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Are heat pumps overpriced?

The heat pump market is tiny in the UK. I estimate well under 10,000 units a year. For heat pumps to really make any impact on the heating market in the UK, it's very clear the price has to come down. We can see from solar PV that only by reducing the prices using incentives did this market truly become widely accepted.

Reducing the FiT has resulted in a 50 per cent reduction in equipment and installation price in a matter of months.

Our industry's version of the FiT, the long-anticipated RHI, has now been delayed for a fourth time and will not be introduced until 2013, if at all.

So what is the position NOW?

In an average house of 120 sq m, if your gas combi boiler breaks down and you need a new one, typically you would pay £3,000 including 20 per cent VAT to have it replaced. With two minutes research on the web, anyone can buy the boiler for £1,000 so the labour and parts make up £2,000.

If instead of a boiler you chose a heat pump how would the maths look?

A typical heat pump for this property might be a 9kW machine; you would also need to install a hot water cylinder. The total installed cost of this system would typically be £7,000 - £8,000 including 5 per cent VAT. The pricing is such that payback versus a gas boiler is unrealistically long.

An inverter-driven, MCS-approved heat pump would be £2,500 - 3£,500 to the plumber depending on supplier, the hot water cylinder £1,000 and the rest £3,500 would be labour.

The labour charge in this case again is a little high. Agreed, the amount of work needed to install a heat pump is more than replacing a combi, but is it worth £3,500? But the installers cannot be blamed for high prices when the kit price is at a premium too.

So what should we do about it?

Manufacturers and installers need to start looking at the pricing of heat pumps. I think they are expensive for what you get in the box so, at Ecobuild next week, Samsung launch the new EHS mono 9kW unit, it is £1,600 + VAT to the trade.

See you there.
Posted by Graham Hendra 12 March 2012 16:39:11 Categories: Graham's Gossip

Comments

By Roland
12 March 2012 16:42:11
A successful choice for me was a small (2.5kW) split reversible aircon unit, with existing lpg ch and woodstove as backup. Runs most of the time on 400-600W from our PV. Has cut bills dramatically, especially this mild winter and cool summer..
By nick hannigan
12 March 2012 16:41:11
until the major players insist on installing green initiatives, as are now legal requirements with new builds abroad,the costs and incentives to install elsewhere will not be deemed worthwhile.The costs of maintaining systems must also be taken into account, as well as long term efficiency.I have to concur with david, in that insulation and use of specialist buildings fabrics would achieve better results and be cost effective.
By David
12 March 2012 16:40:11
Anything with a subsidy of any description ends up overpriced as the trade rips the consumer off. We have just seen that with the price fall in solar pv following the fit reduction. Further to the point do we need heat pumps? Until electricity is totally green they are no more eco than fossil fuels. Emphasis should be more on insulation so that little energy is needed for space heating in which case a low cost gas boiler simple to maintain and set up will suffice.
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