Are heat pumps now more expensive than gas again?

I have been thinking again over the last few days about whether we should (early) replace our existing gas boiler with a heat pump. What somewhat dissuaded me from this in principle is also the fact that the subsidy (in a reasonably adequate amount) only exists if the gas boiler is at least 20 years old. But well, pointless regulations and laws – side issue. I am also very satisfied that we chose gas for the past. Just for the screed heating alone, we consumed dozens of kWh and with a heat pump you would have to use electric heaters (annual performance factor = 1); until spring 2022, we mostly paid under 5 cents, at the very end just over 5 cents.

We currently still have a fixed contract with price lock at 9.4 cents for gas and 30.6 cents for electricity. Now I looked at where we could switch once the price lock expires:
- 8.2 cents gas
- 31.0 cents electricity
(each again with 12 months price lock)

This results in an implicit annual performance factor of 3.78, from which point onwards the heat pump is better. Yes, there are basic fees, on the other hand there is also the expected lifetime where everyone currently still claims that the heat pump will not last 30-40 years, as gas heating has proven long ago in practice.

I used the calculator from the Federal Heat Pump Association, low-energy house, 35 degrees flow temperature, VWL 75, 40-50 percent hot water share (corresponding to our current consumption – we have 24/7 circulation and do not want to give that up; on the other hand, the building was built to KFW55 standard back then – just not certified, i.e. for example we have no solar collectors on the roof because as a compensatory measure we have a well-insulated house [monolithic, but good windows, good roof insulation, ...]), 60 degrees storage temperature (here too: 60 degrees is the optimum temperature against legionella – we are not going to weigh a few cents per day against our health) and this results in an annual performance factor between 3.66 and 3.78.

One could now also calculate with heat pump electricity, but that then has shutdown times, right? Would possibly be problematic with the 24/7 circulation? That would be 22.3 cents and, of course, basic fees, second meter, etc...

22.3 / 3.78 = 5.9 cents for one kWh of heating energy. Okay – one saves about 414 euros per year at 17,000 kWh. Possibly with problems due to shutdown and/or the lifetime of the heat pump (+ initial investment ~20k).

If you calculate against the heat pump, the result will also be against the heat pump. But that's just a side note. You at least don't seem convinced by the heat pump.

The question is not what gas and electricity cost now, but in the future. Gas is supposed to become significantly more expensive due to the climate transition. The question is whether this will really happen or if there will be countermeasures again, and what will happen to the electricity price? The fact will be that the gas infrastructure will be kept available for fewer and fewer users. Accordingly, the fixed costs alone are likely to increase significantly, regardless of what the world market price, levies, and taxation do.

We consciously decided against gas 10 years ago and are satisfied. I don’t need 60° water temperature and also didn’t have exorbitant costs when heating the screed.

However, solely because of the resource usage for manufacturing the gas heating system, I would only switch when it is really necessary, as long as there is no significant imbalance in gas costs compared to the heat pump in maintenance, or if it is foreseeable that the gas heating system will give up.

I can no longer fully follow your line of thought from the halfway point, but I do see a fundamental error: Sustainability does not mean throwing existing systems out the window and replacing them with heat pumps and electric cars! Provided the system does not cause significant unpriced costs in one area, it is wrong to replace the system.

I also find the perspective for the calculation somewhat too narrow: The acquisition costs of the gas heating system and the opportunity costs of continuing to operate the gas system are not taken into account. The 20-30,000€ will either be spent today or invested with interest for 10 years, which shifts the profitability further toward the gas heating system. At the same time, the calculation could also shift significantly in favor of the heat pump if there were a cheap photovoltaic system on the roof.

In any case, there are so many ifs and little gain in comparison that, from my point of view, it only makes limited economic sense because of the subsidy and is definitely not in the spirit of sustainability!

If you calculate against heat pumps, then you’ll also end up against heat pumps. But that’s just aside. You don’t seem convinced about the heat pump, at least.

I try to calculate realistically based on our actual conditions. Example winter 2022/2023 – back then, out of solidarity, we also turned the temperature down a bit. It was always affordable for us price-wise. We then turned it back up again last winter. We could manage to strain ourselves for a year, but not permanently.

The question is not what gas and electricity cost now, but in the future. Gas is supposed to become significantly more expensive due to the climate transition. The question is whether that will really happen or if there will be countermeasures, and what will happen with the electricity price? The fact will be that the gas infrastructure will be maintained for fewer and fewer users. Accordingly, the fixed costs alone are likely to rise significantly, regardless of what the world market price, surcharges, and taxation do.

If that happens, adjustments can still be made.

We deliberately decided against gas 10 years ago and are satisfied.

At the time, everyone around us said: Gas heating can also be done later because hydrogen will be used instead of gas, and hydrogen will eventually be cheaper than gas anyway. Today's forecasts say something quite different again.

I don’t need 60°C water temperature and didn’t have exorbitant costs for screed heating.

60°C and circulation minimize the risk of legionella (and circulation is very comfortable and is mandatory in every multi-family house – so a single-family house without circulation would be a step back in terms of comfort). As with risks in general: they do not have to occur. That’s clear.

Just because of the resource use for the production of the gas heating system, I would only switch if it is really necessary, as long as there is no significant imbalance in operating costs between gas and heat pumps or if it is foreseeable that the gas heating system will break down.

At the moment, as in recent years, it still looks like gas heating is cheaper. I still wouldn’t install a new one. Regarding prices, I also think it was right back then to choose gas heating. It doesn’t cost 2k, plus 2k for installation – so about ~4k (we also had a cost estimate, with which we didn’t build, that broke it down for us back then – 5k gas heating including DHW storage tank and 5k for solar collectors, which we don’t have; ground-source heat pump including tank and drilling was 40k back then).

