How To Keep Heating & Hot Water Systems Cost Effective By Staying Practical!

27 Apr. 2019

Written by Neil Marsh MCIPHE RP RHP EngTech

Energy efficiency is a well discussed topic today! FORTHRIGHT does support the installation of efficient heating systems, however the common problem with the market place is a products efficiency is being pushed over sustainability and overall costs …

The reality is most manufacturers, installers the even the Government want you to regularly be exchanging and upgrading aspects of your heating system. A lot of legislation that has been implemented/changed has been designed to encourage this. For the economy and Government consumers regularly spending hard earned money is great, however for the consumer it is this constant spending (repairing and replacing defective products) that slows or prevents many people from spending money on what they would like to and/or saving more money.

We at FORTHRIGHT remember the days where vacuum cleaners, televisions, fridges, freezers, boilers and many other household goods could run for many years with no problems. We occassionally visit homes that shave working 30 year old appliances that have been fault free! We believe that a well built product that lasts many years will be more cost effective to the consumer and benefical to the enviroment than regular replacement which comes about from the modern system of selling. How many of you are confident that modern home appliances will last anything close to what they did in years gone by? The style of modern appliances and their performance has improved greatly over the years, but the lifespan is in decline. This is not happening by chance, manufacturers specifically design products to fail after shorter periods of time as it increases the amount of demand for these products. This means more money is generated by the businesses selling such products as there are more products being sold in the same period of time compared to older versions. Of course the Government will support this as more products being sold means more tax revenues and a stronger economy. On the other hand, the consumers need to get the best value possible from a product to keep unwanted expenditure to a minimum and this will envolve getting products that are cost effective and reliable as possible.

The modern day market places are mostly controlled by a handful of large international companies. Some smaller and medium sized companies do well in each market place, however the rules that govern each are generally controlled by the industry giants. These companies often sell varying products across varying markets and/or are part of groups that cover many markets, often giving them lots of control throughout several industries. Major shareholders in these companies have control of the businesses due to majority shares. Some share holders are majority share holders across a multitude of different companies, giving small groups of people large influences in varying industries.  There will be varying ethics and business strategies from businesses to business, however the common principle is the same, which is to get as large of a market share as possible and maximise how much the company makes from each of their customers. 

The boiler market is no different! Efficiency may have risen with boilers but the lifespan has decreased, part costs on average are getting more expensive and the amount of repairs the average boiler will need over it’s lifespan has increased. There is little data to support this as it is not something industry wants to promote, however FORTHRIGHT amongst others have noticed this trend and those with inside knowledge know that boiler manufactures are making larger profits than ever!

The Numbers

There are around 27 million homes in the the UK, of which 85% of that is made up of gas boilers. 152,00 new homes where registered in 2014 and boiler sales are currently at 1.66 million a year. This means the average boiler is currently being replaced around every 14 years. This is a big change from the days of the back boiler which would often run 25-30 years with minimal repairs.  If energy consumption in the world was the real agenda then the energy used in the production of boilers (and other products) would be taken into consideration and offset against the energy saved when the products are used. Some people may be unsurprised when we say that some “green” technologies use more energy to manufacture than what they will ever save/produce in their lifetime for the consumer. For products to be truly energy efficient they not only must perform efficiently, but they must last long enough to offset the energy used in the manufacturing process. Modern day efficiency is currently only measured from a point of use only. 

According to the HHIC the average boiler replacement was £2500.00 in 2010. Inflation has averaged around 2.5% since then, so expecting replacement costs to be around £2800.00 on average in 2015 would be a reasonable estimate.

Following a survey of it’s members, Which found the cheapest maintenance contract/policy for a boiler was £183.00 per year. Members who where surveyed who did not use maintenance contracts, who serviced their boiler annually whilst undertaking repairs as and when they where required where £50.00 a year better off on average than homes that where on this policy. This would put their average maintenance cost around £133.00 per year for non policy users.

Average gas bills according to Ofgem using 2014 prices where at £672.00 each year.

At today’s prices the annual average operational cost of a gas boiler that is not on an maintenance policy would as set out below:

£200.00 towards the replacement costs
£672.00 towards gas bills
£113.00 towards maintenance

Total: £985.00 & £1035.00 for people that use maintenance contracts/policies.

