Introduction
Switching to renewable heating isn’t just about sustainability—it’s also about affordability. One of the biggest questions UK homeowners ask is: “How much does an air source heat pump cost?”
In this article, we’ll break down the equipment costs, installation expenses, running costs, government grants, and long-term savings of air source heat pumps. You’ll also see how schemes like ECO4 and the Boiler Upgrade Scheme (BUS) can make these systems free or highly affordable.
Cost Breakdown: How Much Does an Air Source Heat Pump Cost?
The typical cost of installing an air source heat pump in the UK ranges from £8,000 to £15,000, depending on property size, system requirements, and complexity.
Detailed Cost Analysis (2024)
| System Size | Equipment Cost | Installation Cost | Total Cost | After BUS Grant | After ECO4 |
|---|---|---|---|---|---|
| 5–8kW (Small) | £4,000–£6,000 | £2,000–£3,000 | £6,000–£9,000 | £1,000–£3,500 | FREE |
| 8–12kW (Medium) | £5,000–£8,000 | £2,500–£4,000 | £7,500–£12,000 | £2,000–£6,500 | FREE |
| 12–16kW (Large) | £7,000–£11,000 | £3,000–£5,000 | £10,000–£16,000 | £4,500–£10,500 | FREE |
Equipment Cost Factors
- Heat pump unit: £3,000–£8,000
- Hot water cylinder: £800–£1,500
- Smart controls: £300–£800
- Pipework & fittings: £200–£600
Regional Price Variations
- London/Southeast: 10–20% above average
- Scotland/Northern England: 5–15% below average
- Remote areas: Transport costs may increase total
Installation Costs
Air source heat pump installation varies depending on whether your property is new-build (simpler) or retrofit (more complex).
Typical Labour Costs
- System design: £200–£500
- Installation labour: £100–£150/day per installer (2–3 days typical)
- Electrical work: £300–£800
- Commissioning/testing: £200–£400
Additional Equipment
| Component | Cost Range | Purpose |
|---|---|---|
| Electrical upgrades | £300–£1,200 | Ensure supply capacity |
| Cylinder replacement | £400–£1,000 | Better insulation & storage |
| Radiator upgrades | £150–£300 each | Larger radiators for efficiency |
| Pipework changes | £200–£800 | Improve integration |
| Controls upgrade | £200–£600 | Smart thermostats/weather compensation |
Project Cost Examples
- Simple installation (new build): £7,000–£11,500
- Complex installation (retrofit): £10,000–£17,000
Running Costs: Are Air Source Heat Pumps Expensive to Run?
Running costs depend on electricity tariffs, system efficiency, and property insulation. Generally, they are 30–50% cheaper than gas heating and 60–80% cheaper than oil or direct electric heating.
Annual Operating Costs (Typical UK Properties)
| Property Type | Heat Demand | ASHP Annual Cost | Gas Boiler | Oil Boiler | Savings |
|---|---|---|---|---|---|
| Well-insulated (new build) | 8,000 kWh | £400–£600 | £600–£800 | £800–£1,200 | £200–£600 |
| Average insulation (retrofit) | 12,000 kWh | £600–£900 | £800–£1,200 | £1,200–£1,800 | £200–£900 |
| Poor insulation (older property) | 18,000 kWh | £1,000–£1,400 | £1,200–£1,800 | £1,800–£2,700 | £200–£1,300 |
Seasonal Performance
- Autumn/Spring: SCOP 4.5–5.5
- Winter: SCOP 3.0–4.0
- Annual average: SCOP 3.5–4.5
Electricity Tariffs and Impact
The electricity tariff you choose has a major impact on running costs.
- Standard Tariff: 15–20p/kWh
- Economy 7: 7–12p/kWh at night, higher daytime rate
- Time-of-Use Tariff: Flexible rates for smart homes
- Green Tariffs: 100% renewable electricity (slightly higher cost)
Return on Investment (ROI)
Without grants, payback for a heat pump is 8–15 years. With grants, ROI can be much quicker.
Long-Term Savings (20 Years)
| Scenario | Installation Cost | Annual Savings | 20-Year Saving | Net Benefit |
|---|---|---|---|---|
| Gas replacement + BUS grant | £3,000–£6,000 | £200–£400 | £4,000–£8,000 | £1,000–£5,000 |
| Oil replacement + BUS grant | £3,000–£6,000 | £600–£1,200 | £12,000–£24,000 | £9,000–£21,000 |
| ECO4 free installation | £0 | £200–£1,200 | £4,000–£24,000 | £4,000–£24,000 |
Property Value Impact
Research shows air source heat pumps increase property value by 3–5%.
- Average UK home (£280,000): £8,400–£14,000 value increase
- Premium homes: Even higher value uplift
- Rural properties: Particularly attractive where gas isn’t available
Market Trends and Future Costs
- Government Grants: £7,500 BUS grants until 2028
- Growing demand: More installations = lower costs over time
- Technology improvements: Increased efficiency, smaller units
- Installer competition: Expanding workforce brings down labour costs
Conclusion
While the upfront costs of an air source heat pump are higher than a traditional boiler, grants, lower running costs, and property value increases make them a smart investment.
- Typical installation: £8,000–£15,000
- Grants: Reduce costs to as little as £1,000–£3,500 (or free with ECO4)
- Running costs: Up to 50% cheaper than gas, 80% cheaper than oil
- ROI: Significant savings over 20 years, with increased property value
For many UK households, especially those eligible for ECO4, the transition to an air source heat pump is not just environmentally friendly—it’s financially smart.