Is it really going to save me money or will my heating bills increase?
- 17 hours ago
- 4 min read
Is it really going to save me money or will my heating bills increase?
This is the million-dollar question, and the answer is: it's highly likely to save you money in the long run, but your electricity bills will look different, and there are upfront costs to consider.
Let's break down why, especially for a home in North East Scotland:
Energy Price Landscape:
Electricity Prices: In Scotland the average electricity unit rate is around 24.53p per kWh, with a standing charge of 54.25p per day (Ofgem Price Cap from July to September 2025).
Gas Prices: In Scotland, the average gas unit rate is around 6.27p per kWh, with a standing charge of 29.97p per day (Ofgem Price Cap from July to September 2025).
The Challenge: Electricity is more expensive per kWh than gas.
This is the primary reason why some people initially fear higher bills. If a heat pump had 100% efficiency (like an electric resistive heater), it would definitely be more expensive to run than a gas boiler due to the difference in unit rates.
The Solution: Heat Pump Efficiency (COP) makes the difference.
As we discussed, ASHPs are not 100% efficient; they are typically 250% to 400% efficient (COP of 2.5 to 4). This means for every 1 kWh of electricity they use, they produce 2.5 to 4 kWh of heat.
Let's do a simplified comparison for a typical home in Stonehaven (assuming a balanced system):
Scenario: A medium-sized home needing approximately 12,000 kWh of heat annually.
Gas Boiler (90% efficient):
Energy needed from gas: 12,000 kWh / 0.90 = 13,333 kWh
Annual gas cost: 13,333 kWh * £0.0627/kWh = £836.65
Plus standing charge: £0.2997/day * 365 days = £109.39
Total Annual Gas Heating Cost: Approx. £946
Air Source Heat Pump (average COP of 3.0):
Electricity needed for heating: 12,000 kWh / 3.0 = 4,000 kWh
Annual electricity cost for heating: 4,000 kWh * £0.2453/kWh = £981.20
Plus electricity standing charge: £0.5425/day * 365 days = £197.91
(Note: If you disconnect gas, you save the gas standing charge, but your general household electricity use still has its standing charge).
Total Annual ASHP Heating Cost: Approx. £981 + other electricity use + standing charges.
Initial Impression: Similar or slightly higher bills on paper based purely on unit rates.
However, this simple calculation doesn't account for several critical factors that make ASHPs a money-saving option in Scotland:
Scottish Government Grants & Loans:
The Home Energy Scotland Grant and Loan scheme is fantastic. You can get a grant of up to £7,500 towards an ASHP installation.
For homes in rural areas (which many in and around the North East could be classified as), there's a rural uplift of an additional £1,500, bringing the total grant to £9,000.
You can also get an interest-free loan of up to £7,500 for the remaining costs. This significantly reduces the upfront cost, which is often the biggest barrier.
There's also 0% VAT on heat pump installations until March 2027.
Home Insulation: As mentioned before, ASHPs work best in well-insulated homes. If you combine your ASHP installation with insulation improvements (which may also be grant-funded in Scotland), your overall heat demand will drop, leading to lower running costs for any heating system, but especially beneficial for ASHPs.
Specialist Electricity Tariffs: Energy suppliers are increasingly offering "heat pump tariffs" or "smart tariffs" that provide cheaper electricity during off-peak hours. If you use your heat pump to heat hot water during these cheaper times, or if the heat pump can intelligently manage its operation, you can significantly reduce your running costs. Octopus Energy, for example, offers "Cosy Octopus" with a discounted rate of 14p per kWh for heat pump electricity.
Long-term Cost Stability: Gas prices are subject to global events and political instability. Electricity prices, while also fluctuating, are increasingly linked to renewable generation, which has more stable long-term costs. As more renewables come online, electricity prices could become more stable or even decrease relative to gas.
Reduced Maintenance: ASHPs generally have lower maintenance requirements than gas boilers and a longer lifespan (20-25 years vs.10-15 for boilers). This saves on repair and replacement costs over time.
Removal of Gas Standing Charge: If you go fully electric and remove your gas connection, you save the daily gas standing charge, which adds up over a year.
Will your electricity bills skyrocket?
Yes, the kWh usage on your electricity bill will increase significantly. This is because your heating energy shifts from gas to electricity.
However, your total energy bill (electricity + any remaining gas, or just electricity if fully off-gas) is very likely to be lower over the year, or at least comparable, once grants, insulation, and smart tariffs are factored in.
You will see zero gas bills if you remove your gas supply.
Recommendation:
Given the generous Scottish Government grants and the general move towards decarbonisation, an ASHP is a strong candidate for saving you money in the long run. The initial investment is high, but the grant significantly mitigates this.
To get a true picture for your home:
Get a professional heat loss survey. An MCS-certified installer will assess your home's insulation, existing heating system, and heat demand. This is crucial for correctly sizing the heat pump and providing accurate running cost estimates.
Ask about grants and loans. Home Energy Scotland is the first port of call.
Discuss smart tariffs with your energy provider or potential providers.
Consider insulation upgrades alongside your heat pump installation. This is often the most impactful step for reducing overall energy consumption.
In essence, while you'll be buying more electricity, the efficiency of the ASHP and the available financial incentives in Scotland mean you are very likely to save money compared to fossil fuel heating, especially as energy prices continue to be volatile.
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