Over the next 10 years with a 2% inflation rate, the average operational costs of a gas boiler system that is not on a maintenance policy would be £10,785 and £11,333 for boilers that are on a policy that have had no chargeable repairs (excluded work)!

Please note that boilers do use a small amount of electricity to operate, however these costs would be negligible and that is why we have not included them.

Making Savings

To reduce operational costs as a home owner all 3 of the major expenses need to be addressed. The most straightforward saving is to avoid insurance/maintenance plan providers. In addition to average savings as advised by Which, additional savings can be made. You need to be aware that as tempting as maintenance/insurance policies for boilers and heating systems may sound they are there to make a business profit, not save you money! Only a small percentage of consumers work out better off financially over a 10 year period than people who maintain their own gas boiler systems. Every policy on the market place varies in the level of cover that they provide and all of them have exclusions and safe guards against expensive repairs!

FORTHRIGHT have undertaken lots of insurance/maintenance plan work over the years for several of the major suplliers and we can assure you that many customers where advised “not covered by policy”! This resulted in the customers having to pay for the repair in addition to their policy premiums. Taking all factors into account, we would expect this to save the average household £1200.00 over the 10 year period by not using a policy.

Large savings can be made by installing boilers with high warranty periods over boilers that do not. You MUST be careful with who you contract to install a boiler and read the terms and conditions of the warranty carefully before selecting an appliance. All warranties on the marketplace that exceed 12 months require an annual service by a Gas Safe registered engineer and all do not cover for installation defects or issues caused with sludge, scale or sediment. According to a leading manufacture, 60% of all warranty visits attended by their eingeineers where a result of poor installation. It is imperative that you contract a good engineer/company that will install the boiler to the manufacturers instructions, account other variables (like external controls) and power flush the system to approved codes of practice to ensure system durability and warranties remain valid throughout the term! At least 60% of heating engineers are not installing boiler correctly, from experience we can tell you that in reality it is much higher. If a boiler is correctly installed with a 10 year warranty, safe guards are implemented against freezing, the system is cleaned from any sediment and then protected from sediment formation, all old components are upgraded for new (radiator valves, external pumps, valves, controls etc) and a regular service is maintained, there is no reason why the system can go without a single chargeable repair in 10 years. Radiators, cylinders and pipework can last well in the excess of 40 years so long as external factors like frost and internal factors such as scale and sludge are not allowed to damage the system. Taking all aspects into account, with an average service price at £65.00 over the next 10 years, we would expect consumers who opt for a boiler with a 10 year warranty, have it correctly installed and have aspects of the system upgraded  where required (valves, controls etc)  tp save £480.00 over the 10 year term on systems that are not on any maintenance plan who service their boiler anually and in the excess of £1630.00 for those that where on such plans.

Another important factor is boiler quality. If you purchase a boiler that has a good build quality it is more likely to have less repairs and last longer than a cheaper counterpart. Installation can have a huge impact on the durability of an appliance, so ensuring that you use a quality installer is important. The difference between a good quality boiler and a budget boiler can be as much as £300.00, but we can assure you that  budget boilers will cost more to run than a good quality appliance made by a reputable manufacture. For this reason we would advise that you stay clear of budget boiler manufactures like Biasi, Aristion, Halstead, Ferroli, Sime, Heatline, Ravenheat or anything similar. These manufacturers may charge less for their boilers but they are made of a lower quality  and the costs they charge for boiler spares can exceed as much as four times the cost of similar parts from other manufacturers like Ideal, Baxi, Potterton, Worcester, Vaillant and Glow Worm that generally produce better boilers. Some of the best built boilers on the market today are not the most expensive! The market is full of hype and make believe and the engineering/plumbing community has a lot to do with this! Installers often base a good boiler on how it looks, how easy it is to install, how light it is, scheme intensives (cash back, points etc) and other things that do not really matter to the consumer. What really matters to the consumer from a economic point of view is installation and purchase costs, reliability, warranty period, efficiency and the quality of the installation. We would strongly advise that you take the advice of an honest installation company with a solid background in maintenance and repair as companies like this can best advise you on what products have the best build qualities andt track records. Most boiler installers know little about repairing and maintaining boilers and have little experience in doing so. Some of the best built products on the market today are standing in the shadows of appliances that are not as good as them as a result of advertising and hype.

