Brain Dump IV – Should we buy an Air Source Heat Pump or New Boiler? Plus the GDHIF
In today’s Brain Dump we are covering such exciting topics such as Air Source Heat Pumps, Boilers, and the government scheme called the Green Deal Home Improvement Fund (GDHIF). When we moved house in October we didn’t really consider how old the boiler was but having had a few qualified people come round to have a look they reckon it’s knocking on 30 years. It would probably survive for another year or two but I recently read about the GDHIF and that you can get up to £1,000 off a new boiler installation, plus a further bonus £500 if you moved house in the last 6 months. With a possible £1,500 up for grabs I thought it was the ideal time to look into getting the rusty old thing replaced! As usual with these things it turned out to be far from simple with a myriad of options, ways to pay and save with government schemes, and so on. I’ll try to summarise it as clearly as I can below, in case anyone else is also in need of an upgrade, this might come in handy!
Overview of boiler replacement options
After reading around a bit I narrowed down the high level options as follows:
- A new, higher efficiency condensing boiler (Gas)
- A new, higher efficiency condensing boiler (Gas), with up to £1,500 cashback from the GDHIF
- An Air Source Heat Pump (I will call this ASHP to save typing it out every time from here on in!)
Option 1 and 2 are fairly self-explanatory as I am sure most readers are familiar with a gas boiler. The newer models are around 90% efficient whereas the old one is probably around 70% so we’d be looking at a cut to our bills and Carbon footprint of about 20%. Therefore this isn’t an investment as such as it wouldn’t pay for itself over it’s expected lifetime of say ~20 years (hopefully), barring a horrendous gas price increase (in which case I would be wishing I’d gone for the ASHP option anyway!). But looking and listening to the old one, creaking and cranking away, worries me a little, and apparently it’s not installed in an ideal spot either, so it needs to go and we might as well just get on with replacing it.
The Green Deal Home Improvement Fund
You might also be wondering why anyone would go with option 1 over option 2, surely I would jump at the chance to get £1500 off right!? Not so fast young Firestarter 1!
It turns out that the GDHIF is an overly complicated scheme. A government program with many rules, caveats and hoops to jump through? I know, inconceivable isn’t it?
So to get the money, you actually have to complete two home efficiency improvements from this list here.
The most feasible improvement would have been the addition of a Flue Gas Saver which takes extra heat from the Flue and recycles it back into the system for even higher efficiency 2 but this added nearly a grand onto the quote, so we are pretty much back to square one on price and I think the savings would end up being negligible. Add in the extra ball ache of filling all the forms in, having to go through a Green Deal qualified installer (see further reading section below for help on this!) and so on, it quickly became obvious this wasn’t really worth the effort for our situation.
Having said that, it is still a great scheme if you have other more worthwhile improvements to make such as cavity wall installation, so if you were thinking of doing those anytime soon then now seems like the time to do it! The schemes get pulled quite quickly and at short notice, so get your arse into gear now if you think it will benefit you, time is of the essence!
What the frack is an Air Source Heat Pump?
This leaves the other option as the Air Source Heat Pump. From what I gather they are pretty much a refrigerator in reverse, they take “heat” 3 out of the air outside your house, and use heat exchangers and refrigerant liquids to convert that into useful energy to heat water or air inside your house. Pretty darn clever.
They run off of electricity and because of the conversion process they can generate up to 4 kWh of heat for each kWh of electricity input. For this reason it is said they are over 100% efficient. In fact if the ratio is 4 to 1 then the efficiency is said to be 400% 4, which is often called a Coefficient Of Performance (COP) rating of 4.0. This is what makes them a “renewable energy source”, because they are generating heat out of a renewable source, which is latent heat in the air. And this is why they have a lower carbon footprint than a gas boiler, in fact if you know the electricity to run the ASHP comes from solar or wind power, then you have a (nearly) completely carbon neutral heating system 5. Good stuff!
As I’m no expert in thermodynamics, I’d rather leave the technical side of things there, but for more information read here or trusty old wikipedia, which will explain how these things work in far better detail than I can! If you have any questions though please ask and I’ll try my best to answer them.
