Heat Pump Operation: What it costs. And what it costs me.

Friends, yesterday I wrote about the way the new Vaillant 5 kW Arotherm plus Heat Pump performed during 24 hours of a mildly-cold autumn day.

Click image for a larger version. The graph shows electrical power consumed by the heat pump and the thermal power delivered by the pump during the 24 hours of 24th October 2021.

This was really important data for me. I have spent the best part of £60,000 insulating the house; installing solar PV and a battery; and plumbing in the air source heat pump (ASHP).

But this was the first real-world indication that the system worked more-or-less as I had anticipated.

Understanding how the heat pump works is complex. And surprisingly, explaining what it costs to operate is more complicated than I expected, and slightly personally embarrassing.

Let me explain

Basics

Recently I switched to Octopus Energy and they charge me a daily standing charge plus a rate dependent on how much gas or electricity I use.

Standing Charges 

  • Gas: 23.85p per day.
  • Electricity: 25p per day.

Rates

  • 3.83p per kWh of gas.
  • 5.0p per kWh of electricity between 00:30 and 04:30.
  • 16.26p per kWh of electricity between 04:30 and 00:30.

All these rates are likely to change – increase – in the future.

Domestic Hot Water

As the graph shows, on 24th October, the heat pump used 1.6 kWh of electricity to create 4.9 kWh of heat in the hot water cylinder.

If I had used gas to do this using a boiler which was 90% efficient I would have needed to consume 4.9/0.9 = 5.4 kWh of gas which would have cost 5.4 kWh x 3.83p/kWh = 20.7p.

Using the heat pump I consumed 1.6 kWh of electricity at 5 p/kWh (because it was heated between 00:30 and 04:30) which cost 1.6 kWh x 5.0p/kWh = 8p.

So for heating domestic hot water, the heat pump is 62% cheaper than using gas.

If we had considered heating hot water during the summer, then the electricity would have been drawn from the battery which would had been charged by solar electricity, and so would be free.

Space Heating

As the graph shows, on 24th October, I used 2.3 kWh of electricity to create 10.0 kWh of heat in the house.

If I had used gas to do this using a boiler which was 90% efficient I would have needed to consume 10/0.9 = 11.1 kWh of gas which would have cost 11.1 kWh x 3.83p/kWh = 42.5 p.

Using the heat pump I consumed 2.3 kWh of electricity at 16.26 p/kWh which cost 2.3 kWh x 16.26p/kWh = 37.4p.

So for space-heating in this mild climate, the heat pump is 12% cheaper than using gas.

Actually its a bit better than this. Because we have a battery, we fill up with cheap rate electricity at 5 p/kWh so the actual cost of using the heat pump during the day is closer to 2.3 kWh x 5p/kWh = 11.5p i.e. 73% cheaper than using gas.

And actually, its even a little better still. Even at the end of October typically 50% of our electricity is derived from the solar PV system and stored in the battery. So the actual cost per unit is closer to 2.5p/kWh, so the actual cost of using the heat pump during the day at this time of year is closer to 2.3 kWh x 2.5p/kWh = 6p i.e. 85% cheaper than using gas.

The solar contribution will go down as we head into winter, but even in midwinter we still get ~ 2 kWh/day of generation, all of which is now captured in the battery. See the graphs below for more details.

Click image for a larger version. This complicated graph shows solar generation since the solar panels were installed in November 2020. The thin green lines with circles are daily generation. The thick pink line is 7 day running average. The big green circles are monthly averages, and the yellow circles are monthly averages for this location from 2005 to 2016.

Click image for a larger version. This graph shows household electricity consumption (averaged over ±1 week) during 2021. After the battery was installed, we used very little grid electricity for about 3 months. The blue line shows actual household consumption As we head into winter, our use of grid electricity is increasing. The dotted green lines show the range into which I expect grid electricity to fall depending on how cold the winter is, and how well the heat pump works.

Preliminary summary

For heating hot water, using a heat pump costs less than half the cost of using gas when using cheap-rate electricity.

For space-heating, using a heat pump costs 12% less than using gas even when using full-price electricity. And accounting for the solar generation and use of cheap-rate electricity stored in the battery, space-heating will cost a small fraction of what it would have cost using gas.