Boiler efficiency is an important factor from a user point of view as it will effect bill costs, however as a consumer getting wrapped up in negligible efficiency differences is a pointless exercise as any savings will be minimal.  We would advise that focus more on the build quality of the boiler as most modern boilers are similar in efficiency. One thing that you will not hear from most installation companies and boiler manufacturers is how a boilers efficiency is drastically effected by the system that it is installed and how the overall efficiency of your system is effected by its design and insulation retention of the property. Most old systems where designed to run at higher operational temperatures. Modern condensing boilers need to run at lower system temperatures to maximise on efficiency. If you install a new boiler onto an old radiator system and set the boiler to run at the lower efficient temperatures the radiators will often fail to give out the required amount of heat and fail to heat the property sufficiently. As the operational temperatures of a system decrease, radiator size needs to be increased to ensure the outputs of the radiators match the requirements of the room or the rooms need to be better insulated to reduce heat loss. By failing to have lower system temperatures in a modern condensing boiler you could reduce the efficiency beyond 10%.  Modern radiators are better designed than older versions. They often contain less water, have better designes and have a larger surface area which means radiator outputs have improved from older versions of the same size. Radiator sizes may need to be increased as much as 50% to ensure that modern boilers can run at the lower temperatures and achieve higher efficiency rates. Without calculating the requirements of your property you are reliant on the heating company that you contract to undertake the work. Very few companies can design and size systems effectively and most do not even bother to factor this in when offering a replacement as they just want to sell you a new boiler, install it and turn a profit. Most properties have undersized/oversized boilers and/or radiators, both which effect efficiency and performance of the system. Over sized boilers also will cause increases in installation costs. Another common fault in households is the wrong type of boiler system used, resulting in poor performance and higher gas bills. For example, using a combination boiler in a household with high hot water demand will cause significant increases in gas use over using well installed cylinder based system.  The average property could save as much as £70.00 a year on their gas bills by having correctly sized radiators and hundreds of pounds could be saved in energy by using a suitable system over one that is not.

System efficiency is effected by many variables. Some major factors in system efficiency are:

Cylinders: Having a un-lagged cylinder can loose as much as 26kW a day. Older insulated versions can loose as much as 10kW a day where as modern cylinders can loose as little as 1.5kW a day! At £0.04 per kilowatt with a boiler averaging a 80% efficiency, savings as much as £430.00 a year could be made depending on the existing cylinder type and what it was replaced with.

Controls: Correctly installed and set room stats and thermostatic radiator valves can make a huge difference in the running costs of the system. The energy saving trust advise that the average property can save as much as £165.00 on their annual gas bills by having these controls correctly installed and set. Modern thermostats and weather compensation controls have the ability to increase efficiency further, however the cost and products life span need to be taken into consideration. We regularly install a durable programmable stat that allows for high levels of control that costs  £60.00. When these are installed and set correctly they can make significant savings to the consumer over systems without stats. There are some controls on the market that can cost as much as £100.00 more and have marginal increases in efficiency, but the negligible savings made often prevents the additional purchase costs being recovered in the products lifespan. We would advise to always be practical with controls.

Installation: This also plays a big role in system efficiency. Ensuring pipes are well insulated in areas such as loft spaces and outhouses to minimise heat loss from the system, minimising pipe lengths and diameters in areas such areas and other factors effect overall system efficiency. Only a good installation company will factor this in.

The heat retention in a property has the largest effect on how much gas will be used by a system will use whilst in use to heat the property. You can have the most efficient system on the market but if your home is poorly insulated the operational costs will be high as your system will regulary be replacing lost heat. When the inside temperature of a property is greater than the outside temperature heat will transfer from inside to out. The greater the difference in temperature and lower the resistance (insulation) the quicker heat will transfer,resulting in more energy lost and the more energy you will need to use maintain heat in your property. Modern building methods have reduced heat loss as much as 75% over traditional methods, with improvements in technology and methods further reductions in heat loss can be made.  If you reduce the energy lost in your home by 75% then your heating bills will decrease equally with he same amount of use. Heat loss in a property comes down to how well it is insulated and how the house is used people that live there. People that leave windows open whilst using the central heating can expect higher heating bills than those that close them. By having a sensible approach to the use of heating in a property and increasing the amount of insulation you can make large increases in energy savings. Often this can be the most cost effective way to reduce your energy consumption, however savings will vary depending on the property and how much you are willing to invest in insulation. We would always advise you start with the most cost effective solutions first as these will give you the best returns on your investment. Savings can often be made with small adjustments into attitudes/behaviours in the home.

