Answer by Dale Blundell (Atkins)
The running costs of a heat pump are determined by the price of electricity. The cost effectiveness is dependent on the relative fuel prices of the other available options, and the COP of the heat pump.
The simplest comparison is with direct resistive electric heating, which will cost three times as much per kWh of heat compared to that of a heat pump with a COP of x3. This cost advantage is lower in the case of storage heaters using low cost off-peak electricity, as the financial advantage will be less than this. However, if the heat pump can also be run on off-peak electricity overnight and the heat is put into a thermal store to be used during the day, then the 3 times advantage is restored.
As an example, when comparing an ASHP with COP of 2.7 to a modern natural gas boiler with an efficiency of 90%, the heat pump will be 3.0 times more efficient. However, if the price of electricity is 3.0 times that of natural gas, then the energy cost of the two systems will be the same.
Obviously different installations will have different economics, but in practice it is found (in the UK) that while heat pumps can be highly cost effective when compared to oil or LPG heating, they may not currently be the best option where natural gas is available. However, as the UK moves towards decarbonisation of electricity by 2030, the use of electric heat pumps is likely to prove advantageous where carbon emissions factor into the business case.
Taking account of the lower lifetime servicing and maintenance costs of heat pumps will increase their attractiveness.