10th June 2025
Q. Why is the uptake of Air Source Heat Pumps in the UK so poor?
It appears to be less than 1% of the installed gas boilers in UK homes, even with a £7500 BUS grant.
- The answer is simple for the average UK homeowner. It does not make financial sense!
The cost is too high for both the installation and operation of heat pumps. The UK energy market is distorted and sets one of the highest electricity to gas charges in Europe. It is the elephant in the room.
The typical ASHP purchase and installation cost is ~£14,000 versus a gas boiler at ~£3,000. The household would need to still pay £6,500, even with the full BUS grant of £7,500.
If the electricity cost was much cheaper, then it would help some households offset the high install costs with cheaper running costs compared with a gas boiler. Today, it is difficult to always state the running costs will be less than a gas boiler without additional cost of solar, batteries, and/or a specialist tariff in a typical UK household.
A snapshot of the relative costs of energy for a medium sized household across several countries is shown in Table 1. The data was taken from Eurostat website for 2nd semester of 2024 for euro/100 kWh. Heat pump country coverage was obtained from theecoexperts article by J. Jackman, 21/4/2023. I would consider the coverage indicative, since the household numbers are >40% in the Scandinavian countries listed.
| Country | Electricity (incl taxes) Euro | Gas (incl taxes) Euro | Electricity/Gas ratio | Heat pump per 100 people |
| UK | 28.34*1.2151=34.43 | 7.37*1.2151=8.95 | 3.85 | ~0.5 |
| Ireland | 36.99 | 13.47 | 2.75 | ~1 |
| France | 29.26 | 13.43 | 2.18 | 5.8 |
| Portugal | 24.77 | 13.66 | 1.81 | ~2 |
| Norway | 19.02 | limited domestic gas grid. | 1.0* | 29.7 |
| Sweden | 23.51 | 18.93 Limited domestic gas via Denmark. | 1.24 | 22.7 |
| Finland | 27.29 | Limited domestic gas grid. | 1.0* | 24.2 |
| Germany | 39.43 | 12.38 | 3.18 | ~2 |
| Italy | 31.11 | 15.86 | 1.96 | 5.4 |
| Spain | 24.00 | 9.01 | 2.66 | ~2 |
| Estonia | 22.14 | 7.88 | 2.81 | 17.3 |
| Poland | 24.77 | No data | ~1.5 | |
| Netherlands | 21.55 | 16.71 | 1.29 | ~2 |
| Belgium | 33.13 | 9.03 | 3.67 | ~2 |
| Denmark | 37.63 | 13.13 | 2.87 | 10.3 |
| Hungary | 10.32 | 3.15 | 3.28 | ~0.1 |
| Average | 28.72 per 100 kWh | 12.33 per 100 kWh | 2.33 |
Table 1. Cost of energy across several European countries in first half of 2024.
It is apparent from the Table that the UK has some of the highest electricity costs (coloured red) combined with the lowest gas costs (coloured blue).
Observation
The UK has one of the highest cost ratios for electricity to gas in Europe. It is no surprise that the uptake of ASHP in the UK is low. It simply does not make financial sense for most households.
Regardless of the UK climate. The ASHP CoP performance would need to be much higher to deploy the same equipment in the UK for the same standard running costs. You can explore alternatives to minimise the higher electricity tariff using solar, night time batteries or flexible off-peak tariffs. However, these alternatives tinker with basic tariff disparity in the UK.
The UK applies levies to both electricity and gas. The levies are about 16% on the final price for electricity bills and 4% of the final gas bills. Currently, the bulk of the revenue raise comes from electricity bills and the remainder from gas, albeit the average households use much more gas. The differences appear to act as a higher tax on low carbon energy. Eg ASHPs.
If the high electricity levy charge of 16% could be swapped to the gas levy charge of 5% with no loss to the exchequer, then the outcome would be improved.
The UK figures (From the Table above) would then be,
Electricity cost: (28.34/1.16)*1.04=25.41
Gas bill cost: (7.37/1.04)*1.16=8.22
Electricity/Gas ratio= 3.09
A big improvement on 3.85.
