Return on investment for heat pump systems: when will you start saving?
Did you know that 75% of the energy a heat pump system uses is completely free? Despite the high initial investment, energy savings ensure it becomes more cost effective than any other climate control system sooner rather than later.
Heat pump systems are changing the rules of the game for climate control in our homes. Efficient, sustainable, and increasingly accessible, this technology raises many questions, especially about its return on investment. We're not going to lie to you: it isn't the cheapest system you can install. But it's definitely the one that can offer you most savings in the medium to long term. Here we'll explain why.
What does this article cover?
How much can I save with a heat pump system?
For a start, a heat pump system is considered a renewable energy source. What does this mean? That, while a traditional heating system such as a gas or oil boiler consumes fuel to generate heat, the heat pump system simply extracts thermal energy from the outside air (yes, even in the depths of winter!) and transfers it into your home. That's one point in its favour.
However, what it does require to perform this process is electricity. Luckily, the magic of a heat pump system lies in its efficiency. To give you an idea, for every kWh of electricity it consumes, it can generate between 3 and 4 kWh of heat. In other words, the energy performance of heat pump systems is typically around 300% to 400%. Not bad, right?
Plus, Daikin Altherma systems' Inverter technology reduces energy consumption by 30% compared to other On/Off climate control systems. All this leads to more efficient and rational energy use, significantly lowering household electricity costs.
How much money will you save? That depends on what system you had before and how much it consumed. However, as a general rule, installing a heat pump system can save over 50% of costs per year, with the system paying for itself in around 4 years. And let's not forget that, besides providing climate control for your home, a heat pump system also supplies domestic hot water, offering a dual benefit.
Practical example:
Imagine you previously spent around €1,500 a year on heating with oil or around €900 with natural gas. With a heat pump system, that cost could be reduced to €450-€600 per year. Now think about what you could do with those €900-€1,000 you'd save each year. A beach holiday? An extra treat? You decide.
When will you notice the savings?
Here's the big question. Switching to a heat pump system requires an initial investment, and it's normal to wonder when that investment will start to pay off.
A heat pump system can cost between €8,000 and €15,000, depending on factors such as the size of your home, the equipment selected, and whether additional work is needed to adapt it. Although it sounds like a big expense, don't be put off. Remember the following two good reasons:
Immediate monthly savings:
You will see a clear reduction in your energy bills from the very first month of use. For example, if you previously spent €150 a month and now pay €50, then you're already putting money back in your pocket.
Public grants and subsidies:
Many countries offer incentives to encourage the use of renewable energy, which can significantly reduce the initial cost of installation. In Spain, for instance, there are several grants covering up to 40% (and sometimes even more) of the investment.
Accumulated savings typically surpass the initial investment within 5 to 10 years. But remember, this is just an average, and variables such as electricity prices, fossil fuel prices, and the size of your system all have an impact on these numbers.
How to calculate the return on investment?
Calculating the return on investment (ROI) for a heat pump system isn't complicated. You can use this basic formula:
ROI (years) = Installation cost / Estimated annual savings
Let's say you invest €10,000 in installing a heat pump system and save €1,000 a year compared to your previous system. Your ROI would be:
€10,000 / €1,000 = 10 years
In this example, you'd start to see a net saving from year 10. Naturally, this period can be reduced if you have a grant (e.g. €4,000). In that case, we'd be looking at a return in just 6 years.
From that point on, everything is profit, plus you're using environmentally friendly technology, which is also worth a lot.
Heat pump systems mark a significant turning point in how we approach home climate control. Not only is it a cheaper long-term option, but it also helps reduce our carbon footprint, a key point in combating climate change.
As we continue to move towards a more sustainable world, investing in efficient technologies like heat pump systems isn't just an economic decision, it's an investment in future well-being. And, as a bonus, your wallet will thank you too.
If you're thinking of taking the plunge, now's the time. Because saving is important, but saving while looking after the planet is even better.