Are Air Source Heat Pumps Worth It? A Cost vs. Benefit Analysis

As we move to a world set up on renewable energy solutions, air source heat pumps (ASHPs) are creating a lot of fanfare. Homeowners and businesses are investigating if they are a feasible substitute for conventional heating systems. However, with the rising energy costs and a need to address carbon emissions concerns, a large number of people are asking themselves whether investing in an ASHP is worth it.

Although these systems offer many advantages, such as greater efficiency and reduced dependence on fossil fuel, they also require a significant upfront investment. In this article, we will show you a cost vs. benefit analysis so that you can make the best decision when considering your purchase.

Upfront Investment vs. Long-Term Savings

The upfront costs may be the biggest concern when exploring an air source heat pump. The UK cost of an ASHP, including purchase and installation, is usually between £7,000 and £14,000, while in the US, the average price is typically $8,000 to $18,000, depending on system size, type of property, and other installation requirements. ASHPs are around £2,500 to £6,000 more than traditional heating systems such as gas or oil boilers, so they’re a large initial investment.

But the long-term savings on energy bills can outweigh the initial outlay. Air source heat pumps are very efficient, requiring just one unit of electricity to produce three to four units of heat. Its efficiency saves you a ton on heating as compared to older technologies. Gas boilers are typically 85-90% efficient, whereas ASHPs can achieve efficiency levels 300-400%. This means that for 1kw of electricity consumed to drive the process, multiple kw of heat is produced, resulting in cheaper running costs in the long term.

A gas central heating household with an ASHP could, on average, save on energy bills of £500–1,000 a year, again depending on home insulation and electricity prices in the area, with savings reflected in a reduced energy bill. Those with electric heating or oil-based systems can save even more. When combined with government incentives and grants, the long-term financial attractiveness is undeniable. Based on 1,000 different scenarios – taking into account the price of fuel, insulation in buildings, and if the owner receives subsidies for the ASHP installation – the payback period for the average system is between 8 and 15 years.

Comparing ASHPs to Gas Boilers & Other Heating Systems

In order to decide if an air source heat pump is the right option, you need to weigh it against other common heating solutions. Gas boilers are the most common heating system in many parts of the world because they are often cheaper and more familiar. Gas prices have been a volatile metric in recent years, and as governments push towards decarbonisation, gas heating could one day prove less cost-effective than current electric alternatives.

A large benefit of ASHPs is their efficiency. Normal household gas boilers have around 85-90% efficiency, meaning a large percentage of the energy put into them is lost in the form of waste heat. Air source heat pumps, on the other hand, run at significantly higher efficiency — especially in properly insulated homes. While electricity is usually pricier per unit than gas, the efficiency improvements make this price difference less noticeable. Since electric heating systems like regular resistive heaters are much less efficient than ASHPs, this makes ASHPs an attractive option for individuals whose homes rely on electric heating.

Performance in cold weather is another major consideration. While ASHPs are capable of operating in low temperatures, they become less efficient when the temperature drops to between -5°C and -10°C so in very cold climates, a ground source heat pump or a hybrid system pairing the ASHP with a backup gas boiler may be more effective. However, recent advancements in heat pump technology have made them more effective in colder climates, with some models running effectively in -20°C environments.

Maintenance and lifespan are also important considerations in addition to efficiency and performance. Gas boilers need to be serviced annually and repaired from time to time, and they typically last 10 to 15 years. Air source heat pumps, meanwhile, can last around 15 to 20 years and need less regular maintenance — just clean filters and routine servicing. Plus, ASHPs prevent dangerous leaks of carbon monoxide, a worry with gas-powered heating systems.

Grants & Incentives to Reduce Costs

The cost implications of ASHPs upfront can be daunting for many homeowners, but to offset the expense the government provide a range of incentives and grants. The Boiler Upgrade Scheme (BUS) in the UK, offers grants of £7,500 to assist households in switching to air source heat pumps. Under the Energy Company Obligation (ECO4), funding is also available for low-income households to install energy efficiency measures in their homes, this could significantly reduce the cost of the installation.

There are also financial incentives at the federal and state levels in the US. The Inflation Reduction Act offers a tax credit to cover as much as $2,000 for heat pump installations. Many states (for example, California’s TECH Clean Energy Program) offer rebates and subsidies, too — in this case, to assist residents who are switching to heat pumps. Homeowners can also look for low-interest loans, supplier discounts and energy-efficient mortgage options to help stagger the cost of installation.

The up-front financial incentive can immediately decrease the cost of an ASHP, decrease payback, and increase the argument against a conventional heating option for those looking to upgrade.

Final Verdict: Who Should Consider an ASHP?

Although air source heat pumps are beneficial for many homes, they are not the answer for every property. These are most effective on well-insulated properties, as poor insulation can lead to inefficiencies and increased operating costs. New builds and energy-efficient recently renovated homes are prime candidates, as they stand to benefit most from ASHP technology.

But financially, ASHPs are best for homeowners interested in long-term savings and sustainability. Those who plan to remain in their home for a decade or longer will be able to get the highest financial return on their investment. Moreover, ASHPs can end up being more affordable due to government grants that you can help if your household qualifies.

However, ASHPs are not ideal for properties with bad insulation or homes in areas that face extremely cold winters unless they are combined with other heating solutions. Moreover, it may not be financially compelling for households with access to very low-cost gas heating to make the transition with costs remaining relatively stable in the short term.

If you need a reliable air source heat pump installer, you can receive help from Scottish Energy Saving. Contact us today for a free, no-obligation energy assessment.