These £5,000 grants can help small business owners in England and Wales to mitigate the upfront cost of low-carbon heating technologies when they come to replace fossil fuel systems including oil or gas boilers and electric heating. You can find out if you’re eligible here.

Air source heat pumps harvest renewable energy in the form of heat, reducing scope 1 emissions (direct greenhouse emissions from fuel). The pumps condense heat and move it to where we need it. This heat is renewable because it comes from the sun, which warms the ground and atmosphere.

To have a fully zero-carbon system, the electricity used to move the heat to where it is needed must also be renewable.

An air source heat pump works like a fridge in reverse, extracting heat from the outside air in the same way a fridge extracts heat from its inside. The air is passed over a closed system that contains a refrigerant and turned into a gas, which is then compressed back into a liquid, raising its temperature. It then transfers this heat to the heating and hot-water circuits of the building.

The air outside doesn’t even have to be warm, although as the external temperature drops, a heat pump has to work harder to extract heat from the air. At really low temperatures, it also might need to be supplemented with electric heating.

There are two types of air source heat pump available:

• air-to-water
• air-to-air

Air-to-water heat pump

This is the most common type of air source heat pump. An outside unit absorbs heat from the outside air and transfers it a unit indoors that connects to the central heating and water supply. Air-to-water heat pumps work best with underfloor heating or large radiators. Note that in a very under-insulated building, a heat pump would need to be larger/and or operating harder, which might make it less economical.

Air-to-air heat pump

This type features a unit that heats up the air outside and then pumps it into the building via a fan unit as heating. It does not heat water, however, and is more suitable for smaller buildings. If this is the type of air source heat pump you wish to install, you may need to upgrade your insulation. On the plus side, it’s easier, and cheaper, to install than the air-to-water heat pump.
 

Since 2011, the installation of an air source heat pump in a domestic property has been considered to be a permitted development, providing it complies with Microgeneration Certification Scheme standards or equivalent, does not exceed 0.6 cubic metres, and is the sole air source heat pump on the property. Installations of air source heat pumps on non-domestic land may require an application for planning permission, so it’s best to check with your local authority.

There is a wide price range – cost depends on the type and size of the system you use as well as insulation costs. Zero Carbon Business suggests average installation costs are likely to be:

• air-to-water heat pump: £7,000 – £13,000
• air-to-air heat pump: £1,600 – £3,100

Running costs are dependent on the size of your property and how well insulated it is. With regular maintenance, an air source heat pump could last from 15 to 20 years.

The Department for Business, Energy & Industrial Strategy (BEIS) says heat pumps are cleaner and more efficient than fossil fuel boilers. They can deliver more than three units of heat for every unit of energy input compared to less than one unit of heat per unit of energy delivered by traditional gas and oil boilers.

It is worth noting that cost savings are currently marginal or non-existent.

In carbon terms, however, heat pumps have lower emissions than gas boilers, and this should improve over time as the grid decarbonises.

• Could lower your fuel bills
• Will cut carbon emissions, especially if combined with another renewable energy source such as solar panels or a wind turbine
• Can heat your property and water supply, depending on which type you install

You can receive a discount on climate change levy (CCL) taxes paid to your energy supplier by signing a climate change agreement (CCA). This is a voluntary agreement with the Environment Agency to reduce energy use and carbon emissions.

You can find out if you’re eligible and how to apply here.