I think means it uses something other than APR (any finance experts in the community?). From a quick look today, it would appear that Heat Geek’s 11.9% ARP offer is approximately equivalent a 7.5% simple interest value in the spreadsheet.

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It’s an interesting idea about a move towards something more like a drop-in to the existing system, favouring low install costs over SCOP maximisation. A friend was given two options in her heat pump quote: with and without radiator changes. The option without would use a design flow temperature of 60C! Seems unthinkable for Heat Geeks, but the quote promised a SCOP of 3.3, which would deliver similar running costs to gas on the price cap.

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That is the strategy that Octopus is going for with their own-made heatpumps: high temperature drop-in replacement for a boiler, without disruption or cost of radiator upgrades.

Pair that with HeatGeek’s MiniStore for hot water (suspiciously very pink) and the barrier for combi owners is considerably reduced.

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It seems wrong to me to include solar or battery in a comparison of heat pump costs. They’re clearly logically separate and they introduce so much practical and unnecessary complication. People mentioning negative bills, for example …

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Thanks @L_Bow! and welcome to the forum! Thanks for letting me share your spreadsheet and apprecaite all of your thoughts on this!

Is your friends house pre-2000? I wonder if that 60C design temp is actually just a result of an over-estimated heat loss? Might be closer to 45-50C in reality perhaps? E.g with our house default pre-2000 CIBSE heat loss 7.5 kW the original radiators would have needed to run at ~75C, I upgraded the radiators doubling the output capacity but in hindsight at the actual measured heat demand of ~3.3 kW I would have only needed to run the original radiators at 47C which would have just fallen inside the range of my old R410a Ecodan, wouldn’t have even needed an R290 heat pump!

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I approached the problem differently. I asked myself how much I would save annually vs gas if I switched to a well performing system (COP 5 for heating and 3.5 for DHW) vs my current gas usage (using the manufacturer’s optimistic performance of 89% for a combi boiler). I’m on Octopus Agile and my average price per unit of electricity is12.5p and 6.2p for gas. In my case that’s a potential saving of £651 per year.

Then I divided that by the cost of money (4.5% for me, in my current financial situation) giving me a total of £14,565 for the project. I figured that either a) I’d sell the house and get my money back or b) the system would outlast me or c) in 15 years I’d be able to upgrade to a better system. In the meantime, I’d help reduce global warming.

I installed it myself; my time is free to me. I didn’t go via the BUS because the systems commercial people offered to install were way more expensive than the costs and were sub optimal (massively oversized, buffer/volumizers, etc). I live in a 1930s house and I KNOW what my heat loss actually is, not some finger-in-the-air MCS ultra cautious number.

I upgraded many of my radiators to expensive K2 vertical / K3 horizontal ones, fitted a Kingspan solar 300l cylinder and a recoup waste water heat recovery system. My heat pump is a Vaillant 5kW Arotherm+. I have come in under budget and my family like the fact that the house is warm all the time.

I didn’t include the price of the Open Energy Monitor system as I class that as entertainment for me. Currently, I have the highest performing self-installed system (London Arotherm+ 5k) but it’s only been running for a few weeks. I expect that my SCOP will be a little over 4.5 in a year’s time.

EDIT: my design temperature is 35C flow at -3C outside temperature. Hence the massive radiators.

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I agree. If you’re talking about return on investment for a heating system, then you only include the costs and savings for the heating system.

Also, I note that people don’t price things correctly, almost no-one properly accounts for the cost of batteries. I have a Telsa one and I don’t think that it’ll ever pay back. Fun to have though and does allow me reduce the carbon impact. The good news is that batteries are getting much, much cheaper.

EDIT: In my opinion, heat pump installation payback should be calculated based on the cost difference between a heat pump system and a direct replacement. When I replaced my gas boiler a few years ago (a direct replacement) it cost over £2,000.

If I replace my Arotherm for a direct replacement, I expect that it’ll cost about the same as the gas boiler swap above, in a few years (greater availability and better training).

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