Whoever you are, and wherever you live in the UK, rising energy prices are something we are all becoming accustomed to. The skyrocketing price of wholesale gas in Europe has driven a huge increase in the price we pay for our energy, both gas and electricity. In this article we look at what this means for heat pump owners compared to traditional fossil fuels, and whether there’s anything you can do about it.
Gas vs. Electricity
Martin Lewis’ Money Saving Expert website provides this breakdown of the new price cap, effective this Spring.
https://www.moneysavingexpert.com/utilities/what-is-the-energy-price-cap/
Even though the primary factor driving costs is the wholesale gas price, this doesn’t mean electricity gets away unharmed. In fact, gas is the main fossil-fuelled source of electricity in our national grid energy mix, as it is still relied upon at times when the wind isn’t blowing or the sun isn’t shining.
That said, the relative increase in gas price is still significantly higher than that of electricity:
Gas: 4.07p/unit to 7.37p/unit
Increase of 81%Electricity 20.8p/unit to 28.34p/unit
Increase of 36%
This means that for a unit of heat production, the cost for a heat pump would be 7-8 pence, the same unit of heat production for a gas boiler would be 9-10 pence.
Costs for oil at the moment are comparable to gas.
Will This Trend Continue?
Rising energy costs are expected to continue through 2022 due to the reopening of global economies following the pandemic and unfortunately, a continuing demand and reliance on fossil fuels throughout the world.
Closer to home, over the next decade it is proposed that the cost of so-called “green levies” - contributions we all make through our energy bills towards the cost of green energy policies - will be switched from electricity and to the more carbon intensive fuels like gas and oil.
We wrote about this in one of our previous blog posts.
What this means for heat pump users is that over the next decade, the cost of these levies will be switched away from the tariff they pay - electricity - and onto an energy bill they don’t pay - gas or oil. The net result of this will be a greater saving compared to the traditional fossil fuel alternative.
What Can I Do About Rising Energy Prices?
Starting with the basics: as a heat pump owner the only energy you require is electricity. And the good news about electricity is that there are some things that you can do about it.
Generate your Own
The higher the price of electricity, the better the economics stand up for generating your own electricity. Here at Alto Energy, we installed a large PV array on our office building in 2021. Our calculations estimated (based on the lower electricity prices at the time) that we would see a return on investment within four years. We heat the building with a heat pump (obviously), cool it in the summer with air conditioning, and consume electricity for computers, forklift trucks etc. throughout the day.
With prices for solar PV lower than they’ve ever been; and prices for buying electricity higher than they’ve ever been, there has genuinely never been a better to turn your own roof into a micro power plant and generate your own electricity.
Be Agile
Unlike gas, which has a virtually fixed price throughout the day, electricity is a minute-by-minute market linked to supply and demand. Without delving into a full-blown economics lesson, the more supply there is of something the cheaper it is; and the more demand there is of something the more expensive it is. So at night when the wind is blowing but everyone is asleep not consuming electricity, this means electricity is very cheap. In fact, we’re aware of some customers on agile tariffs who actually get paid to consume electricity at night because (such is the crazy nature of the way the electricity grid is managed) it is cheaper to pay a consumer to take the electricity than it is to pay an electricity generator (e.g. a wind turbine operator) to stop generating.
There are a growing number of agile tariffs on the market, all linked to a smart meter, which provide a variable rate of electricity that reacts to the supply/demand driven price of electricity. If you’re on an agile tariff, you can use this to your benefit to:
Heat your water tank overnight, when electricity is cheap
Keep the house up to temperature overnight (i.e. don’t have a night setback), avoiding the need for the heat pump to have to work hard first thing in the morning, when electricity is most expensive
As our energy becomes more and more decentralised, agile tariffs will become the new standard. As a heat pump user (especially if you have an electric vehicle, or a battery storage system), you’re already well placed to take advantage of agile energy tariffs.
Make Sure Your Heat Pump Is Working Efficiently
It might sound obvious, but when energy prices are high it’s even more important to make sure your heat pump is working as efficiently as possible. If your heat pump hasn’t been serviced in a while, chances are there are some efficiency improvements to be had. Build ups in the hoses and heat exchangers all have a negative impact on flow rates, efficiencies and the delivery of heat into the building. All of this means you could be paying more than you have to.
Contact Alto Energy For A Heat Pump Service
If you think your heat pump isn’t running as efficiently as it should be, or you haven’t had it serviced in a while, then book one of our expert engineers to come and service your heat pump.