In this article 

1. What is an air source heat pump? 

2. How does an air source heat pump work? 

3. Types of air source heat pumps

4. The benefits of air source heat pumps

5. What's the cost of an air source heat pump?

6. Is an air source heat pump suitable for my home?

Air source heat pumps have been in use for decades to heat homes and supply hot water doing away with the need for fossil fuels. In fact, the invention of the air source heat pump goes back to 1856. Rather than using gas, oil or LPG, like a traditional boiler, an air source pump transfers energy from the surrounding air into your home - even when it’s freezing cold. Much more environmentally friendly, an air source heat pump provides a more energy efficient, and therefore greener, way of powering your heating and hot water that can help to reduce energy bills and lower your home’s carbon footprint.1

In this blog, we’ll explain the fundamentals of an air source heat pump and its installation, compare the different types of air source heat pumps available, and evaluate the energy efficiency and the potential savings on any heating bills you could expect should you choose to install heat pump technology in your home.

1. What is an air source heat pump?

An air source heat pump is designed to replace, or in some cases complement, your home’s traditional boiler. In essence, air source heat pumps take advantage of the fact that outdoor air above absolute zero (-273° Celsius) contains energy. It simply transfers a certain amount of this energy found in the air as heat between the outside and inside of your home. In fact, an air source heat pump does all the things your home’s boiler does, only by relying on the energy found in the air and electricity instead of gas or oil as its primary fuel source, meaning it’s much better for the environment.

Getting a heat pump installed can also be a more economical and cost-efficient way of heating your home.2 Heat pumps qualify for payments from both the Government’s Renewable Heat Incentive (RHI) and its newer Green Home Grants (GHG) scheme. This means you can get help with the upfront cost of an air source heat pump and get paid quarterly instalments for every kilowatt of renewable energy your heat pump produces, guaranteed for up to seven years.

2. How does an air source heat pump work?

With an air source heat pump responsible to provide your home’s heat and hot water, nothing about the day-to-day way you heat your home will change. You’ll enjoy the same convenience of turning on a tap to get hot water and switching on your radiators when you want to heat up your home. Behind the scenes however, heat pumps are a little different from a gas or oil boilers. In fact, they work in much the same way as a fridge.

When you have a heat pump installed, a unit is fitted to the outside of your property, which draws air into the system. This air is used to turn a refrigerant inside the unit into vapour. This vapour, in turn, is then compressed and produces heat as a result. The heat is then transferred to your home’s heating system, providing your home with heat and hot water, when you need it.

The system is so effective that heat can even be extracted from the air when temperatures fall below freezing, ensuring that even in the coldest conditions your home’s heating won’t let you down. In fact, in well-insulated homes, an air source heat pump can entirely replace the need for a gas boiler, helping to significantly lower your carbon footprint and reduce energy bills.3

The heat pumps we offer at Igloo are all powered using smart controls from a mobile smartphone, tablet or laptop.4 This gives all members of your household the freedom to control your home’s heating at the touch of the button and engage the system even when you’re not at home - for instance, if you want a warm house on your return from holiday.

3. Types of air source heat pumps

If you’re considering moving your home’s heating to an air source system, there are two types of air source heat pumps to choose from: air-to-water heat pumps and air-to-air heat pumps.

What is an air-to-water heat pump?

Air-to-water heat pumps are the most common types of heat pumps in the UK. They transfer heat generated from the outside air into water, which passes around your home using its wet heating system. Air-to-water heat pumps can offer more energy efficiency than traditional boilers.

What is an air-to-air heat pump?

Air-to-air heat pumps depend on a warm air circulation system to distribute heat throughout your home. Unlike air-to-water heat pumps, air-to-air heat pumps only provide your home with heating and not hot water. It’s also worth noting that they do not qualify for the Government’s Renewable Heat Incentive (RHI) - more on this later.

4. What are the benefits of an air source heat pump?

Installing an air source heat pump can be a great investment and comes with several key benefits for your home, the environment and your pocket. Let’s break them down:5

  • Lower your heating bills:

Depending on your current heating source, an air source heat pump could save you up to £1,300 per year on your heating bills.6

  • Reduce your carbon footprint:

Air source heat pumps are highly efficient - in fact up to 4 times more efficient than typical boilers - and reduce your carbon footprint by producing clean, renewable energy for which the government will pay you. 