Renewable Heat Incentive Payments
The main benefit of getting an ASHP right now is that the government are running a scheme to entice people into buying and installing this more efficient and climate change friendly heating systems, as part of their drive to meet the carbon emissions cuts they’ve agreed to by 2020, 2030, and beyond. The higher your needed heating demand the quicker your payback period will be on your investment. This obviously doesn’t mean you can turn the thermostat up to 30 degrees and sit there in your bermuda shorts, coining it on your way to early retirement. You would still end up losing money that way as the payments are only a percentage of the heat you generate, so don’t try pulling any funny business, right? 🙂
But the RHI is a great scheme and it makes the ASHP option much more attractive at current prices, which are otherwise expensively prohibitive for most installations.
The additional pros and cons of the ASHP will be discussed further below!
Here are the quotes and my estimates for other costs for the 3 options
|Boiler||Boiler + GDHIF||ASHP|
|Cost up front||£3320||£5724||£6933|
|Other costs involved||~£1000*|
|Money Back now||£1500**|
|Money Back via payments||£4185***|
|Final cost over 10 years||£4120||£4574||£3948|
*Apparently we need some newer, better radiators to work properly with the ASHP and to qualify for the RHI payments. I am guessing a middle figure for this of £1000 at £100-£200 per radiator depending on whether we can go with standard ones or have to go with these fancy fan convection ones.
** I am assuming we’d get the full amount back, which I think is pretty doubtful anyway!
*** You get the payments over 7 years so this would work out as £597 per year. This is an estimate from the company that we got the quote off of, so not sure how accurate it will be.
**** I am assuming £80 per service for the boilers over 10 years. Apparently you just need to do a basic check yourself for ASHP with a service every 3-5 years, so I am totally guessing £100 per service on that one.
So as you can see, the boiler with the GDHIF actually works out slightly more expensive and that is assuming we’d get the whole of the allowance money back, which as I say I think is doubtful, so we are pretty much set on knocking out option 2 straight away. So this just leaves Boiler vs ASHP.
Weighing up the Pros and Cons
The price over 10 years looks pretty much a wash, so let’s review the other possible pros and cons of each system:
|Higher carbon footprint||A more sustainable way of generating our hot water needs (as recommended by Sustainable Energy without the hot air)|
|Trusted technology||Kind of an unknown quantity|
|Gas prices could rise steeply over the next 10 years||Generating electricity with Solar panels and heat via electricity with ASHP seems to hedge fairly well against this|
|Gas is ~4 times cheaper per kWh than electricity right now…||Electricity prices could rise…|
|… although yearly running costs should still work out higher due to lower efficiency||… although RHI payments are index linked so should be protected from this for at least 7 years, plus yearly running costs should be lower due to higher efficiency|
|Fits nicely into our airing cupboard||Noisy / bit of an eye sore, plus there is an outside component|
|No messing about with government schemes. Costs are well known from the offset||Are the RHI payment figures accurate!? No real way of knowing until the system is installed and the first payment comes in. The system for calculating this seems horrendously complicated|
|Incentive to switch off heating and use less gas, to use less and save £££||Less incentive to turn off the system as you are paid on how much heat you generate (I find this a bit weird!)|
|Generates lower temperature water
|Fairly easy and quick job for installers. Recommended option.||Bigger and more complicated job to organise, radiators need replacing as well, etc… Non-recommended option!|
There seems to be far more red on the ASHP side of the table but a lot of them are just minor quibbles and are more based on unknowns, however they still need to be considered.
The “Less Incentive to turn off the system” one is a bit silly for a start, because even though we’d get 7.3p per kWh of renewable heat generated (63% of total heat according to our survey), you are still paying more than that for the electricity. But you can’t get away from the fact that the more heat you generate (that is actually needed, or would have used anyway) then the better the pay back will be. If we are very frugal with our heating and hot water usage, then we’ll get less benefit than someone who is naturally more wasteful, which is a bit of a paradox!