Installation costs are important. FORTHRIGHT is based in an affluent area and our average boiler exchange (including valves, power flush and controls) averaged at £2400.00 for last year.  With over 95% of our installations benefiting from a 10 year warranty, our customers are averaging up a £480.00 saving on maintenance and boiler replacement costs over the first 10 years on the average household who where not on maintenance plans and for those that are they are saving in the excess of £980.00. In addition to this there are the energy savings that where made by having a more efficient system and showing the customer how to use it correctly. This could be as much as £200.00 a year in the average property. This is achieved without making any modifications to the radiator system or using advanced controls. By contracting energy providers and large national companies to install new boilers/systems and/or using finance to pay for your heating system, costs can be much higher than our average price. Regional location will play a part in costs as installation costs, in London average installation costs are higher on average than what they are in Liverpool. It is equally important that you are wary of cheap installation bids as often cheap installations will sacrifice quality to get the price down. This often results in invalid warranties and further costs to the consumer at a later date due to premature part failures and performance issues. We can not begin express the sheer volume of customers we have attended who required expensive corrections/maintenance work as a result of a poor quality installation by a third party.

FORTHRIGHT regularly designs highly efficient systems. Although boilers are not cheap, in comparison to other options you often do not need to spend large amounts of money to make significant improvements in the performance and efficiency of the system. You do need to employ the right company who looks at all the angles and takes the time to design the system correctly as any differences in costs between a professionally installed, well designed system and budget system are often recovered quickly in opperational costs. The larger a property, the greater the savings that will come about from a well designed system. If you have a large property you need to be especially diligent in energy efficiency as the difference in operational costs can be several hundreds of pounds a year or more between well and poorly designed systems.

Renewable Technology

Although some renewable technology has the ability to produce impressive reductions in energy consumption, when all costs are factored in the humble gas boiler is still one of the most cost effective solutions, especially when retrofitting. For example, according to the Energy Saving Trust two of the most efficient technologies on the market are air and ground source heat pumps. Air source are expected to cost between £7000-11,000 to install in a 4 bedroom home and a ground source is expected to cost between £11,000 and 15,000. The annual savings for energy use against a gas boiler system is expected to £295.00 – £425.00 for the air source and £410.00 – £595.00 for the ground source in homes of this size. The average UK home is 76m2 and the average floorspace of a 4 bedroom home is 117m2 making it over 50% bigger. By increasing the installation cost of the average gas boiler system by 50% we can estimate the installation costs to be around £4,200 in a 4 bedroom home. If also increase the average gas use by 50% then we can expect costs of £1008.00 in  the average 4 bedroom home. The mean energy savings made by the use of a heat pumps would be £431.00 against gas boilers, saving £577.00 pounds a year against a gas boiler system. This means that the installation and energy use of a gas boiler in a 4 bedroom property over 10 years will be approximately £13,080 plus maintenance costs. The installation and energy use of a heat pump in a 4 bedroom property over 10 years, working on the speculation that the heat pump will last 14 years will cost £12,167, plus maintenance costs.

Maintenance between the two is difficult to compare. Although regular servicing of heat pumps is not required, they will require maintenance from time to time, of which the associated costs will be higher as heat pumps cost more. It is not uncommon for heat pumps capable of giving out 16kw of heat to exceed the purchase cost of quality gas boilers by 6-7 times! From experience, we can assure you that major component failure in a heat pump can cost several thousand pounds to repair! As with boilers warranty periods vary and installation defects and external factors are not covered under the warranty, hence why it is very important that you use an experienced and reputable company or it could cost your dearly! There are heat pump products offering a 10 year warranty, but expect to pay a premium for these products, most products are offering warranties of 2-7 years. Factoring in maintenance costs, we would expect heat pumps with a 2-4  year warranty to have simular total maintenance costs (servicing costs) to that of a boiler with a 10 year warranty over a 10 year term providing they both are installed to manufacturers instructions and best installation practices are ensured. 

