14.5 Times cheaper than kerosene

14.5 Times Cheaper Than Kerosene

Let’s calculate how much we pay for home heating and hot water. In Ireland, you can heat your home using various methods and fuel types. The main ones are kerosene, bottled gas, and, of course, electricity.

I understand that this isn’t particularly relevant right now due to the warm weather and summer, but things will change soon, and we need to be prepared.

So, 1 kWh obtained from burning kerosene will cost us €0.11.
1 kWh obtained from burning gas will cost us €0.32.
1 kWh of electricity costs us €0.26.

Now let’s calculate the cost price of 1 kWh obtained from a “Mechanical Heat Pump” unit with a thermal capacity of 30 kW and a cost of €17,000.

The service life of the unit is at least 25 years.

  • Annual heat generation: 90,000 kWh (hot water heating up to 50°C).
  • Amortization of the unit (cost of acquisition calculated per year)
  • We need to distribute the cost of the unit over its entire service life.
  • Annual amortization = Unit Cost / Service Life
  • Annual amortization = €17,000 / 25 years = €680 per year
  • Total annual heat cost
  • Total annual heat cost = Annual amortization = €680
  • Cost per 1 kWh of heat

Now let’s divide the total annual cost by the amount of heat generated per year.

  • Cost per 1 kWh = €680 / 90,000 kWh = €0.00755 per 1 kWh

Conclusions:

As you can see, the cost per 1 kWh of heat produced by a “Mechanical Heat Pump” is 14.5 times cheaper than kerosene, 42 times less than the cost of gas, and 34 times less than the cost of 1 kWh of heat obtained from electricity in Ireland.

Important Note:

This calculation is simplified. In real life, you would need to consider:

  • Cost of installation (purchase and installation): I’ve indicated €17,000, which is a good starting point.
  • Operating costs:
  • Maintenance and repair: Regular maintenance, replacement of parts, possible repairs over 25 years. This is all company profit that can be calculated in different ways.
  • Insurance: If applicable.
  • Inflation: The cost of kerosene and electricity may change over time, and as history shows, it always increases. However, once a “Mechanical Heat Pump” is installed, the cost does not change.
  • Loan interest: If the unit is purchased on credit.