Heat Pump Running Costs: How Much Does It Really Cost to Heat Your Home?
On a standard electricity tariff, a heat pump costs slightly more to run than a gas boiler. On a dedicated heat pump tariff, it costs £200 to £400 less per year. The difference comes down to three factors: your electricity tariff, your home's insulation level, and the heat pump's efficiency (COP). This guide gives you exact running cost figures for every UK property type, explains how to minimise your bills, and shows when a heat pump makes financial sense versus gas.
Running costs by property type
Here are the annual heating costs for a gas boiler versus an air source heat pump at current 2026 energy prices. All figures assume a well-insulated property with adequate radiators.
| Property type | Heat demand (kWh) | Gas boiler | Heat pump (standard) | Heat pump (HP tariff) |
|---|---|---|---|---|
| Mid-terrace (2 bed) | 8,000 | £601 | £676 | £441 to £529 |
| Semi-detached (3 bed) | 12,000 | £901 | £1,014 | £662 to £794 |
| Semi-detached (3 bed, old) | 15,000 | £1,127 | £1,267 | £828 to £993 |
| Detached (4 bed) | 18,000 | £1,352 | £1,521 | £993 to £1,192 |
| Detached (4 bed, old) | 22,000 | £1,653 | £1,859 | £1,214 to £1,457 |
Gas boiler assumes 90% efficiency at 6.76p/kWh. Heat pump assumes COP 2.9. Standard tariff: 24.5p/kWh. Heat pump tariff: 15 to 18p/kWh effective rate. Based on Ofgem Q1 2026 price cap.
Use our heat pump calculator for a personalised comparison based on your property type, current heating system, and insulation level. Compare directly with our boiler vs heat pump tool.
The tariff is everything
On a standard tariff, a heat pump costs about 12% more to run than gas. On a heat pump tariff, it costs 20 to 35% less. Switching to a heat pump tariff is the single most important thing you can do to reduce heat pump running costs. Read our heat pump tariff comparison.
Understanding the maths
The running cost equation is straightforward: divide your annual heat demand by the heat pump's COP, then multiply by your electricity price per kWh.
At the Q1 2026 Ofgem price cap, electricity costs 24.5p/kWh and gas costs 6.76p/kWh. Electricity is 3.6 times more expensive than gas. But a heat pump with a COP of 2.9 produces 2.9 kWh of heat for every 1 kWh of electricity. So the effective cost of heat from a heat pump is 24.5p divided by 2.9, which equals 8.4p per kWh of heat. Compare that to gas at 6.76p per kWh (assuming 90% boiler efficiency, the real cost is 7.5p per kWh of heat).
On a standard tariff, heat pump heating costs 8.4p per kWh versus gas at 7.5p per kWh. Gas wins by a narrow margin. On a heat pump tariff at an effective rate of 16p/kWh, heat pump heating costs 5.5p per kWh, beating gas comfortably.
What is COP and why it matters
COP (Coefficient of Performance) is the ratio of heat output to electrical input. A COP of 3.0 means the heat pump produces 3 kWh of heat for every 1 kWh of electricity it consumes. The higher the COP, the cheaper the heat pump is to run.
Real-world seasonal COP for air source heat pumps in UK conditions typically ranges from 2.6 to 3.2. Ground source heat pumps achieve 3.5 to 4.5 because the ground temperature is more stable than air temperature. The COP varies throughout the year, being lower in the coldest weather (when the heat pump works hardest) and higher in milder conditions.
| Seasonal COP | Cost per kWh of heat (standard tariff) | Cost per kWh of heat (HP tariff, 16p) |
|---|---|---|
| 2.5 (poor installation) | 9.8p | 6.4p |
| 2.8 (average) | 8.8p | 5.7p |
| 3.0 (good) | 8.2p | 5.3p |
| 3.2 (excellent) | 7.7p | 5.0p |
| 4.0 (ground source) | 6.1p | 4.0p |
For reference: gas boiler at 90% efficiency costs 7.5p per kWh of heat at 6.76p/kWh gas price.
A well-installed air source heat pump with a COP of 3.0+ on a heat pump tariff produces heat at roughly two-thirds the cost of gas. A poorly installed system with a COP of 2.5 on a standard tariff costs more than gas. Installation quality and tariff choice make or break the economics.