  • Efficient even at low temperatures:

Air source heat pumps can work in temperatures as low as -25°C while still providing your home with a readily available form of heating.   

  • Low maintenance and long lifespan:

The life span of an air source heat pump is typically around 20 years.

  • Easy installation process:

Air source heat pumps are easy to install. They don’t typically require planning permission, or any additional work to your property such as digging a hole or requiring an additional fuel storage tank.7

  • Manage your usage with smart controls:

Once connected to the internet, your air source heat pump can be controlled via an app giving you complete remote control over your heating and hot water.

  • Free up space in your property:

Air source heat pumps are placed a few feet from the outside wall of a house, freeing up indoor space previously taken up by your boiler.

  • Increase the value of your property:

Adding a renewable heating source has real potential to increase your properties value, with future fuel savings and earning power being of particular interest to potential buyers.

How efficient are air source heat pumps?

When it comes to the energy efficiency of an air source heat pump, there’s no comparison. Set side by side with a traditional boiler, the heat efficiency of air source heating is up to four times greater, making air source heat pumps a more energy-efficient and often more cost-effective way to heat your home.8

What’s more, at Igloo, we offer a Metering and Monitoring Service Package (MMSP) that allows us to measure your air source heat pump efficiency remotely. By analysing your heat pump’s performance in this way, we can make sure you’re experiencing the most efficient way of using a heat pump, even when temperatures dip below zero. You’ll also be able to view all your data via your smart control system, giving you full transparency over how well your heat pump is working at any time.

What’s the running cost of an air source heat pump?

As we mentioned earlier, an air source heat pump can be up to four times more energy efficient compared to a typical boiler, so it’s a highly economical way to run the heating in your home compared to conventional fossil fuels.

The unit is powered by electricity (although it only uses a small amount), so while you won’t be able to say goodbye to your fuel bills entirely, you won’t use any more fossil fuels and may be able to reduce your energy bills.9

In fact, the Energy Saving Trust estimates that switching to an air source heat pump in England, Scotland or Wales, can deliver annual savings of between £380 and £1,300 per year if your home currently runs on LPG, while those with electric storage heaters can expect to save between £520 and £1,000 each year on average. Replacing an oil boiler with an air source heat pump can save you between £80 and £550 per year. Finally, homes with gas boilers can also expect an annual reduction of their heating bills with a heat pump, on average between £95 and £425 when switching from newer or older boilers, respectively.10

5. What’s the cost of an air source heat pump?

The overall cost of installing an air source heat pump will vary and depends on a few factors around your home and heating consumption. When buying an air source heat pump, you will typically purchase the unit along with full installation, through which you’ll be able to benefit from government funding. We take a look at the typical costs you can expect, and the funding available to you:

What’s the cost of installing an air source heat pump?

Heat pump installation costs can vary, and the actual cost will depend on the type of system you install, the size of your home, how well it is insulated as well as your energy usage, which in turn will be influenced by your home’s hot water and heating needs. Average prices for an air source heat pump installation start from £9,900, and there are government-backed green energy grants available (the Green Homes Grant and the Renewable Heat Incentive) to help you cover a part, if not all, of the cost. 

Applications for the Green Homes Grant are open to all homeowners in England, and if granted, the amount you receive can reduce the air source heat pump cost to levels comparable to installing a new boiler. If you choose Igloo for your heat pump installation, we’ll help you with your application for grants, saving you any headaches along the way.

What air source heat pump grants are available?

Spending less on your energy each year isn’t the only reason that running your home with an air source heat pump can be more cost effective than a traditional boiler.

Thanks to air source heat pump grants, such as the Green Homes Grant scheme and the Renewable Heat Incentive (RHI), households that install an air source heat pump can look forward to help with the upfront costs of an installation plus seven years' worth of guaranteed government payments relative to the energy their pumps produce.

Here’s a more detailed overview of what both green energy grant schemes offer:

Renewable Heat Incentive (RHI)

The Domestic Renewable Heat Incentive (DRHI), sometimes referred to as Ofgem RHI, is a UK Government green energy scheme that rewards households that switch to renewable energy sources to meet their heating needs.

It was introduced in 2011 for commercial properties before being extended to domestic properties in 2014, with the aim of helping the Government reach its carbon reduction targets, as well as to fulfil its ambition to have 12% of the UK’s heating generated by renewable sources by 2020. Renewable heating for domestic properties is fundamental to achieving net zero by 2050. Ofgem administers the scheme on behalf of the Government, and unlike the Green Homes Grant, which is only eligible to residents in England; RHI is redeemable in England, Scotland and Wales.

