Households running a heat pump and an electric vehicle are saving an average of £1,180 a year compared with homes using gas for heating and hot water and petrol for their cars, according to analysis published by the Energy and Climate Intelligence Unit (ECIU) on 5 July 20221. The figures cover the year to May 2022 and were updated to the end of June as petrol prices rose1.
The ECIU, a non-profit organisation that describes itself as supporting informed debate on energy and climate change, compared homes with better insulation, a heat pump and an electric car against homes with average insulation, a gas boiler and a petrol car1. It found that energy prices contributed 3.2 percentage points of the 9.1% consumer price inflation rate reported by the Office for National Statistics for the year to May 2022, but only 2.3% for the electric household, which it describes as almost a third lower1.
The analysis sets out several components of the saving:
| Measure | Figure |
|---|---|
| Overall saving, May 2022 prices | £1,000 a year, up from £620 a year earlier2 |
| Overall saving, end of June 2022 | £1,180 a year1 |
| Heat pump versus gas boiler heating | More than £220 a year cheaper1 |
| Electric car versus petrol car, charged at home | £780 a year cheaper in the year to May, rising to £960 by late June1 |
| Projected saving after the October price cap rise | Around £1,600 a year1 |
Gas price inflation of 97% under the price cap that changed in April was almost double that of electricity, while petrol price inflation of 30% widened the running cost gap between electric and petrol cars2. The ECIU expects the saving to grow to almost £1,600 a year once gas prices rise again in October, followed to some extent by electricity prices2. Ofgem's latest forecast put the average dual fuel bill at £2,8001.
"Homes and cars powered by electricity are not just cheaper to run, they're much less polluting and are increasingly running on British offshore wind. These net zero technologies are allowing more and more homes to break free of the oil and gas markets that have Putin's hands on the levers, doing their bit for their own and the UK's energy security."
The ECIU states that heat pump prices start at £4,000, with a typical price of £6,000, supported by a £5,000 grant from the Boiler Upgrade Scheme, which it says can bring the price down to the level of a gas boiler1. It adds that the Government is working with industry to reduce the cost by up to 50% by 2025 and to parity with a boiler by 20301. On electric cars, it notes that grants of £1,500 for new electric vehicles have ended, and that 40,000 battery electric vehicles changed hands on the second-hand market in 2021, up 119% on 20201.
Why it matters for households
The analysis frames the gap as a question of exposure: a home that heats with gas and drives on petrol carries the full weight of gas and oil price movements, while a home using electricity for both carries less of it, because electricity prices under the cap rose less than gas2. For a household considering a heat pump, the running cost comparison is only part of the picture, since the upfront price and any grant affect the total outlay; the Boiler Upgrade Scheme grant is the mechanism the ECIU cites for closing the purchase price gap with a gas boiler1. Insulation also appears in the analysis as a contributor, with the ECIU stating that even a few hundred pounds spent on insulation is paying back in record time1. The wider claim is about energy independence: the ECIU argues that homes avoiding fossil fuels are less exposed to international gas and oil markets, and puts the national figure at UK households spending at least £35 billion a year more on heating and car travel than they would in an electric future1. The analysis does not report the position for households that cannot install a heat pump or charge a car at home, and no figures for those cases have been reported1.
What happens next
Energy bills are set to rise again in October, with the average dual fuel bill likely to reach £2,800 according to Ofgem's latest forecast1. The ECIU expects the saving for households avoiding fossil fuels to grow to almost £1,600 a year once that happens1. It also notes that petrol price volatility has led some to forecast prices of well over £2 per litre1.