Similarly, the hot showers point might be a load of rubbish, I have no idea what temperature my shower runs at and maybe I don’t need the power of gas to get a nice one!? Google to the rescue here again, it looks like around 40 degrees C is fine for showering. I’ll cross that one out then 🙂
A bigger red cross on the ASHP column for me is the fact that the this solution is actually not recommended for our current house set up. Yep you read that right! If you are on gas mains and have a relatively small house the recommended option is indeed to insulate and get a high performance gas boiler. ASHP are generally recommended to replace oil boilers/biomass boilers for people who are living out in the sticks, not townies like myself.
However, the green pros in the ASHP column are pretty big ones for me. I like the idea of trying to get on the sustainable bandwagon early doors even if we end up paying a little bit more for it in the medium term. Likelihood is that in 5 years time these things will be half the price! But we need a boiler replacement now. Also I like the idea of hopefully future proofing ourselves against a possible steep rise in gas prices. This could end up being a massive win over the course of 10 years, but it is a bit of a punt and could go either way. Long term (20 years time) I think these things will be everywhere anyway, so we could just get a boiler this time round then replace it when that one goes kaput in 15 years time, or we might not even be living in our current house by then. Oh, the future! You elusive blinder, you! 🙂
The final thing that should be considered is the opportunity cost of not having the money that would be saved by going with the cheaper boiler option invested over the 7 years. To make it fair we’ll assume we would invest the income from the RHI payments as soon as we receive them as well, so let’s see how does that work out?
Boiler: Lump sum of £4613 over 7 years @ real return of 4% = £6100.
Total returns = £6100 – £4613 = £1487
ASHP: Monthly investment of £49.82 from the RHI payments over 7 years @ real return of 4% = £4820
Total returns = £4820 – £4185 = £645
So as you see the cheaper boiler option returns an extra £842 over the 7 years, not to be sniffed at! This should pay for the yearly servicing for example, which works out pretty nicely. It is worth bearing in mind though this return is not guaranteed, and it could end up being negative! Whereas the RHI payments and a more efficient heater are guaranteed returns (just the amount we receive is still to be 100% determined)
To be honest I am still somewhat undecided. The fact that the total cost of the systems are so similar, even if the RHI payments don’t quite work out quite as much as in the estimate out I am sure we’d break even over time anyway. But I also am surprised that the difference in cost invested generates such a large amount! Maybe the point it boils down to is principals. I’d like to think I am a man of them, therefore the ASHP is the only real option, if that is the view I am taking.
As always I’d really appreciate others input on this one! What would you go for? Has anyone got an Air Source Heat Pump out there that can vouch how amazing they are? Or has anyone faced a similar decision and gone with the gas boiler option (or other), and what were your reasons?
Further Reading / Resources
If you are interested in the Green Deal Home Improvement Fund the following links might come in handy:
Government’s Green Deal main page – https://www.gov.uk/green-deal-energy-saving-measures
Find local Green Deal Assesors, Providers and Installers – http://gdorb.decc.gov.uk/
Find more companies here… – http://www.greendeal-directory.co.uk/
And here… – http://www.thegreenage.co.uk/find-local-green-deal-assessor
Important Note: It was very hard to get someone to come out and give you a quote for work done without getting an EPC (Energy Performance Certificate) or Green Deal assessment which cost around £150!!! This was another reason why I was put off of going along with this scheme, as there is no guarantee you will get any money from it up front and you may decide that you dont want the work done anyway. If you are certain you want work done it’s not such a big deal as you will get some of the money back off the work anyway, but it is certainly something to bear in mind and I found it rather annoying if I’m honest!
More on heat pumps
You can also get Ground Source and Water Source heat pumps! You need either a big garden or, surprisingly, a water source. Here is some info on the other options – http://www.betterplanet.co.uk/ground-source-air-source-or-water-source
RHI payments info – https://www.ofgem.gov.uk/environmental-programmes/domestic-renewable-heat-incentive/apply-domestic-renewable-heat-incentive
- Quite a relevant name with all this talk of combustable gases isn’t it? 🙂 ↩
- In fact, this isn’t even listed on the list, so not even sure it would count anyway ↩
- (in quotes because they still work somehow even when the temperature is below freezing, they are just less efficient at lower temperatures ↩
- The X-Factor judges would have a field day with that one! ↩
- Barring the obvious footprint of manufacturing and transporting the thing to your house, which is not insignificant. ↩