Oil or Air source decision - complete system from scratch

moverthrow

We are putting in a new central heating system in our 1920s 4 bed rural semi which is off mains gas. Currently no central heating at all. We explored trying to fix our night storage heaters but running costs this winter will be crazy and they are really undersized for the rooms anyway so we have made the decision to replace and finally get a decent central heating system as we plan to stay in the house in long term.

We have a quote for £13k for air source install (actually 18k but with 5k grant discount its 13k). Also got a quote for oil which is also £13k including base and tank etc.

We are looking to choose the option which is likely to be the most cost effective but also be most suitable for our less than energy efficient old house (we plan to sort this as best we can too). With so many unknowns we are really suffering from information overload and struggling to make a decision but need to decide ASAP to try and get benefit before winter (and increased electric prices) arrives.

My calculations based on October electric price seem to show air source coming out double the running cost of oil or more. Even if oil was £2 a litre it would still be cheaper as far as I can see?

If you were in our position, which would you opt for? Or would you wait it out a little longer and see whether the government announce anything (unlikely I know!)?

tacpot12

In your situation I would sort out my insulation, air sealing and ventilation first, design the new radiators and pipework for an ASHP and then go with an oil boiler.

You'll save money which can be spent on doing the insulation and air sealing properly, and eventually the cost of ASHPs will reach a sensible level and you can switch over then knowing your home is good to go. 

moverthrow

tacpot12 said:

In your situation I would sort out my insulation, air sealing and ventilation first, design the new radiators and pipework for an ASHP and then go with an oil boiler.

You'll save money which can be spent on doing the insulation and air sealing properly, and eventually the cost of ASHPs will reach a sensible level and you can switch over then knowing your home is good to go. 

Thanks. So effectively bigger radiators etc to future proof? That sounds good advice, thank you. 

QrizB

I agree with tacpot12.

ASHP sounds like a good option but for the next couple of winters oil is likely to be much cheaper.

lohr500

I would personally go with oil, but make sure that the radiators are large enough to accommodate an ASHP in the future. Bigger radiators now should also allow you to run the oil boiler with lower flow and return temperatures which will help it run more efficiently.

To some extent the energy efficiency of the house is not relevant as it will take the same amount of energy to warm up, irrespective of the heat source. 

A litre of kerosene heating oil yields 10.35kWh at 100% conversion efficiency. With a modern oil boiler if you assume 90% + efficiency, than means every litre of oil will generate around 9.5kWh.

At £1 a litre, that works out at around 10.5 pence per kWh.

I have no practical evidence to support this, but my gut feel is that even the latest ASHPs will struggle to deliver a conversion ratio of above 3:1 in the depths of winter when it is cold outside and you want most heat inside.

If we assume the October electricity price will be say £0.52 per kWh and use the conversion ratio of 3:1, every kWh of energy from the ASHP will cost 17 pence. Even at a conversion of 4:1 it work out at 13 pence per kWh.

Of course, what we don't know is what will happen to the relative price of electricity and oil over the lifespan of the system you install.

But my money remains on oil being the most cost effective over the next few years.
  
I couldn't make the numbers add up for ASHP last year, even when the electricity price was much lower and I could have got a grant of close to £12k towards switching over from oil.

Additionally, from reading numerous posts on people who have ASHP, they do seem to need a lot of careful commissioning and fine tuning to optimise their performance.

Check also the warranty period on whichever type of system you go for as I suspect ASHP will be expensive to repair in the event of an out of warranty failure.

I chose a Grant external Vortex Blue oil boiler which comes with a ten year parts and labour guarantee. The only requirement is that it was fitted and serviced by a Grant approved installer. Annual service cost this year was £80, which included a tank inspection.
 

matelodave

AS others have said, if you've got space for the tank then go for oil but with rads sized for a heatpump and make sure you can insulate  as much as possible as it will benefit the running costs of any type of heating.

