According to recent reports the Government is poised to slash the cost of electricity for homeowners, in an attempt to encourage a switch away from fossil fuel boilers to low carbon heat pumps.
How Can Electricity Bills Be Slashed?
Currently over a quarter of your energy bill is made up of various taxes and levies. So, for a typical electricity tariff of around 17p per kWh, around 4p of this is simply paying for taxes and levies. These have built up over the years to fund a number of energy efficiency policies, however this has paradoxically created a barrier to the uptake of heat pump systems by making the operating costs of heat pumps more than it should be.
The Government is currently consulting on the best way to transfer these charges elsewhere, with the current proposals being either gas bills, or general taxation.
What Does This Mean For Heat Pumps
Clearly the impact on heat pumps will be significant, with potentially up to a 23% reduction in running costs. Typically a heat pump will deliver between 3 and 4 units of heat for every unit of electricity consumed. So for a typical property with a total heat requirement of 20,000kWh, this will require around 6,000kWh of electricity. At 17p, this would cost £1,020 for the year, or £85 a month. However if that rate was cut by 23% down to 13p, then the cost would be £780, just £65 a month.
This is the sort of difference that would swing the balance even further towards heat pumps, and now is the best time to make the decision. Until March 2022 the Government is offering a very generous incentive, called the Renewable Heat Incentive (“RHI”), to encourage homeowners to switch to heat pumps.
In that same example above, the homeowner would receive around £1,400 per year, for seven years, from the Government, simply for installing an air source heat pump system.
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If you’re interested in installing a heat pump in your own home, please get in touch with us today, and a member of our team will be more than happy to discuss your options.