The UK Government currently offers the Renewable Heat Incentive (RHI) which is a scheme where you can claim quarterly payments from the Government on the energy you use (each Kilowatt) over a seven year period whilst using your renewable heating product. Strict rules apply, however the payments can contribute significantly to the installation costs of the system which could make in more financially viable than a gas boiler, however you will still need the money to invest into this system to start with and you will need to be able to afford the maintenance of these systems, which can get expensive. 

Currently, heat pumps will provide a greater return in the long run against existing systems. If heat pumps become more widely used the costs to purchase these appliances should come down, bringing down part costs and installation costs. Efficiency will increase as technology improves, however the scope for improvement may be limited.  The replacement of a heat pump like for like will cost far less than converting an existing gas boiler based system, therefore reducing installation costs in the future as units are replaced. The large initial investment and an expected 20 year return plan (without RHI) is likely to scare off the average person from investing in these systems, hence why many households are still replacing existing systems with gas boilers. Modifying old high temperature systems (traditional gas systems) for the low temperatures of heat pumps can be very disruptive when retro fitting into an existing property which needs to be factored in as large, unattractive radiators can cause installation and practical issues, especially in small properties. Alternative methods such as underfloor heating can be used, however they can get expensive and can be disruptive also. Temperature heat pumps that can be retrofitted onto existing systems are an option, however as the operational temperatures rise with a heat pump the efficiency decreases which needs to be factored in and the expectations of the consumer need to be managed. 
Another thing to consider is that due to gas fuelling the majority of  heating systems, investment into research and development in this sector will be higher than it is in heat pumps as their market share is under 1%. This is likely to result in greater developments in gas fuelled appliances which could result in highly efficient gas fuelled products in the future. Heat pump technology may become redundant as a result of this, however it is possible these systems will combine in the domestic sector as gas fired heat pumps do exist in the commercial market and give better returns. There are no guarantees that in the long haul heat pumps will be the most cost effective system or not replaced with something else. Other micro-generation and gas fuelled technologies are being improved and new systems are being developed, it is possible that these technologies will rival or even surpass heat pump technology in the years to come.

For now we would advise most people to stick with a gas boiler system. The problem is not so much with the technology of the heat pump costs combined with the attitude of the market place and the installers. Heat pumps (domestic especially) are no different than any other consumer based product, they are not built to last. Some are better than others, but most, if not all companies factor in design weaknesses and they will require maintenance. As long as you are prepared for this and can afford the maintenance on your heat pump this is fine, however we at FORTHRIGHT know how much many people can be stretched by a £200.00 repair bill on a boiler and with heat pumps they can be much more. In addition to this, many installers are not installing and calirating these systems correctly and as a result the systems are expensive to run and/or not providing sufficient heat. You need to be very carefull with who you chose to install a heat pump,

If you are looking to benefit from energy savings made from other technologies, both electrical and gas based heating and hot water systems can supplemented and benefit from increased energy efficiency through wind turbines and solar systems. These require little maintenance, can be intergrated with existing systems more easily, when installed correctly give good outputs of energy and  they can be bought at a reasonable cost (when cost to return rates are compared), especially when payments for excess energy produced are factored in. With enough investment it is possible to become energy neutral and even generate income selling energy back to the grid (Solar PV & Wind) under current schemes with using one or more of these energy production methods. 

To Sum Up

Always remember that the life expectancy and maintenance costs over the lifespan of any energy producing system will be major factors in total running costs. These costs are often from consumers and if you want to keep costs down you must look at the best overall solution for you and your property. Gas boilers are here to stay for the foreseeable future. For most people in the UK gas boilers are still one of the most overall cost effective heating and hot water solutions and this is likely to remain for a good number of years. Ensuring that you use a quality installer and investment in proven products that produce good cost to result returns such as insulation and effective controls look room stats and thermostatic radiator valves with sensible use will provide the best results for most.

Resource Links:
Is it worth paying for boiler cover?
How big is a house? Average house size by country