Air source heat pumps cost significantly less to run than many homeowners expect, with a typical UK household spending £800 to £1,100 per year on heating with an ASHP compared to £900 to £1,200 for a gas boiler, despite electricity costing roughly 24p per kWh versus 7p for gas. The reason heat pumps compete on cost despite dearer fuel is their coefficient of performance — a well-installed ASHP delivers 2.5 to 3.5 kWh of heat for every 1 kWh of electricity consumed, effectively reducing the real cost per unit of heat to 7p to 10p. The Boiler Upgrade Scheme currently offers a £7,500 government grant towards installation, bringing the net cost of a typical air source system to £4,500 to £8,500 after the subsidy. This calculator compares your estimated annual running costs for a heat pump against your current heating system, factoring in your property size, insulation level, and local climate.
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How to Use This Calculator
Enter your property type and size — the calculator uses this to estimate your annual heat demand in kWh.
Select your current heating system (gas boiler, oil boiler, electric heating, or LPG) so the calculator can compare running costs against a heat pump.
Rate your insulation level (poor, average, or good) — this significantly affects both heat demand and heat pump efficiency.
Review the annual running cost comparison between your current system and an air source heat pump, including the estimated payback period after accounting for the BUS grant.
At Ofgem Q1 2026 rates, a heat pump at COP 3.0 costs around £1,100/year in a 3-bed semi — slightly more than an old gas boiler at 75% efficiency (£950/year), but less than oil or LPG heating. The economics improve significantly with higher COP, off-peak tariffs, or the £7,500 BUS grant, which brings typical payback to 8–15 years.
Heat Pump Running Costs vs Gas Boiler (2026 Rates)
At Ofgem Q1 2026 rates (electricity 27.69p/kWh, gas 5.93p/kWh), a heat pump with COP 3.1 produces heat at roughly 8.9p/kWh effective cost — compared to 7.9p/kWh for a 75%-efficient old gas boiler. The running cost gap narrows as gas prices rise relative to electricity.
The economics of heat pumps are more nuanced than many comparisons suggest. A heat pump running at COP 3.1 converts 1 kWh of electricity into 3.1 kWh of heat — making its effective heat cost 27.69p ÷ 3.1 = 8.9p per kWh of heat. An old gas boiler at 75% efficiency delivers heat at 5.93p ÷ 0.75 = 7.9p per kWh of heat.
At current rates, heat pumps cost slightly more per unit of heat than old gas boilers. But the gap narrows with an efficient pump (COP 3.8 = 7.3p/kWh) and widens if you are replacing direct electric heating (27.69p/kWh effective cost with no COP benefit).
What Is COP and Why Does It Matter?
COP (Coefficient of Performance) is the ratio of heat output to electricity input. A COP of 3.1 means 1 kWh of electricity produces 3.1 kWh of heat. The UK average installed ASHP achieves around COP 3.1, but well-insulated homes with modern units can reach COP 3.8 or higher.
COP varies significantly depending on:
- Outdoor temperature: COP drops in cold weather. UK heat pumps are tested at −7°C to +7°C, with real-world UK winter performance typically between COP 2.5–3.5
- Flow temperature: Lower flow temperatures (35–45°C for underfloor heating) give higher COP than high-temperature systems (60°C+ for older radiators)
- Insulation quality: A well-insulated home needs less heat output, allowing the pump to run at more efficient low-temperature settings
- Equipment quality: Premium inverter-driven compressors maintain higher COP across a wider temperature range
Before installing a heat pump, a heat loss survey will determine whether your home needs radiator upgrades or insulation improvements to achieve a good COP. This is part of any reputable MCS-certified installer assessment.
The £7,500 Boiler Upgrade Scheme (BUS) Grant
The Boiler Upgrade Scheme provides a £7,500 grant for air-to-water heat pump installations in England, available until April 2028. The grant goes directly to the installer and is deducted from your quote — you pay the net price upfront. Scotland, Wales, and Northern Ireland have separate schemes.
Key BUS grant eligibility rules:
- England only for this grant (Scotland has the Home Energy Scotland programme; Wales has Nest/Warmer Homes)
- Existing property — not available for new builds
- Replacing a fossil fuel system (gas, oil, or LPG boiler)
- MCS-certified installer required — you cannot apply directly; the installer claims on your behalf
- Valid EPC required (and any “high priority” insulation measures flagged on the EPC must be addressed first)
The grant effectively reduces average installation costs from £12,000–£15,000 to £4,500–£7,500 for most homes. With the BUS grant, the total cost proposition improves significantly — particularly when replacing oil or LPG heating where annual fuel savings are larger.
Best and Worst Cases for Heat Pump Economics
Heat pumps make the strongest economic case when replacing oil, LPG, or direct electric heating. The case vs a new gas boiler is marginal at current prices but improves if you benefit from time-of-use tariffs (charging overnight at 7–10p/kWh) or add solar panels.
Best case (strong economics):
- Replacing oil or LPG heating (fuel costs 7.5–9p/kWh — similar to or above heat pump effective cost)
- Replacing direct electric heating (immediate running cost saving of 65%+)
- Well-insulated home achieving COP 3.5+ with Agile/off-peak tariff at 7–10p/kWh
- BUS grant eligible (reduces payback by 3–6 years)
Marginal case (careful analysis needed):
- Replacing a new, efficient gas boiler (A-rated, 90% efficient)
- Poorly insulated detached house requiring significant radiator upgrades
- On standard electricity tariff only (no time-of-use benefit)
At current energy prices (electricity 27.7p, gas 5.9p), heat pump running costs are comparable to gas boilers - and slightly higher at COP 3.0. The financial case is strongest when replacing oil/LPG heating, using off-peak electricity tariffs, or achieving COP 3.5+. The £7,500 BUS grant is the biggest factor in overall payback.
Heat Pump Running Costs by Property Size
The table compares estimated annual running costs for air source heat pumps vs gas boilers at Ofgem Q1 2026 rates (electricity 27.69p/kWh, gas 5.93p/kWh). At current rates and COP 3.0, heat pumps cost slightly more to run than a 75%-efficient gas boiler.
| Property | Heat Demand (kWh) | ASHP Cost/yr | Gas Boiler/yr | Difference |
|---|---|---|---|---|
| 1-bed flat | 5,000 | £461 | £395 | HP costs £66 more |
| 2-bed terrace | 8,000 | £739 | £633 | HP costs £106 more |
| 3-bed semi | 12,000 | £1,108 | £949 | HP costs £159 more |
| 3-bed detached | 15,000 | £1,385 | £1,186 | HP costs £199 more |
| 4-bed detached | 20,000 | £1,846 | £1,581 | HP costs £265 more |
| 5-bed detached | 25,000 | £2,308 | £1,977 | HP costs £331 more |
Source: Energy Saving Trust, Ofgem Q1 2026 price cap (electricity 27.69p/kWh, gas 5.93p/kWh). ASHP COP 3.0, gas boiler 75% efficiency. At COP 3.5+ or off-peak tariffs (7–10p/kWh), heat pumps become cheaper to run.
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