Heat Pumps: Big Carbon Savings, Hidden Costs

As the drive towards net zero gathers pace, heat pumps are increasingly seen as a core technology for decarbonising buildings. They can offer significant carbon savings compared to traditional gas heating systems, making them an attractive option for schools, academies, local authorities, and other public sector organisations.

However, before committing to a heat pump installation, it is important to carefully consider the wider implications beyond the environmental benefits, such as the ongoing financial and operational impacts.

The Benefits of Heat Pumps

Carbon reduction – Heat pumps are highly efficient and, when powered by electricity from renewable sources, can deliver substantial reductions in greenhouse gas emissions compared to fossil-fuel heating systems.
Future-proofing – With government policies focused on phasing out gas boilers, heat pumps represent a forward-looking solution that aligns with long-term sustainability goals.
Low on-site emissions – Heat pumps do not burn fuel directly, so they avoid producing emissions such as NOx, improving local air quality around school sites and public buildings.
Compatibility with renewable generation – When combined with solar PV, heat pumps can be partly powered on-site, helping offset some electricity costs.

The Challenges and Costs to Consider

While the carbon case for heat pumps is strong, the cost case is more complex:

Running costs – Heat pumps run on electricity rather than gas. With electricity significantly more expensive per unit than gas, running costs can be higher than expected.
Metering requirements – Heat pumps often require a larger electricity supply capacity. This can mean upgrading to a bigger meter, which can significantly increase non-energy charges (capacity, standing charges, and distribution costs).
Infrastructure upgrades – In some cases, schools may need cabling, switchgear, or transformer upgrades to handle the increased load, adding to the upfront project cost.
Building suitability – Heat pumps work most efficiently with good insulation and low-temperature heating systems (e.g. underfloor heating). Older, poorly insulated buildings may see lower performance and higher operating costs.

WME Example

WME has seen the impact of this on schools. In one example, a school had a new, larger electricity meter installed to support a heat pump installation. This larger meter resulted in the school experiencing a significant increase in its daily standing charge, rising from £6.30 to £32 per day.

The transition from a non-half hourly metered supply to a half hourly metered supply also introduced an annual capacity charge, which totalled £4,300 per year.

Consequently, the schools’ total annual energy costs increased by £13,680, an expense for which the school had not been expecting. This was completely unexpected for the school, as they had associated reduced carbon, with reduced cost.

The key message is that heat pumps will save carbon, but they may not save money, especially if the financial analysis does not fully account for changes to non-commodity electricity costs.

Questions to Ask Before You Commit

Before moving forward with a heat pump project, it’s important to ask the right questions of your contractor or consultant. This will ensure you are fully aware of both the benefits and the potential cost impacts. Consider asking:

Have the increased electricity non-commodity costs been factored into the financial model?
Will a larger electricity supply capacity or new meter be required? If so, what are the associated charges? Note that WME can support where a new meter is required.
What are the estimated annual running costs compared with our current system?
What assumptions have been made about energy prices in the cost analysis?
Is our building fabric (insulation, glazing, draft-proofing) suitable for a low-temperature heating system?
What changes, if any, will be required to our internal heating system (radiators, pipework, underfloor heating)?
Have potential infrastructure upgrades (cabling, switchgear, transformers) been included in the cost plan?
How does the carbon saving compare to other decarbonisation options available to us?
What maintenance regime will be required, and who will be responsible for it?
Are there opportunities to pair the heat pump with renewable generation, such as solar PV, to reduce electricity costs?

A Balanced Approach

Heat pumps can play an important role in decarbonising the public sector estate, particularly in newer or well-insulated buildings, or where paired with renewable electricity. However, they are not always the most cost-effective solution in isolation, and the true financial impact can be underestimated if non-energy costs are overlooked.

For schools and other public sector organisations, the decision to install a heat pump should be based on a balanced assessment of carbon savings, operational costs, building suitability, and long-term strategic goals. By asking the right questions and ensuring all costs are captured up front, you can make informed choices that deliver both environmental benefits and best value for money.