When I take account of all the variables, including the standing charges, the heat pump, the solar PV and the battery, I estimate that my annual bills from electricity and gas will be reduced from roughly £1600 to about £500 including £178/year of standing charges.

So financially, I am benefiting from my £60,000 of investment to the tune of around £1,100 per year.

But there are some complications…

Complication#1

I feel obliged to disclose that when I installed the heat pump, in addition to a £5000 government grant, the kind staff at Enhabit pointed out that I could I apply for funding under the Renewable Heat Initiative (RHI).

This scheme funds people who switch to using renewable technologies to heat their homes, compensating for the fact that electrical heating is generally more expensive than gas.

It didn’t seem to matter that – as I showed above – in my circumstances the heat pump would be cheaper than using gas.

So in addition to saving around £1,100 per year, the RHI scheme will additionally pay me £129.83/quarter or £519.32 per year for the next seven (7) years. Yes, I really did write that.

So broadly speaking, I don’t expect to pay anything at all for electricity or heating for the next 7 years.

Complication#2

I also feel obliged to disclose that when I installed the heat pump, the kind staff at Enhabit also pointed out that I could I apply for funding to monitor the heat pump performance using the so-called Metering and Monitoring Service Package (MMSP).

Under this arrangement, I needed to pay £1,156 to have a system installed which monitored the performance of the heat pump, and reported the data back live to OFGEM every 2 minutes.

This helps OFGEM establish the real world performance of heat pumps rather than relying on manufacturer’s specifications.

In return, I get:

  • Access to the data – that’s the data I used for the previous article.
  • A one off payment of £805
  • Annual payments of £115 (paid quarterly) for the next 7 years.

Overall this amounts to £1,610. This easily covers my outlay; provides important data to OFGEM; allows me to write endless blog articles; and reduces even further the cost of heating my home for the next seven (7) years.

Final Summary 

Friends, even without any Government deals, the heat pump would already be saving me money over a gas boiler.

And the use of solar PV and a battery makes the advantage even larger.

But taking advantage of the Government’s subsidies I find myself in receipt of a financial windfall – and it seems unlikely I will need to pay for electricity or heating for the next seven years.

Frankly, I am a little embarrassed.

However, even without these deals, switching to a heat pump would already be saving me money.

Keep warm!

 

 

3 Responses to “Heat Pump Operation: What it costs. And what it costs me.”

  1. Simon Duane Says:

    You might think of them as “complications”, as if there is a personal aspect, but I think the key questions here are about “justice”: the calls for a “just transition” towards net zero, whether “justice” relates to costs – “have I the cash to make this improvement?” – or employment – “but I work in the oil extraction industry, and I’m going to be made redundant!” – are really important.
    It’s not so much that you personally will pay little or nothing for your gas and electricity in coming years (and in some sense, through taxes and levies, “we” will be paying your bills for you), it’s that you already spent a very substantial lump sum (that you are very open about) to get into that position. That big outlay is beyond the reach of most people (and I’m definitely not making a personal point here, about you or about me, in case others might wonder). If our country is to get remotely near net zero we have to make some pretty fundamental changes to the way things work, and that boils down to politics.
    Along the way, your enormously informative blog is providing a worked example of what is possible, where there is both the will and the means. Collectively, we do have the means but, now at least, we lack leaders who show the remotest sign of understanding what is needed to get there from here.
    BW

    • protonsforbreakfast Says:

      Thanks Simon. My position is not typical and so I feel all I can do is just try to be as straightforward as possible.

      And at this point I just don’t see the political resolve to face up to our the awful reality we all face.

      Anyway – I should have a bit of money spare to support good causes 🙂

      Best wishes: Michael

      • Simon Duane Says:

        We have a lot in common here – including the resource to do something on an individual level. (And even, I hope, to have something left over after whatever can be done has been done.) But, in the meantime the urgent step, replacing a non-condensing with a condensing boiler, has been taken, while reducing the leakiness of our house, etc is under way. These will buy us the time to embark on and evaluate all the other steps that could be taken. (Also, I’m hoping that at least some of the present “conservation area” type restrictions might be relaxed somewhat. You know, what with us facing an existential threat and all, it’s not too much to ask …)
        Another comment will follow by email.
        Cheers

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