**In this article**

Air source heat pumps vs boilers

Our assumptions for calculating annual running costs

How to calculate running costs

Running cost comparison between air source heat pumps and oil boilers

What efficiency (SCOP) is necessary to break even with an oil boiler?

What other advantages does an air source heat pump have over an oil boiler?

An important question when it comes to air source heat pumps is how much they are going to cost on a continuing basis especially at a time when living costs – including the price of energy – are rising across the board. While air source heat pumps often have lower running costs than comparable heating systems, the truth is that this differs from property to property.

Running costs are different for every home as they depend, among other things, on the price of the fuel used, the heat loss of the property, the efficiency of the heating source, how much hot water is used and to what temperature the property is on average being heated. Still, we want to give you some realistic figures to compare your current running costs to those typical of an air source heat pump and help you understand whether the latter could make financial, and not only environmental, sense for your home.

Our example assumes an average annual heat demand of 12,000 kWh. That is the energy (measured in kWh) needed to heat the property as well as any water that is needed over the course of a year. If you know the annual heat demand of your home, the efficiency of your heating source and the price for your heating fuel, you can calculate the running costs for your own property to get an initial idea. It won’t replace the insights gained from a properly conducted home survey by us but it’s a good starting point.

**Looking for a comparison with gas boilers instead? Click here.**

**Air source heat pumps vs oil boilers **

Heating oil in the UK has traditionally been cheaper to buy than electricity, and that's still the case today. At the time of writing this article, heating oil is around 3.5 times cheaper than electricity. Unsurprisingly, many assume this means that a heat pump will also cost 3.5 times as much to run compared to an oil boiler. However, this couldn't be further from the truth. An air source heat pump will not cost you 3.5 times as much as an oil boiler simply because the higher efficiency of an air source heat pump is able to offset the price difference between electricity and oil in most cases. Our examples clearly show this, and our customers agree. But let's have a closer look at the assumption behind our calculations and the running cost calculations themselves.

**Our assumptions for calculating annual running costs **

__Heating oil price__

Since hitting a 4-year low of £299.6 (for 1,000 litres) in 2020, the average price of heating oil has more than doubled in less than two years to what is now the equivalent price of £0.081 per kWh. And with the price of heating oil not showing any signs of slowing down and diesel prices at their highest ever, there's never been a better incentive to look for alternatives.

__Electricity price__

The price for electricity assumed in our calculations is £0.28 per kWh. That’s the maximum your energy supplier is allowed to charge you under the latest price cap (April 2022).

__Annual heat demand__

Heat demand refers to the energy needed to satisfy the heating and hot water demand of a property. We assume an average annual heat demand of 12,000 kWh, which is in line with Ofgem's Typical Consumption Values for an average medium-usage home.

__Oil boiler efficiency__

The minimum efficiency standard for a new oil boiler in the UK is 92% as set by the __Energy-related Products Regulations__. The efficiency of an oil boiler, however, varies significantly and depends on whether the flow temperature, that is the temperature of the water pumped around the heating system, is low enough for the boiler to condense. It turns out that in reality __most boilers do not condense__.

To make matter worse, in the UK, __boilers are typically oversized__, which affects their efficiency negatively. Finally, the lack of appropriate controls for many installed boilers also has a negative impact. Detailed studies of condensing boilers showed an average measured efficiency of 82.5% for combination boilers and 80.3% for heat-only boilers. concluding that “the in-situ performance of the boilers is significantly less than the rated […] seasonal efficiency”. It is hence more realistic to assume that, in most cases, 92% efficiency is not being achieved. For our calculations, we therefore use both a 90% boiler efficiency and a more realistic one of 80% for modern boilers, and 70% for older oil boilers.

__Air source heat pump efficiency__

Heat pumps are more efficient than any other heating systems because the amount of heat they generate is higher than the amount of electricity they use. The amount of heat generated for every unit of electricity put in is referred to as the *Coefficient of Performance* (CoP). So, if a heat pump has a CoP of 3.3, then it will generate 3.3 units of heat for every unit of electricity. For comparison, when we say an old oil boiler is 70% efficient, it means that you only receive 0.7 units of heat for every unit of energy consumed (in this case oil).

You will also often find the SCOP (Seasonal Coefficient of Performance) specified when researching air source heat pumps. This is a relatively new efficiency indicator which shows how effective a heat pump is on an annual basis. It’s intended to give a more realistic picture that makes it easier to compare heat pumps across producers (and models from the same manufacturer) while also taking into account different efficiency levels based on average annual outside temperatures.

Since we’re able to monitor the efficiency of our customers’ heating systems remotely, we can confidently assume an average SCOP of 3.3 for the air source heat pumps we install; that’s a heating efficiency of 330%, i.e. 3.3 units of heat for every kWh of electricity consumed. Not bad if you ask us.

**How to calculate running cost? **

The formula to calculate the annual running costs is fairly straightforward:

*Annual heat demand divided by the energy efficiency of the heating system multiplied by the unit cost of the fuel type in question.*

**Running cost comparison between air source heat pumps and oil boilers **

Having laid out our assumptions and the formula to calculate the runnings costs, all that's left to do is plugging the different values into the formula to calculate the running costs for each heating system. So, let's go ahead and do that:

__Old oil boiler__(70% efficient) = (12,000 kWh / 0.7) x £0.081) =**£1,388**__Modern oil boiler__(80% efficient) = (12,000 kWh / 0.8) x £0.081) =**£1,215**__Modern oil boiler__(90% efficient) = (12,000 kWh / 0.9) x £0.081) =**£1,080**__Air source heat pump__(330% efficient) = (12,000 kWh / 3.3) x £0.28) =**£1,018**

As you can see, air source heat pumps can already be cheaper to run than oil boilers. It’s important to stress that the efficiency levels we see with our customers' heat pumps can only be achieved if they are correctly designed and professionally installed, which makes who you choose to install your system all the more important.

Finally, in order to be condensing and reach efficiencies of 90% and above, the flow temperature of an oil boiler would have to be set to 55°, which is effectively heat pump territory. The question one should ask oneself at this point though is why not go for an air source heat pump and benefit from a much higher efficiency if the property is warm enough with a flow temperature set to 55°.

**What efficiency (SCOP) is necessary to break even with an oil boiler**?

Below we show the efficiency levels (shown in SCOP) of an air source heat pump necessary to break even with the costs of oil boilers of different ages and efficiencies. The more efficiently an air source heat pump operates (as indicated by the blue line), the less it costs to run. To beat the running costs of an old oil boiler, an air source heat pump would have to achieve a SCOP of around 2.4, and for modern oil boilers SCOPs of around 2.75 or just above 3.1 are needed, respectively. Such efficiency levels are well attested in the UK.