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Sizing Matters – are heat pumps expensive to run?

New research by Parity Projects shows heat pumps could deliver an average of £275 saving on annual energy bills.

Concern about the cost of running heat pumps is a significant barrier to their uptake for heating and hot water. Parity Projects has analysed the latest models and found that running costs could be lower than many think.

The most common energy efficiency advice that people receive is in the form of an Energy Performance Certificate (EPC). These do not, at present, recommend heat pumps. Parity Projects has found that this is because EPC recommendations use standard sizes, with outdated ratings and prices.

Parity Projects’ software uses the same calculation method as the EPC for consistency, but it goes further by:

  • Testing 844 of the latest heat pump models (air and ground source). An EPC recommendation engine only looks at 6 air source heat pump systems.
  • Using the real-world performance of each model, where the EPC only tests illustrative examples.
  • Modelling the running cost of each at 3 different flow temperatures, with realistic installation costs and energy tariffs.

Heat pumps deliver bill savings

Heat pumps have become more efficient in recent years, as evidenced in BRE’s Product Characteristics Database. This means that installing a heat pump in an average property could save money on energy bills.

And those savings appear significant. For a representative sample of 3780 UK homes, we identified well-installed heat pumps could deliver:

  • An average £275 saving on heating bills – 15% on average but up to 70% in some cases
  • An average 10-point boost in SAP score
  • 50% of properties save from £125 to £571 on their energy bills each year
  • 93% of properties see reduced bills

Chart showing realistic bill savings from heat pumps across a representative sample of homes

The replacement of old gas boilers, room heaters, electric boilers, and storage heaters offers the biggest savings. The installation of a heat pump will save households with old gas boilers or storage heaters about £533. Even replacing an A-rated gas boiler with a well-installed heat pump saves about £194 per year.

Extremely well-insulated homes are much less likely to benefit significantly. But it remains the case that better-insulated homes will have lower bills.

Parity Projects’ advice software considers the whole house and the potential for energy efficient home improvements. Its stock modelling software combines demand reduction and heat pump analysis to optimise retrofit plans. The software also takes occupancy assessment data into account where that is available.

If you are a housing professional, including Asset Managers or Retrofit Coordinators, head here for more information. If you are a homeowner, you can get whole house advice from Ecofurb that takes into account your goals and budget.

Types of Heat Pump

There are two heat sources used for home heating systems:

  • Air Source Heat Pumps: These are more common and generally more affordable to install. The heat pump works by using electricity to extract heat from the outdoor air. A heat exchanger transfers heat from the heat pump to the water in the central heating system.
  • Ground Source Heat Pumps: They are more expensive to install, but ground-source heat pumps are highly efficient. As the name suggests they extract heat from the ground. In the long turn they can provide significant energy savings. They are less affected by outdoor temperature fluctuations, making them cost-effective in extreme climates.

Over time the electricity that powers heat pumps will increasingly come from renewable sources rather than fossil fuels. Both work with wet (water-based) heating systems, such as radiators and underfloor heating.

The Performance Gap

Any modelling in the planning stages has to make assumptions. Any difference between those assumptions and the real world installation will result in a ‘performance gap’.

The factors listed below are ones of particular interest. Parity Projects addresses them where they can in the modelling software. Ultimately performance is dependent on the final specification and installation.

  1. Local Climate: The local climate plays a significant role in operating costs. In colder climates, air source heat pumps may need to rely on electric resistance heating during extreme cold, which can increase costs. Ground source heat pumps are less affected by climate extremes. Parity Projects takes account of regional climate data in all analysis.
  2. Energy Tariffs: The cost of electricity in your area is a crucial factor. Heat pumps are more cost-effective in regions with lower electricity rates. Users of Parity Projects’ software can enter up to date energy tariffs, including regional variations.
  3. Home Insulation and airtightness: A home with draught proofing and controlled ventilation is more airtight. Together with good insulation this means less work for the heat pump, and less cost for the resident. Surveyors can enter airtightness figures in our software to improve the predicted efficiency of a heat pump installation.
  4. Proper Sizing and Installation: A correctly sized and well-installed heat pump will operate more efficiently. A unit that is too large or too small for your home will be less efficient. That could result in higher costs. Parity Projects aims to empower buyers with advice on the right size heat pump for their home or homes.
  5. Maintenance: Regular maintenance is essential to keep your heat pump running efficiently. Dirty filters and coils, or other issues, can reduce efficiency and increase operating costs.
  6. Usage Patterns: How a household uses their heat pump also affects operating costs. Maintaining consistent temperatures, using setback thermostats, and optimizing usage can help control energy consumption. Retrofit Coordinators can enter occupancy assessment data in Parity Projects’ software to tailor their advice to the homeowner.


In summary, heat pumps can cut energy bills. Particularly in moderate climates or when using correctly sized and highly efficient models. However, costs can vary widely depending on the specific circumstances of your home, and the quality of work done. It’s essential to consider all these factors, and Parity Projects empowers housing professionals and homeowners with advice that highlights the importance of correct sizing.