If you’re warming up to the idea of replacing your existing heating system with a heat pump, then now might be a very good time.
The Energy Price Cap, which controls what most households pay for energy in the UK, rose by an average of 5% on 1st January 2024. Here, the experts at smart energy provider Plug Me In look at why, with the rising cost of gas, now might be the right time to invest in a heat pump.
What’s the Energy Price Cap?
First, let’s look at what the Energy Price Cap is and how it works. The Price Cap was introduced on 1st January 2019 by Ofgem. It limits what you pay for each unit of gas and electricity that you use.
It also sets a maximum daily standing charge – that’s the sum you pay to be connected to the grid. The Price Cap changes every three months, in January, April, July and October. On the 1st January 2024 the Price Cap rose to £1,928 a year. This is up 5% on the previous October 2023 Price Cap, which was £1,834 a year.
The Price Cap only applies to standard and default tariffs, which are generally known as standard variable tariffs (SVTs). So if you’re on a fixed-term tariff, the Cap won’t affect you.
Why it’s a good time to invest in a heat pump
The rising cost of gas means alternatives to gas, coal, oil and Liquid petroleum Gas (LPG) are something worth seriously considering.
According to the Energy Saving Trust, if you’re replacing an older, G-rated gas boiler, then savings last year were around £295 a year on your energy bills. The saving will be even greater now the new Price Cap has come into effect.
If you’re considering switching from oil central heating to a heat pump, you can also consider the cost and time savings of not having to buy and store oil in bulk and pay for delivery. And if you’re replacing old electric storage heaters with a heat pump system, then, according to the Energy Saving trust, you could save up to £1,500 on your annual fuel bill.
You’ll see even greater savings if you already have solar panels, as you can save money by using the free energy that they generate to power your heat pump. And if you have a solar battery, this can increase your savings further, as it will store the sun’s energy to power your heat pump later in the day.
Grants to help pay for your new heat pump
Don’t forget you are also likely to be eligible for sizable grants towards paying for your new heat pump. If you live in England and Wales, the UK governments Boiler Upgrade Scheme (BUS) offers grants up to £7,500 towards the cost and installation of a heat pump.
If you live in Scotland the Home Energy Scotland Grant Loan offers funding up to £7,500 or £9,000 for households which qualify, with additional funding available as an optional interest-free loan.