Setting up a heat-pump system: examples of cost and payback

A look at the typical costs and payback of different heat-pump systems.
Back to: A detailed look at heat pumps and how they work

Worked example: 100 kW system

Installation prices

  • Ground source (boreholes) circa: £130,000–£140,000
  • Closed loop water source circa: £80,000
  • Open loop water source (boreholes) circa: £95,000–£110,000

Table 1. Heat pump investment performance per annum – 100 kW system

Heat used (kWh)

220,000

Estimated running cost

£7,300

Equivalent in gas

£8,400

Total running cost saving

£1,100

kWh eligible for RHI Tier 1

131,400

Tier 1 (8.84p per kWh) RHI Payment

£11,615

kWh eligible for RHI Tier 2

88,600

Tier 2 (2.64p per kWh) RHI Payment

£2,339

Total RHI Payment P.A

£13,770

Total annual benefit

£14,870

In this example, the total RHI payment over 20 years (no adjustment for inflation) would be £275,400.

Notes

Estimates exclude groundworks, power supply, heating-system alterations and control-system upgrades. All prices exclude VAT.

Assumptions:

  • 2,200 heat-pump operating hours
  • 55˚C flow temperature
  • 10p/kWh electric
  • 5p/kWh gas boiler
  • 80% boiler efficiency

The worked example uses 2015 prices, therefore please check the input costs and tariff against what is currently available.

Worked example: 500 kW system

Installation prices

  • Ground source (boreholes) circa: £500,000–£600,000
  • Closed loop water source circa: £320,000–£350,000
  • Open loop water source (boreholes) circa: £320,000–£380,000

Table 2. Heat pump investment performance per annum – 500 kW system

Heat used (kWh)

1,100,000

Estimated running cost

£37,000

Equivalent in gas

£42,350

Total running cost saving

£5,350

kWh eligible for RHI Tier 1

657,000

Tier 1 (8.84p per kWh) RHI Payment

£58,078

kWh eligible for RHI Tier 2

443,000

Tier 2 (2.64p per kWh) RHI Payment

£11,695

Total RHI Payment P.A

£69,773

Total annual benefit

£75,123


In this example, the total RHI payment over 20 years (no adjustment for inflation) would be £1,395,460.

Notes

Estimates exclude groundworks, power supply, heating-system alterations and control-system upgrades. All prices exclude VAT.

Assumptions:

  • 2,200 heat-pump operating hours
  • 55˚C flow temperature
  • 10p/kWh electric
  • 5p/kWh gas boiler
  • 80% boiler efficiency

The worked example uses 2015 prices, therefore please check the input costs and tariff against what is currently available.

Worked example: 1 MW system

Installation prices

  • Ground source (boreholes) circa: £800,000–£900,000
  • Closed loop water source circa: £400,000–£500,000
  • Open loop water source (boreholes) circa: £320,000–£400,000

Table 3. Heat pump investment performance per annum – 1 MW system

Heat used (kWh)

2,200,000

Estimated running cost

£73,300

Equivalent in gas

£84,700

Total running cost saving

£11,400

kWh eligible for RHI Tier 1

1,314,000

Tier 1 (8.84p per kWh) RHI Payment

£116,158

kWh eligible for RHI Tier 2

886,000

Tier 2 (2.64p per kWh) RHI Payment

£23,390

Total RHI Payment P.A

£139,548

Total annual benefit

£150,948

In this example, the total RHI payment over 20 years (no adjustment for inflation) would be £2,790,960.

Notes

Estimates exclude groundworks, power supply, heating-system alterations and control-system upgrades. All prices exclude VAT.

Assumptions:

  • 2,200 heat-pump operating hours
  • 55˚C flow temperature
  • 10p/kWh electric
  • 5p/kWh gas boiler
  • 80% boiler efficiency

The worked example uses 2015 prices, therefore please check the input costs and tariff against what is currently available.

Useful links

Learn how a heat pump works Information on the types of heat-pump systems Setting up a heat-pump system

Got a question. Ask a member of the team:

Nathalie Key

Knowledge Exchange Manager (Protected Edibles, Vine Crops, Mushrooms)
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