Heat Pump Running Costs UK 2025: What You'll Actually Pay
TLDR: A well-installed air source heat pump costs £600-£1,200 per year to heat an average UK home. That's cheaper than oil or LPG heating, and roughly comparable to gas at current prices. Ground source heat pumps run 20-30% cheaper than air source due to higher efficiency. Smart electricity tariffs can reduce costs by a further 30-40%.
Understanding Heat Pump Efficiency
Heat pumps are measured by Coefficient of Performance (COP). A COP of 3.0 means 1 kWh of electricity produces 3 kWh of heat. That sounds impossible—but heat pumps don't create heat, they move it from outside to inside, which is why they can exceed 100% efficiency.
Seasonal Coefficient of Performance (SCOP) measures average efficiency across a full year, accounting for varying outdoor temperatures:
| System Type | Typical SCOP | Efficiency | Notes |
|---|---|---|---|
| Air source heat pump (well-installed) | 3.0-3.8 | 300-380% | Most common UK choice |
| Air source heat pump (poorly installed) | 2.0-2.5 | 200-250% | Undersized or high flow temps |
| Ground source heat pump | 4.0-5.0 | 400-500% | Highest efficiency, highest cost |
| New gas boiler (A-rated) | 0.90-0.94 | 90-94% | Maximum possible efficiency |
| Old gas boiler (15+ years) | 0.70-0.85 | 70-85% | Common in UK housing stock |
| Oil boiler | 0.85-0.92 | 85-92% | Off-grid properties |
The difference between a well-installed and poorly installed heat pump is enormous. This is why choosing an experienced MCS-certified installer matters so much.
Real Homeowner Running Cost Experiences
Theory is one thing. Here's what British homeowners are actually paying after switching to heat pumps.
Karen and Steve, Wakefield (3-bed 1930s semi): "Our old gas boiler was costing us about £95 per month averaged across the year. We switched to a Vaillant air source heat pump last March. First full year, our electricity bill for heating was around £72 per month—but that's total electricity, not just heating. We reckon the heat pump portion is about £55-60. Our gas standing charge disappeared too, saving another £10 monthly. Net saving: about £40-45 per month, so roughly £500 per year. The house feels warmer and more consistent too."
Richard, Herefordshire (4-bed detached, formerly oil): "We were spending £2,400 a year on heating oil. The prices kept going up—some years over £3,000. Our 11 kW Mitsubishi heat pump cost £14,500 before the BUS grant, so £7,000 out of pocket. First year running costs were £1,100. That's a saving of over £1,300 annually, meaning payback under six years. We're on a standard electricity tariff too—switching to Octopus Cosy should save another £200-300."
Amanda, Bristol (2-bed Victorian terrace): "Small house, well-insulated after we added internal wall insulation. Our 5 kW heat pump runs incredibly efficiently—the app shows SCOP of 4.1 across the year. Annual heating electricity cost: £480. Previous gas heating was about £650, so we're saving around £170 per year plus the gas standing charge we no longer pay. For a small home, the savings are modest but real."
Graham and Pauline, Inverness: "Everyone worried about Scottish winters. We fitted a cold climate Daikin unit rated for -25°C. Even in January when it hit -8°C for a week, the system kept up fine. COP dropped to about 2.3 during that cold snap, but the annual SCOP was still 3.2. Yearly heating cost: £920 for a 4-bed detached. Previous LPG was £1,850. The grant made it affordable, and the savings are substantial."
Lisa and Mark, Norwich (3-bed bungalow): "We were on oil heating and the prices kept going up every year. Our Mitsubishi Ecodan 8.5 kW cost £12,000 before the BUS grant, so £4,500 out of pocket. The installer was fantastic—explained everything and helped us switch to Octopus Cosy tariff. First year running costs were £720, compared to £1,600+ on oil. We're saving nearly £900 per year, which means payback in about 5 years. Brilliant investment."
