Cadent puts £283bn price tag on heat pump switch over

Replacing all of the UK’s 23 million gas boilers with heat pumps would cost nearly £300 billion, Cadent has estimated.

In its written submission to the House of Commons energy security and net zero committee’s inquiry into ‘Heating our Homes’, which holds its first hearing next week, the gas network says the average heat pump installation costs an average of £13,000.

These costs could be higher if work is needed to replace the home’s heat distribution system or upgrade the building fabric in order to allow the heat pump to work effectively, says Cadent.

Most of the cost relates to the installation process and associated infrastructure rather than the heat pump unit itself, it adds.

By contrast, according to Cadent, the full installation costs of hydrogen boilers are expected to be the same as those using natural gas, which is approximately £3,000.

Cadent says the running costs of heat pumps remain slightly above those of natural gas boilers now. However, the greater efficiency of heat pumps mean they are likely to be cheaper to run than hydrogen boilers.

It estimates that the cost of running a home with a heat pump could be £583 per year compared to £1,047 per annum with a hydrogen boiler. This is based on a number of assumptions including wholesale costs of 5p/kWh for both electricity and hydrogen.

However, hydrogen boilers could be more economic than heat pumps if the costs of installation are spread across the 15 years that the devices are expected to operate.

Even if the cost of a fully installed heat pump falls by 20% to £10,000, a heat pump would need to cost £467 per year less to run than a hydrogen boiler in order to be the cheaper option, Cadent estimates.

In its response to the same inquiry, Centrica says that costs of air source heat pumps are similar in the rest of Europe and the UK despite much greater experience of carrying out installations elsewhere in the continent.

The Energy and Utilities Alliance warns that such cost differentials mean any move to force households to install air source heat pumps could be “political suicide”.

It adds: “If the costs of decarbonising home heating is forced on consumers or they feel coerced to pay the sums involved, the resentment created could jeopardise the whole net zero agenda.”

And SGN says assumptions that heat pump uptake will follow the pattern in the vehicle market towards growing consumer appetite for electrification ignores key differences in the way that households purchase the two kinds of items.

“Heating appliances are usually distressed purchases, made when the existing appliance breaks down.

“As a result, refurbishment or a like-for-like replacement is the most common approach taken by consumers, as this is deemed the most affordable and least disruptive to households.”