Why is the UK electricity price so high compared with other countries?
The UK electricity price is dominated by the gas wholesale price 98% of the time and gas prices have increased notably after the global gas crisis of 2022. The “carbon brief” “article offers a good review of the UK market.
The UK power system is far more exposed to gas fired generation than other countries. Gas sets the wholesale price of electricity in the UK 98% of the time. It is far more than other European countries. The Netherlands and Belgium are exposed 86% and 87% of time by comparison. Spain is 65%, Germany 24%, Norway and Sweden 1%.
The UK electricity market operates under marginal pricing. The cheapest energy is from renewables, then nuclear, then gas. The renewables and nuclear are used first, but if demand is high, then gas power stations are used. These gas powers stations then set the price for generating electricity as the marginal fuel. The UK electricity price tracks the wholesale gas prices.
This seems to benefit the “status quo” for those stakeholders involved in the UK energy generation market. In my opinion, the gas power station companies benefit alongside the wind energy companies. The wind farms are effectively paid a greater sum of money than the cost to deliver electricity. The present UK electricity market is problematic for the UK consumer.
The use of gas power stations increases the wholesale cost of electricity by ~300%. Since, the simple gas cycle turbine is ~35% efficient.
Hence, the cost of electricity generated from gas is 1/0.35=2.85* gas price
Our gas supply also depends on imported gas, eg Norway. This is another reason our electricity costs are high compared to European countries. The UK is an importer of gas. It is not influenced by the UK gas energy sector in the North Sea, which has been in steady decline since 2004.
Who owns UK gas power stations?
In 2023 there are 35 active gas fired combined cycle power plants and 14 single cycle power plants.
Total generating capacity of 35.7GW
Owners~ Uniper, RWE generation UK, SSE, Vitol, Equinor, TotalEnergies, EPUKi, Integen. Plus a few others.
Who owns UK wind farms?
From Wikipedia.
In 2024 there are multiple owners of wind farms. You can see an overlap between the companies with interests in gas cycle power plants and wind farms stakeholders.
Owners~ SSE, RWE, Equinor, Vattenfall, Orsted, Iberdrola, EDF renewables, etc
Import of gas to UK
Norway: 50.2% 345.9 TWh in 2024.
Norway is a key importer to the UK for 24 of the last 25 years. Norway earned £6.6 billion in 2024. Norway has a significant uptake of heat pumps, since it has a limited domestic gas network and cheaper electricity.
USA: 11% 75.7 TWh in 2024. LNG import.
UK sector of the North Sea: 33.8%.
Alternatives to high electricity tariff in present UK domestic market
The option to use non-standard electricity tariffs is possible for ASHPs. However, you will need a SMART meter.
UK Standard tariff: 27.03 p/kWh (April- June 2025). E/G ratio= 27.03/6.99=3.87. A poor outcome.
Time of use tariffs. Cheapest overnight. Avoid peak use between 4pm-7pm.
Octopus Cosy: 20.09 p/kWh. 04-07,13-16,22-00: 51% less than day rate, peak 16-19: 50% higher than day rate.
Octopus Agile: 19.83 p/kWh. Tracks market volatility. Best for solar, batteries and off-peak usage.
Heat pump tariff
OVO energy heat pump plus: 15p/kWh. It appears to be a standard rate that is compensated at end of month. No time of use restrictions. E/G ratio=15/6.99=2.15. A good outcome.
Scottish Power Heat Pump: 14p/kWh (between 11am-4pm). Thereafter 27.164p/kWh.
Conclusion
The typical electricity cost in the UK is high and the gas cost low linked to policy levies. A rebalancing of the policy levies, or spreading the levies more evenly across the energy sector would help the wider adoption of ASHPs. Vulnerable gas households would need safeguarding.
The rebalancing of the energy levies is a necessary debate in the UK. The present admirable focus on many heat pump forums to enhance COP and/or achieve low temperature operation of ASHPs does not remove the need to make electricity cheaper in the UK for the average UK household.
The running costs are not low enough to justify an ASHP in a typical UK household without reducing the electricity tariff.