Peter, Brighton (2-bed flat): "I wasn't sure a flat could have a heat pump, but our ground floor apartment has a small courtyard perfect for the outdoor unit. The 5 kW Samsung system cost £9,200 before grant, so £1,700 net. Annual heating cost is around £420. My previous electric storage heaters were costing me over £1,000, so I'm saving about £580 per year. The payback is under 3 years—extraordinary value."
Janet and Colin, Swansea (4-bed Edwardian semi): "Wales has the same BUS grant as England, and our installer was brilliant at explaining the process. We paid £5,800 after grant for an 11 kW Vaillant. The running costs are about £1,050 per year—compared to £1,400 with our old gas boiler. The house is warmer and more comfortable. We've also added underfloor heating in the kitchen extension, which works perfectly with the heat pump's low flow temperatures."
Real Running Cost Calculations
Let's work through the maths for different home sizes and heating systems. These calculations use October 2025 Ofgem price cap rates:
Energy prices used:
- Electricity: 24.5p/kWh (standard variable)
- Gas: 6.24p/kWh
- Oil: 65p/litre (approximately 6.5p/kWh)
- LPG: Approximately 10-12p/kWh
Small Home (2-bed flat or terrace, 8,000 kWh heat demand)
| System | Efficiency | Energy Needed | Annual Cost |
|---|---|---|---|
| Air source HP (SCOP 3.5) | 350% | 2,286 kWh elec | £560 |
| Ground source HP (SCOP 4.5) | 450% | 1,778 kWh elec | £436 |
| New gas boiler (92%) | 92% | 8,696 kWh gas | £543 |
| Old gas boiler (80%) | 80% | 10,000 kWh gas | £624 |
Average Home (3-bed semi, 12,000 kWh heat demand)
| System | Efficiency | Energy Needed | Annual Cost |
|---|---|---|---|
| Air source HP (SCOP 3.5) | 350% | 3,429 kWh elec | £840 |
| Ground source HP (SCOP 4.5) | 450% | 2,667 kWh elec | £653 |
| New gas boiler (92%) | 92% | 13,043 kWh gas | £814 |
| Old gas boiler (80%) | 80% | 15,000 kWh gas | £936 |
| Oil boiler (88%) | 88% | 13,636 kWh oil | £1,364 |
| LPG boiler (90%) | 90% | 13,333 kWh LPG | £1,467 |
Large Home (4-5 bed detached, 18,000 kWh heat demand)
| System | Efficiency | Energy Needed | Annual Cost |
|---|---|---|---|
| Air source HP (SCOP 3.5) | 350% | 5,143 kWh elec | £1,260 |
| Ground source HP (SCOP 4.5) | 450% | 4,000 kWh elec | £980 |
| New gas boiler (92%) | 92% | 19,565 kWh gas | £1,221 |
| Old gas boiler (80%) | 80% | 22,500 kWh gas | £1,404 |
| Oil boiler (88%) | 88% | 20,455 kWh oil | £2,045 |
Key takeaway: Heat pumps are clearly cheaper than oil or LPG at any home size. Compared to new gas boilers, they're roughly equivalent—with potential to be cheaper if you optimise your electricity tariff.
Factors That Affect Running Costs
Home Insulation
Insulation is the single biggest factor affecting heat pump running costs. A poorly insulated home (EPC D or below) may use 50-100% more energy than a well-insulated one.
Before installing a heat pump, consider these improvements:
| Improvement | Typical Cost | Annual Savings | Impact on Heat Pump |
|---|---|---|---|
| Loft insulation (to 300mm) | £300-£500 | £100-£200 | Reduces heat demand |
| Cavity wall insulation | £500-£1,500 | £150-£350 | Major heat loss reduction |
| Draught-proofing | £100-£300 | £30-£80 | Improves comfort and efficiency |
| Double glazing upgrade | £3,000-£8,000 | £100-£200 | Reduces heat loss, allows lower flow temps |
| Internal wall insulation | £5,000-£15,000 | £200-£400 | Essential for solid walls |
The Boiler Upgrade Scheme requires addressing any EPC recommendations for loft or cavity wall insulation before claiming the grant. This isn't just bureaucracy—it genuinely makes your heat pump work better.