You can apply for the RHI if you heat your home using a renewable source of energy, such as an air-to-water heat pump, which, as we’ve explained, extracts energy from air (a readily available natural resource). Instead of a one-off payment (like the GHG awards), the Renewable Heat Incentive pays out regular quarterly instalments to homeowners over seven years.

How much you make is proportionate to the amount of energy your home produces, measured in kilowatts or units. The more renewable energy your home generates, the higher the payments you can expect to receive. An average home, switching to an air source heat pump can expect to earn just under £13,00011 over seven years, so it’s not a nominal figure by any stretch, and well worth looking into.

Just like with the Green Homes Grant, which we’ll come onto shortly, only Trustmark registered companies or member of the Microgeneration Certificate Scheme (MCS), are eligible to carry out the works. You can apply for the RHI payments retrospectively if you’ve already had an air source heat pump fitted, but only if your supplier meets one of the above criteria.

Green Homes Grant (GHG)

The Green Homes Grant scheme, or GHG for short, is a home improvement grant to help homeowners in England (including landlords) to cover the cost of making energy saving upgrades to their home. Eligible applicants can claim up to £5,000 to fund two thirds of the cost of the work, with the remainder payable by the homeowner. This figure rises to £10,000, and 100% of the cost, for low-income households in England.

The GHG is awarded in vouchers, which are issued directly to the supplier you appoint to carry out the energy improvement works in your property. To be eligible, your nominated supplier needs to be a member of the Microgeneration Certificate Scheme or Trustmark, both of which apply to Igloo.

What’s also great news for homeowners in England is that the Government Green Homes Grant can be used in conjunction with the Renewable Heat Incentive (RHI). This means that the average English homeowner will be able to claim £5,000 towards the upfront cost of heat pump installation and qualify for seven years’ worth of payments.

Should you choose to combine both GHG and RHI, remember that any future RHI payments will be reduced by the amount one receives through the Green Homes Grant. With these two funding streams available, there’s never been a better time to invest into an air source heat pump.

You will need to apply for the Green Homes Grant yourself directly on the Government’s website, and our expert team are on hand to help you with any questions about your application. Just be aware that all work needs to be completed by the end of March 2022 in order to be eligible for the scheme.

Important notice: The Government has withdrawn the Green Homes Grant scheme, with applications having closed on the 31st March 2021. The grant was originally due to run until March 2022. While this is disappointing for many homeowners, there are other funding options available to help with the costs of an air source heat pump installation, such as our Assignment of Rights (AoR) option.

Assignment of Rights (AoR)

Assignment of Rights (AoR) gives homeowners the opportunity to unlock funding early by transferring the rights of their RHI payments to us in exchange for a discount of up to 50% on the install costs. Learn how you could take advantage here.

6. Is an air source heat pump suitable for my home?

As you’ve seen, an air source heat pump can be a great choice to lower your heating bills and to join the renewable energy revolution. If you're interested in getting an air source heat pump installed, there’s a few key criteria you and your home should meet:

  • You must be the homeowner (or have permission from the landlord)

  • It is a house or bungalow (not a flat or an apartment)

  • Have a minimum of one metre of clearance between where to position the heat pump and the external wall of your home

  • Have an up-to-date EPC (Energy Performance Certificate), which we can help source.

If you’d like to learn more about air source heat pumps or are interested in getting a free, no-obligation quote, our heating experts are on hand and can help answer any questions you may have.

1 Depends on system design and usage.

2 Depends on system design and usage.

3 Depends on system design and usage.

4 Requires an internet connection.

5 The following benefits are subject to system design, usage and regular maintenance.


7 You should always check with local planning authorities before installation.

8 Depends on system design and usage.

9 Depends on system design and usage.

10 Your actual savings will depend on system design and usage.

11 This calculation assumes an annual energy consumption of 20,000 kWh, 14,751kWh of which are eligible for RHI payments, which could result in a potential funding amount of £12,813.15. The calculation of the total potential funding figure is broken down into RHI payments of £1,600.45/year over 7 years (= £11,203.15) plus additional MMSP payments of £1,610.00, bringing the total combined amount to £12,813.15 (= £11,203.15 + £1,610.00). The calculation does not consider any additional fuel savings, which may be achieved with an air source heat pump instead of a traditional boiler.