High warmth pump set up prices could not fall a lot additional

The price of getting a heat pump fitted is a major hurdle for households considering replacing their gas boiler.

The National Audit Office said in March that the high cost of heat pumps and a lack of understanding were preventing more households from choosing the energy-saving devices.

Although some energy firms offer to fit a heat pump for free, many consumers have been waiting for prices to fall further before investing in the devices. 

But will that actually happen – and if so, when?  

All hands to the pump: The Government hopes heat pump prices will fall, but is this possible?

How much further can heat pump prices fall? 

Today, the cost of fitting a heat pump varies depending on which type you pick and what type of property you own, but it usually costs between £8,000 and £30,000. 

The typical cost for an air source heat pump – the most common, as opposed to the less popular ground source heat pump – is normally around £12,000. 

Some renewable energy experts claim that high heat pump installation costs may not fall much further. 

But the Government hopes that the cost of installing a heat pump will fall by between 25 per cent and 50 per cent by 2025 when compared to 2021.

Mike Foster of the Energy and Utilities Alliance thinks there is a natural limit to how cheap heat pumps can be, and thinks prices might not go down much more.

‘The argument that prices will go down as volumes go up is a false argument,’ he says. ‘These products are already globally-traded products.

‘The price in France or Germany is not dissimilar to a UK heat pump. The only area where costs might come down is when installers get used to fitting more heat pumps and can do it a bit quicker, so labour costs might come down.’

Bean Beanland, director of growth and external affairs at the Heat Pump Federation, also thinks the cost of fitting the devices might not come down much further.

‘The devices themselves are already competitive,’ he says. 

‘Fundamentally, the heat pump sector is already mature. The air conditioning market is mature, and a heat pump is effectively air conditioning.’

However, Beanland pointed out that a lot of the cost of fitting a heat pump is only paid once – when first getting the devices installed.

After that point, replacing the heat pump for a second time is cheaper as much of the preparation work has already been done. 

Why are heat pumps so expensive? 

Heat pump installation costs normally include one-off fees for project management and designing a replacement heating system, as well as a compliance check.

All of that inflates the bill for getting a pump fitted, according to a report by consultants Eunomia.

Meanwhile, the fact gas boilers are more established helps to keep their costs low compared to heat pumps – though this could change if heat pumps became more popular. 

Most heat pumps also have to be imported, increasing costs compared to gas boilers which are more likely to have been made in the UK. 

Also, many homes are insulated from the true cost of getting a new boiler as they have specialist boiler cover, which does not exist in the same way for heat pumps.

Even many home emergency policies that cover boiler breakdowns do not cover heat pumps.

Once a home has installed a heat pump for the first time, though, replacing it could be much cheaper.  

‘What’s driving the cost is the cost of the transition’, Beanland says. ‘Those transition costs are driven by a number of factors depending on each individual home. There’s a massive range in terms of possible prices.

‘Once the property has made the transition, the replacement cost of a heat pump, the difference in cost at that point [compared to a boiler] is very modest.

‘So the challenge for the UK is to get over the transition costs, and how we manage that.’

What about energy bills?  

Once a heat pump is fitted, energy bills should fall, and the devices typically need replacing less often than gas boilers.

The Government wants to end the fitting of new gas boilers in most homes by 2035.

Heat pumps use electricity to remove energy from the environment, and come in air, water or ground heat varieties.

Several firms, including Octopus Energy, British Gas and Ovo, have been competing to drive down the cost of getting a heat pump fitted.

Octopus says its ‘Cosy Octopus’ heat pump can be fitted either for free, or for as little as £500, provided the household in question is eligible for the maximum £7,500 grant from the Government’s Boiler Upgrade Scheme.

British Gas has a heat pump that can be fitted from £499, and Ovo has a version that costs from £500 – again, with the £7,500 BUS grant.