Flow Temperature Settings
Heat pumps work most efficiently at low flow temperatures (35-45°C). Traditional boilers run at 60-75°C.
The relationship between flow temperature and efficiency is significant:
| Flow Temperature | Typical SCOP | Running Cost (12,000 kWh heat) |
|---|---|---|
| 35°C | 4.0-4.5 | £650-£735 |
| 45°C | 3.2-3.8 | £775-£920 |
| 55°C | 2.5-3.0 | £980-£1,175 |
| 65°C | 2.0-2.5 | £1,175-£1,470 |
If your existing radiators can't heat your home at 45°C or below, you have options:
- Upgrade radiators to larger sizes (£2,000-£5,000 for a typical home)
- Add underfloor heating during renovation
- Improve insulation to reduce heat demand
- Accept higher flow temperatures and slightly higher running costs
Electricity Tariff Selection
Your electricity tariff dramatically affects heat pump running costs. Smart tariffs designed for heat pumps can reduce costs by 30-50%:
| Tariff Type | Typical Rate | Best For | Potential Saving |
|---|---|---|---|
| Standard variable | 24-28p/kWh | Default option | Baseline |
| Economy 7/10 | 10-14p off-peak, 28-32p peak | Pre-heating overnight | 20-35% |
| Octopus Cosy | ~10p for heat pump hours | All heat pump users | 35-45% |
| Octopus Agile | Variable, often under 10p overnight | Flexible users with battery | 30-50% |
| Octopus Intelligent Go | 7p off-peak (23:30-05:30) | EV owners with heat pump | 40-50% |
Heat pumps pair brilliantly with time-of-use tariffs because they can pre-heat your home overnight when electricity is cheapest. The thermal mass of your house stores that heat for morning use.
Comparing to Your Current Heating System
Switching from Gas
At current prices, a well-optimised heat pump costs roughly the same as a new gas boiler—and less than an old inefficient boiler. The financial case improves if:
- You use a heat pump-optimised electricity tariff
- Your current boiler is old and inefficient
- Gas prices rise faster than electricity
- You factor in the £7,500 BUS grant reducing upfront costs
If you drop your gas connection entirely, you also save the gas standing charge (approximately £100/year).
Switching from Oil
Heat pumps are significantly cheaper than oil heating—typically saving £400-£1,000 per year for an average home. Oil prices are volatile and have been trending upward. The payback on a heat pump replacing oil is often under 5 years after the BUS grant.
Switching from LPG
Similar to oil—substantial savings. LPG is the most expensive common heating fuel. Heat pump savings of £500-£1,200 annually are typical for LPG replacements.
Switching from Electric Storage Heaters
Direct electric heating runs at 100% efficiency. Heat pumps at 300-400% efficiency cut electricity consumption for heating by 65-75%. Annual savings of £800-£1,500 are common, with some households saving over £2,000.
Hot Water Costs
Heat pumps also heat your domestic hot water. This typically adds £100-£200 to annual running costs.
A 200-litre cylinder heated daily uses approximately 800-1,200 kWh of electricity per year via heat pump. At 24.5p/kWh, that's £196-£294. Compare to gas water heating at about £80-£120, and there's a slight premium.
Many households offset this by heating water during off-peak hours on a time-of-use tariff, reducing the cost to £100-£150 annually.
Frequently Asked Questions
Q: Will my electricity bill massively increase?
A: Your electricity bill will increase, but your gas/oil/LPG bill disappears entirely. The net effect depends on your previous fuel type and heat pump efficiency. Most households switching from gas break even or save slightly. Those switching from oil or LPG save significantly.
Q: Do heat pumps cost more in winter?
