The costs and cost savings from switching to heat pumps
All HVAC systems, and not just heat pumps, are expensive to install, and although heat pumps offer savings on utility bills over the long run, switching to them might require higher upfront costs including home upgrades besides the installation itself.
The average cost of a heat pump varies from country to country, and will depend on labor costs, the local climate, the size of your building, installation complexity and equipment type. In the UK, for example, a heat pump would cost around $12,000 compared to approximately $8,500 in Poland, according to Jan Rosenow, Director of European Programmes at the Regulatory Assistance Project (RAP), an energy non-profit.
In the U.S., climate research platform Carbon Switch estimates installation costs to range between $3,500 and $20,000, with an average cost of approximately $14,000 after rebates. The installation of a higher-end heat pump that’s better suited for colder climates could go up to $18,000-25,000, shares Nate Adams, CEO of HVAC 2.0, which focuses on building more cost- and energy efficient homes, in comparison to $9,000-12,000 for a basic HVAC system.
However, once installed, households could save between 12 and 55 percent on their annual electricity bills, according to a study by CLASP, a non-profit advocating for more sustainable and energy efficient appliances. The exact amount of savings would again depend on the same factors that determine heat pump costs in addition to your current heating and insulation system.
Operating costs vary by climate and energy costs, but as natural gas prices soar and renewable energy production increases, “heat pumps are very likely to be the cheapest heat source in all but the coldest climates,” adds Adams who aims to make electrification accessible to all homeowners through practical solutions such as “The Electrify Everything Course”.
Importantly, Carbon Switch has shown that switching to heat pumps could help households cut carbon emissions by 1.1 to 7.6 tons – more than going vegan, which would reduce your carbon footprint by approximately one ton a year, and 10 times more compared to installing LED lighting.
Consumer incentives and policy support
Creating the right financial support mechanisms which could reduce the upfront costs of installing heat pumps and policy changes that would encourage an increase in heat pump manufacturing are vital to drive greater adoption, experts say.
Reforming energy taxes could be one policy lever to lower the running costs of heat pumps compared to heating with oil or gas, shares Rosenow. Some countries have also announced a gradual ban on fossil fuel heating systems, including Germany which set a target of installing heating systems which use a minimum of 65 percent renewable energy by 2025. Under its Boiler Upgrade Scheme, the UK offers grants to reduce the cost of installing air or ground source heat pumps.