How to reduce your heat pump running costs
1. Switch to a heat pump tariff
This is the biggest single lever. Tariffs like Octopus Cosy offer cheaper electricity during off-peak hours (typically overnight and afternoon). Since heat pumps can pre-heat your home and hot water during these windows, most of your heating consumption shifts to the cheaper rate. Effective rates of 15 to 18p/kWh are achievable. Read our full comparison of heat pump tariffs.
2. Insulate your home first
Every improvement to your insulation directly reduces the amount of electricity the heat pump consumes. Loft insulation (£300 to £600 DIY) and cavity wall insulation (£400 to £1,500) are the highest-value upgrades. For older homes with solid walls, solid wall insulation can reduce heat demand by 30 to 40%. Use our insulation calculator for your property.
3. Run the heat pump at low flow temperatures
Heat pumps are most efficient at low flow temperatures (35 to 45 degrees). Running at 55 degrees to compensate for undersized radiators significantly reduces COP. If your installer recommends radiator upgrades, the upfront cost is offset by years of lower electricity bills. See recommended smart thermostats designed to optimise heat pump scheduling.
4. Use the timer and thermostat correctly
Heat pumps work best when run for longer periods at lower output rather than short bursts at high output. Set your thermostat to a consistent temperature (19 to 21 degrees) and let the heat pump maintain it gradually. Avoid the temptation to turn it up high for a quick blast. See recommended smart thermostats with heat pump optimisation features.
5. Add solar panels
A 3 to 4 kW solar panel system generates free electricity during daylight hours, some of which can power the heat pump directly. With a solar diverter or smart controls, you can prioritise heating hot water when solar generation is highest. Read Are Solar Panels Worth It? for the full financial analysis.
Heat pumps vs oil and LPG
If your home is off the gas grid and currently heated by oil or LPG, the economics of a heat pump are much stronger even on a standard tariff.
| Fuel | Cost per kWh (fuel) | Cost per kWh (heat, inc. efficiency) |
|---|---|---|
| Gas (mains) | 6.76p | 7.5p |
| Oil (kerosene) | 6.8p | 8.0p |
| LPG (bulk) | 9.5p | 11.2p |
| Direct electric | 24.5p | 24.5p |
| Heat pump (standard tariff, COP 2.9) | 24.5p | 8.4p |
| Heat pump (HP tariff, COP 2.9) | ~16p | 5.5p |
Oil and LPG prices fluctuate significantly. Figures based on March 2026 market rates. Direct electric assumes no heat pump (simple resistance heating).
For homes on oil or LPG, a heat pump on a standard tariff already delivers comparable or lower heating costs. On a heat pump tariff, savings are substantial. For homes on direct electric heating (storage heaters, panel heaters), a heat pump cuts costs by 65 to 80%.
The £7,500 BUS grant makes the switch even more attractive. Use our boiler vs heat pump comparison tool to see the numbers for your situation.
Monitoring your actual costs
Once your heat pump is installed, track actual consumption to verify it matches expectations. See recommended energy monitors that show real-time electricity usage. Many heat pump systems also have built-in monitoring through their smartphone apps, showing COP, energy consumed, and heat delivered.
If your COP is consistently below 2.5, something may be wrong with the installation, the system settings, or your home's insulation. Contact your installer to investigate. Common issues include flow temperatures set too high, poor refrigerant charge, and undersized radiators forcing the system to work harder.
Compare your bills against the UK average energy bills to benchmark your performance.
Frequently asked questions
Are heat pumps cheaper to run than gas boilers?
On a standard tariff, slightly more expensive. On a heat pump tariff, 20 to 35% cheaper. The tariff choice is critical. Read our tariff comparison.
How much does a heat pump cost to run per year?
A 3-bed semi costs £1,267 on a standard tariff or £828 to £1,034 on a heat pump tariff. Use our calculator for your property.
What is COP and why does it matter?
COP measures efficiency. A COP of 3.0 means 3 kWh of heat per 1 kWh of electricity. Higher COP means lower bills. UK air source heat pumps typically achieve 2.6 to 3.2 seasonally.
Do I need a special electricity tariff for a heat pump?
Not required, but strongly recommended. Heat pump tariffs reduce your effective electricity cost for heating by 30 to 40%. See our tariff guide.
How does insulation affect heat pump running costs?
Better insulation reduces heat demand, directly cutting electricity consumption. Full insulation can reduce running costs by 30 to 44%. Loft and cavity wall insulation should always come first.
Data sources
Energy prices from Ofgem Q1 2026 price cap. Heat pump performance data from Energy Saving Trust. COP data from Heat Pump Monitor (community performance tracking).