A: Yes. Cold weather reduces efficiency—SCOP might drop from 3.5 to 2.5 on the coldest days. But those very cold days are relatively few in the UK. Modern cold-climate heat pumps maintain good efficiency down to -15°C or below. Annual average SCOP is what matters for cost calculations.
Q: What about the standing charges?
A: You'll still have an electricity standing charge (approximately £170/year). If you keep a gas hob, you'll pay the gas standing charge too (approximately £100/year). Going fully electric saves that gas standing charge. Some households switch to induction hobs and eliminate gas entirely.
Q: Can I reduce costs further with solar panels?
A: Absolutely. Solar panels generating during the day can power your heat pump directly, effectively providing free heating during sunny hours. Combine with a battery for evening use, and you can dramatically reduce grid electricity consumption. Some households with solar and battery report running costs under £300 annually.
Q: What maintenance costs should I expect?
A: Annual servicing costs £100-£200, similar to gas boiler servicing. Heat pumps have fewer moving parts than boilers and generally need less maintenance. Budget for inverter replacement after 10-15 years (£500-£1,500 if not covered by warranty).
Q: Are heat pumps noisy and will they annoy my neighbours?
A: Modern heat pumps are remarkably quiet—typically 40-50 decibels at 1 metre, similar to a refrigerator or quiet conversation. Permitted development rules require the unit to be at least 1 metre from the property boundary. Most neighbours don't notice them at all. Older units were louder, which is where the noise reputation comes from.
Q: Can I get the £7,500 BUS grant?
A: Most homeowners replacing fossil fuel heating (gas, oil, LPG, electric storage heaters) qualify for the Boiler Upgrade Scheme grant. Your property must have a valid EPC with no outstanding loft or cavity wall insulation recommendations. The installation must use an MCS-certified installer, and the grant is applied automatically—you never see the money, it's deducted from your invoice.
Q: What's the difference between ASHP and GSHP running costs?
A: Ground source heat pumps (GSHP) are typically 20-30% more efficient than air source (ASHP) because ground temperatures are more stable. However, GSHPs cost significantly more to install (£15,000-£25,000 before grant vs £8,000-£14,000 for ASHP). For most homes, the lower upfront cost of ASHP outweighs the efficiency benefit of GSHP.
Q: How do I choose the best electricity tariff for my heat pump?
A: Look for tariffs designed for heat pumps, such as Octopus Cosy, which offers around 10p/kWh during heat pump hours. If you have an EV as well, Octopus Intelligent Go gives you 7p/kWh overnight. Time-of-use tariffs work brilliantly with heat pumps because you can pre-heat your home during cheap rate periods and let the thermal mass maintain comfort during expensive hours.
Optimising Your Heat Pump Costs
To get the lowest possible running costs:
- Insulate first. Reduce heat demand before installing the heat pump.
- Size correctly. An oversized heat pump cycles inefficiently. An undersized one runs constantly at low efficiency.
- Set flow temperatures low. 35-45°C if your radiators can manage it.
- Use weather compensation. Modern controls adjust output based on outdoor temperature.
- Switch to a smart tariff. Octopus Cosy, Intelligent Go, or similar can cut costs 30-50%.
- Run continuously at low output. Heat pumps work most efficiently running gently rather than in short bursts.
- Consider solar panels. Generate your own electricity to power the heat pump.
The Bottom Line
Heat pump running costs of £600-£1,200 per year are competitive with other heating systems. They're substantially cheaper than oil or LPG, and comparable to gas at current prices.
The key factors are proper installation, appropriate flow temperatures, good insulation, and—ideally—a time-of-use electricity tariff. A well-optimised system can beat gas heating on running costs while providing a future-proof, low-carbon heating solution.
With the £7,500 Boiler Upgrade Scheme grant reducing upfront costs, and running costs at or below fossil fuel alternatives, heat pumps make financial sense for an increasing number of British households. The maths works—and gets better every time fuel prices rise or electricity becomes greener and cheaper.