ASHP v oil as of April 22

secret-stu

With the price of electricity going up in April and again in October is it financially variable to be able to  run an ASHP cheaper than an oil central heating system without any aid from solar or battery back ups?

I have to have a new central heating system installed and its going to have to be either ASHP or oil but even with the sky high price of oil at present i can’t see how running an ASHP will be cheaper?

I guess my property is not perfect for an ASHP as its a 1960s bungalow with cavity wall insulation and some loft insulation BUT has two rooms that have flat roofs (one being a bedroom) which  have poor insulation.

Any advice would be most appreciated.    

lohr500

My gut feel is that oil prices will fall over the next few weeks. Perhaps not back to the +/- £0.60 per litre, but close. 
Electricity is going to increase again in October. 
The sums didn't work out on ASHP to replace our old oil boiler last year and that included a £12k RHI grant which is no longer available.

What heating do you have now. If oil, then  an ASHP system will more than likely need larger radiators fitting as well as a heat store tank.

A litre of oil will yield around 9.5 kWh assuming you have a modern condensing oil boiler. At £0.80 per litre, that works out at £0.084 per kWh.

In mid winter when you need heat the most, I suspect even the best ASHP will not achieve a conversion figure better than 3:1. 

So the electricity cost would need to be £0.252 per kWh or less to make an ASHP cheaper to run than oil.

Unless you have a long term fix, my guess is your electricity will cost more than £0.252 per kWh from April and will rise further in October.

If oil drops back to £0.60 then the gap gets wider.

Add to that the likelihood that an ASHP system will probably cost more to install than oil, and I'm not sure ASHP is the way to go for the next few years. But all very dependant on the relative price of oil vs electricity.

Reed_Richards

lohr500 said:

My gut feel is that oil prices will fall over the next few weeks. Perhaps not back to the +/- £0.60 per litre, but close. 
Electricity is going to increase again in October. 

The thing is, you really need to know the costs of oil and electricity for the next ten years or more.  Electricity is expensive because a lot of it is generated in gas-fired power stations and gas is very expensive at present.  If heating oil is expensive because some users have the option to switch to heating oil from other fuels then the price is not going to come down independently of other fuel prices, no matter what @lohr500 's gut feels.  But perhaps there is some other reason?      

lohr500

My gut feel is based on very little knowledge !!

But for what it is worth, the way I see it is this :

In the short term (next 6 months) : The world needs oil and if supply is restricted from Russia then the other producers will crank up output to mitigate any shortages. And if/when common sense prevails and Putin is put back in his box, sanctions will be lifted.
We are already seeing heating oil prices drop. I filled up my oil tank in the summer and paid £0.56 per litre. Two weeks ago it was up to £1.60 per litre. Today it is down to £0.90 per litre. I still maintain it will fall further in the following weeks, whilst electricity and gas prices are pretty much guaranteed to increase in October.

In the medium term (next five to ten years) : There will still be a massive demand for oil. Despite all the green initiatives and focus on moving to electric powered vehicles and electric heating in Europe, the global demand for oil will only increase. I can't see China, India, South America  and the USA being widespread adopters of all the new electric technologies. Also, don't forget that Jet-A aviation fuel is basically a highly refined version of the kerosene we use in our domestic oil boilers. The aviation industry is predicting significant recovery and growth from pre Covid levels through to 2030. I don't think we will see any electric Airbus A320's by 2030.

In the longer term : If I am still alive by then and my oil boiler is still working, I will take stock of the situation. I went for an oil boiler replacement on the basis of a 10 year minimum life expectancy for the boiler. 

If the world does manage to wean itself off oil in ten years time (which I doubt), unless oil consumption is taxed beyond reach, the laws of supply and demand will prevail and the world's oil producers will drop prices to retain sales.

I could well be proved wrong, but right here, right now, I am so glad I didn't switch to an ASHP in May last year.

Reed_Richards

Fuel prices are determined by the balance between supply and demand but also influenced by taxation.  Petrol prices have increased about 60% to 70% since the lows of lockdown (when most people were stuck at home not using their cars much).  On the other hand the price of heating oil, which should have been in greater demand domestically during lockdown, seems to have risen by rather more.  And if @lohr500 's "massive demand for oil" is not matched by supply then that will force the price of heating oil up, not reduce it.  

lohr500

Let's make a diary note to review the relative prices of heating oil and electricity in five and ten years. Then we will know which option turned out to be the best. Until then it's just speculation.

OP asked for advice and I gave my opinion. But they will have to decide for themselves on the best way forward. 

secret-stu

lohr500 said:

Let's make a diary note to review the relative prices of heating oil and electricity in five and ten years. Then we will know which option turned out to be the best. Until then it's just speculation.

OP asked for advice and I gave my opinion. But they will have to decide for themselves on the best way forward. 

Very much appreciated 

canaldumidi

President Biden has just promised American gas/oil to replace some of Russia's. Saudi Arabia is mooted to be considering increasing supply.

.......

matelodave

The sums are relatively simple but the long term forecast for the cost off leccy, oil, gas or whatever isn't, especially if the government tries to adjust the cost to make one fuel more or less attractive than another (which they have so far avoided doing)

The cost of simply replacing an oil boiler will probably be around 3-4 times less than installing a heat pump, say 4k for oil or £12k-16k for a heatpump, because you'll need the radiators, hot water tank and maybe some pipework upgrading to ensure that the heatpump runs at maximum efficiency. 

If you are starting from scratch then the extra cost of larger rads, tank and the heatpump itself may well only be £3-5k more than a complete oil installation, bearing mind the cost of a tank, foundations etc.

If you can get the £5k grant that the government is offering (but still not yet implemented) and the 0% VAT on heatpumps that they are also suggesting them the cost of the whole installation is probably not far different from a complete oil installation

The price per kwh of heat from a heat pump is around 1/3rd of the cost of the leccy that you put in, so if leccy goes up to 30p then one kwh of heat will cost you around 10p. oil gives around 10kwh per litre so oil needs to be over £1 a litre to make a heatpump cheaper to run.

I'm not anti heatpump, I've had one for nearly 12 years and as far as I'm concerned it's been great, but that's because I've managed to keep on low cost leccy up until last October and the cost per kwh of heat has been pretty close to.that of oil or mains gas

I did choose a heatpump over oil or LPG as I was starting from scratch (replacing storage heaters) as I didn't want a big tank of oil or gas in the garden nor the aggro of getting it filled. We also had the advantage that as we were doing a complete refurb we could install underfloor heating as well. We also have the benefit of being at home all day everyday (unless we go out or on holiday) so we can let it idle away at very low temperatures maximising its efficiency. 

I got about £5k back in RHI over seven years and I do reckon that it's probably paid for itself compared with the cost of oil or LPG over that period.

In the end it's a gamble but if I was starting from scratch I'd go for a heatpump but if I just needed a new oil boiler to stick onto an existing system, then that's what I'd do.

Rodders53

1960s bungalow.  Poorly insulated flat roofs and loft spaces.  FIX THOSE FIRST.  

The money spent will save energy no matter what the source.

Then the 'new heating system' needs clarification so the install costs can be estimated accurately ... what's there now to heat the building and provide hot water?

secret-stu

Rodders53 said:

1960s bungalow.  Poorly insulated flat roofs and loft spaces.  FIX THOSE FIRST.  

The money spent will save energy no matter what the source.

Then the 'new heating system' needs clarification so the install costs can be estimated accurately ... what's there now to heat the building and provide hot water?

No heating at present ,hot water via a hot water tank with electric immersion  .