We've had a heatpump for the past 12 years and while we could get leccy at around three times the cost of gas and a guessed at COP of around 2.5 it worked out OK .

However, with Electricity going up to around 55p/kwh and probably even more in January, one kwh of heat is costing around 22p, so oil would have to be over £2 a litre to come anywhere close.

Our electricity costs have jumped from around £900 last year to, £2000 in the year since Symbio went bust and it will be just over£4000 over the next twelve months, not counting any rises in January 2023 when the cap gets revisited.

Obviously not all of that is heating, I reckon its around 50/50, heating and hot water compared with normal cooking, cleaning, washing etc.so say around £2k just for heating and hot water and £2k for everything else

Reed_Richards

Electricity costs are predicted to rise so high that they will bankrupt many households and many more businesses. I don't see that the government can allow this to happen and survive so if the government intervenes I don't think we can predict what electricity will cost for the next few years.

When electricity cost me 12p per kWh and oil was 42p per litre I reckon my new ASHP had running costs about break-even with my old oil boiler.  I don't know if there are factors which link heating oil prices to electricity prices but if not heating oil will be the cheaper option come October.

You could try to specify a heating system that will run with an output water temperature of 50 C or less.  That should make it compatible with a heat pump later even if that is not your choice now.  Remember that heat pumps need a special DHW tank with a large surface area coil; it's not just the radiators that need to be large.

You could opt for a hybrid boiler that combines an oil boiler with a heat pump.

A heat pump should use about one third of the energy that an oil boiler would.  Some of that electricity is "green", some comes from burning gas in power stations.

Remember to budget for the cost of emptying and removing your oil tank when you eventually finish with it.
      

QrizB

matelodave said:

However, with Electricity going up to around 55p/kwh and probably even more in January, one kwh of heat is costing around 22p, so oil would have to be over £2 a litre to come anywhere close.

Putting some numbers out there ...

I'm going to assume the OP has an annual heat demand of 10000kWh. This could be higher or lower but it's somewhere to start.

• Direct electric heating at 55p/kWh would cost £5500 pa
• Heat pump with COP of 3 will cost 1/3rd of that, £1830 pa
• Oil at £1 a litre and 85% boiler efficiency will cost £1180 pa - saving £650 pa compared to a heat pump
  

A COP of 3 might be optimistic, and £1 a litre for oil is on the high side, so the oil saving is likely to be higher.

moverthrow

QrizB said:

matelodave said:

However, with Electricity going up to around 55p/kwh and probably even more in January, one kwh of heat is costing around 22p, so oil would have to be over £2 a litre to come anywhere close.

Putting some numbers out there ...

I'm going to assume the OP has an annual heat demand of 10000kWh. This could be higher or lower but it's somewhere to start.

• Direct electric heating at 55p/kWh would cost £5500 pa
• Heat pump with COP of 3 will cost 1/3rd of that, £1830 pa
• Oil at £1 a litre and 85% boiler efficiency will cost £1180 pa - saving £650 pa compared to a heat pump
  

A COP of 3 might be optimistic, and £1 a litre for oil is on the high side, so the oil saving is likely to be higher.

Thanks, appreciate your help. Yes, my numbers come out similar. Except our demand is 19,000 including hot water... which makes the case for getting rid of the night storage even more scary and urgent!

Reed_Richards

If you plan it right, it should be possible to install an internal heating system that works equally well with a heat pump or an external oil boiler.

shinytop

I had the same decision to make as the OP (and about the same electricity usage).  I went for the ASHP last year, based on prices then and (crucially) RHI.  Although it's paid over 7 years, RHI meant that my whole system from scratch will cost me £5k ish. Actually in a way that £11.5k I'm getting back is the best investment I have because it goes up with CPI. Shame about the electricity prices though.    At least I'm better off with 7000kWh on the ASHP compared with 20000 with NSHs.

If I had to decide now? I don't know.  Maybe oil, although I'd really rather not.  Oil makes sense financially right now though.