I am just considering whether switching is currently worthwhile. I have already mentally written off the 4-5k for the gas heating because we heated for many years at 4.5 cents, later 5.0 cents, and it has long since amortized two or three times over (also considering the higher interest costs if we had gotten the expensive heat pump – then the loan would have been higher).

From halfway on, I can no longer quite follow your train of thought, but I see a fundamental mistake: sustainability does not mean throwing existing systems out the window and replacing them with heat pumps and electric cars! Provided the system does not cause large unpriced costs in one place, it is wrong to replace the system.

Oh well, but that’s exactly the mainstream. Combustion engines go to Eastern Europe, where they will run a few hundred thousand kilometers instead of here. But first, a new car is produced – that is the plan when combustion engines are disadvantaged (with special parking spaces for electric cars, partly with their own “eco lanes” in some cities etc. – that only achieves: even more consumption). The story with inner-city driving bans for diesel (which then went to Eastern Europe, while new combustion engines were produced here) will surely repeat itself in a similar way soon (with yet another pretext to be invented, I think direct injectors were once an issue, weren’t they?).

I also find the perspective for the calculation a bit too narrow: the purchase cost of the gas heating system and the opportunity costs of continuing to operate the gas heating system are not taken into account. The 20-30,000€ are either spent today or invested for 10 years, which shifts the profitability further towards the gas heating system. At the same time, the calculation could also shift significantly in favor of the heat pump if there were an affordable photovoltaic system on the roof.

You are right. The electric car only makes sense with photovoltaics. Photovoltaics do not make sense compared to an ETF. Actually, the heat pump does not really benefit from photovoltaics because the heat pump needs electricity in winter and photovoltaics doesn’t provide anything then, i.e. self-consumption is already exhausted by household electricity. And in comparison photovoltaic with self-consumption vs. ETF, the ETF wins.

In any case, there are so many ifs and little profit in comparison, so in my view it only makes little economic sense because of the subsidy and is definitely not sustainable!

I just happened to think: Man – you wanted to check out heat pumps in spring 2022. Back then, everyone jumped on it, so I said to myself: I’ll check it later. I try to act as anti-cyclically as possible because it was completely clear that in spring 2022 simply moon prices were being asked.

Now in summer 2024, I think: Man, now that everything has normalized again, let’s recalculate. And look: 8.2 cents vs. 31.0 cents. Oops, it doesn’t pay off anymore!?

Hi, what you’re doing right now is deliberately calculating the heat pump poorly. That is just as sensible as calculating it favorably. What is actually right, you will only know in 10-20 years. I am currently considering something similar; we built with a gas heating system 8 years ago and I am thinking about prematurely getting rid of the gas heating. And it’s true, financially it certainly makes little sense right now to get rid of a functioning gas heating system and replace it with a heat pump. But like every investment, a heat pump is a bet on the future with many unknowns:

[*]The development of gas and electricity prices is hard to predict, but it is assumed that the ratio of kWh prices, which until 2022 was actually always about 1:4 (gas and electricity), will shift increasingly in favor of the electricity price in the future. [*]Yes, ETFs have averaged returns of 5-7% over the past decades. You can’t create an economic efficiency calculation for photovoltaics and/or a heat pump with that. But no one guarantees us that future returns will look like that. Such an overall world situation has never existed before, no one can predict where the journey is headed. [*]Installing a heat pump now will very likely protect you from having to switch to district heating at some point. Once the mayors along with municipal utilities realize that almost unlimited prices and profits can be realized by mandatory connections and that they can assign great contracts to their own people for implementation, a very, very large gold rush will break out. Just the connection to district heating in a few years will be on the same scale as the price of a heat pump today. Digging up the garden and laying pipes is simply expensive... And after that you are completely at the mercy of the pricing of the district heating operators. According to current legal opinion, a mandatory connection for a heat pump cannot be enforced. [*]If you wait until your gas heating breaks down, you will have quite a problem getting a heat pump at a good price in the short term. That will end with you installing a gas heating system again, which you will then have to replace with a heat pump after 3 years. That’s even more nonsensical. [*]A heat pump also doesn’t cost the €20-30k, as Dahlbomii writes. I have a complete offer here for €24k, of which 40% funding is deducted, leaving €14.4k. If I then factor in that, thanks to the possible cooling function of the heat pump, I can save the originally intended retrofit of an air conditioning system (only a minimal version in the living room), I come to about €10k cost. (Yes, that’s optimistic calculation...).

For me personally, points 3 and 4 are so weighty that I will probably go through with the heat pump topic in the next 1.5 years. Whether it is the economically best decision? Ask me again in 20 years... Best regards, Andreas

Now, in summer 2024, I think to myself: Man, now that everything has normalized again, let's do the math. And behold: 8.2 cents vs. 31.0 cents. Oops, it no longer pays off!?

Throwing away a functioning gas heating system with low consumption is, in my opinion, financial nonsense (whether a heat pump is ecologically sensible due to green electricity is open to debate). But if a replacement is actually imminent, I would never replace the gas heating today with a new one. Then go straight to a heat pump and calculate moderate heating costs for the future while gas will become disproportionately more expensive - that is my opinion and indeed that of many experts and professional property managers. I can already see the costs for CO2 emissions, which are still moderate at the moment, in the heating costs charged to my tenants. And if the price is released now (2026) or if certificates are deliberately kept small politically at the same time, you will be glad about the heat pump.