Home Heat Pump Guide

Are Heat Pumps Expensive to Run?

This is the question most people ask first, and it deserves a straight answer. Heat pumps are not expensive to run. They are the cheapest way to heat a home with electricity, and they are comparable to — or cheaper than — mains gas. For anyone currently using oil, LPG, or electric heating, a heat pump will reduce running costs, often dramatically.

The confusion arises because electricity is more expensive per unit than gas. But a heat pump does not use electricity the same way an electric heater does. It uses a small amount of electricity to move a large amount of heat. That changes everything.

Why COP Makes the Difference

COP stands for Coefficient of Performance. It tells you how much heat the pump produces for each unit of electricity it consumes. A COP of 3.0 means 3kWh of heat from 1kWh of electricity. The other 2kWh comes from the outdoor air — free energy that the heat pump extracts and concentrates.

This is not marketing spin or theoretical physics. It is how heat pumps work, and it has been measured and verified in thousands of UK installations. The Electrification of Heat Demonstration Project monitored hundreds of UK heat pumps and found average seasonal COPs (SPFs) of 2.8-3.2 for well-installed air source systems.

Here is what COP means for cost per unit of heat:

  • Electricity at 24.50p/kWh, COP 1.0 (electric heater): 24.50p per kWh of heat
  • Electricity at 24.50p/kWh, COP 2.5 (below-average heat pump): 9.80p per kWh of heat
  • Electricity at 24.50p/kWh, COP 3.0 (average heat pump): 8.17p per kWh of heat
  • Electricity at 24.50p/kWh, COP 3.5 (good heat pump): 7.00p per kWh of heat
  • Gas at 6.50p/kWh, boiler 90% efficient: 7.22p per kWh of heat
  • Oil at 55p/litre, boiler 90% efficient: 8.60p per kWh of heat
  • LPG at 65p/litre, boiler 90% efficient: 10.17p per kWh of heat

At COP 3.0, a heat pump is already slightly cheaper per unit of heat than oil and significantly cheaper than LPG. It is marginally more expensive than gas, but that margin shrinks or reverses with a time-of-use tariff.

Real Annual Running Cost Comparisons

Let us put these figures into annual costs for a typical three-bedroom semi-detached house with an annual heat demand of 11,500 kWh:

Gas Boiler

  • Gas consumed: 12,778 kWh (at 90% efficiency)
  • Gas cost: £830
  • Gas standing charge: £115/year
  • Boiler service: £80-£100/year
  • Total: £1,025-£1,045

Oil Boiler

  • Oil consumed: 1,310 litres (at 90% efficiency)
  • Oil cost at 55p/litre: £721
  • Oil cost at 65p/litre: £852
  • Boiler service: £100-£150/year
  • Total: £821-£1,002

LPG Boiler

  • LPG consumed: 1,795 litres (at 90% efficiency)
  • LPG cost at 65p/litre: £1,167
  • Tank rental: £70-£120/year
  • Boiler service: £80-£120/year
  • Total: £1,317-£1,407

Electric Storage Heaters

  • Electricity consumed: 11,500 kWh (COP 1.0)
  • Cost at blended 16p/kWh (Economy 7): £1,840
  • Cost at standard 24.50p/kWh (panel heaters): £2,818
  • Total: £1,840-£2,818

Air Source Heat Pump

  • Electricity consumed: 3,833 kWh (COP 3.0)
  • Cost at standard 24.50p/kWh: £939
  • Cost at TOU blended 18p/kWh: £690
  • Service: £100-£150/year
  • Total: £790-£1,089

The Bottom Line by Fuel Type

Heat Pump vs Gas

Running costs are broadly similar. On a standard electricity tariff, a heat pump can cost slightly more than gas. On a TOU tariff, it costs slightly less. The difference is typically -£100 to +£250 per year. Neither system is dramatically cheaper than the other at current prices. The financial case for switching from gas rests more on the BUS grant, avoided boiler costs, and expected future price movements than on current running costs alone.

Heat Pump vs Oil

A heat pump is consistently cheaper to run than an oil boiler, saving £100-£350 per year depending on oil prices and tariff choice. Oil prices are also more volatile, making heat pump costs more predictable.

Heat Pump vs LPG

A heat pump saves £230-£620 per year compared to LPG. This is one of the strongest running cost cases for switching. LPG users pay some of the highest heating bills in the country and have the most to gain.

Heat Pump vs Electric Heating

A heat pump saves £750-£1,730 per year compared to electric heating. This is the biggest savings opportunity by far. If you currently heat with electricity, switching to a heat pump delivers transformative bill reductions.

For a detailed cost comparison, see our running costs guide.

Why Some People Think Heat Pumps Are Expensive to Run

The Electricity vs Gas Price Gap

Electricity costs roughly 3.8 times more per kWh than gas (24.50p vs 6.50p). If you assume a heat pump uses electricity like an electric heater, the maths looks terrible. But a heat pump with COP 3.0 bridges most of that gap by producing three times more heat per unit of electricity. Understanding COP is essential to understanding heat pump economics.

Poorly Installed Systems

A heat pump installed with flow temperatures too high, weather compensation disabled, or an oversized system will underperform. A COP of 2.0 instead of 3.0 means 50% higher running costs. Some negative experiences reported in the press or online forums relate to poor installations rather than inherent technology problems. Choose an experienced MCS-certified installer and ensure proper commissioning. Our installation guide explains what to look for.

Comparison to Brand-New Boilers

Some comparisons pitch a heat pump against a brand-new high-efficiency boiler. This makes the gas boiler look its best. In reality, many boilers being replaced are 10-20 years old and running at 75-85% efficiency, not 92%. The heat pump's advantage over the actual boiler being replaced is larger than theoretical comparisons suggest.

Not Using TOU Tariffs

Heat pump owners who stay on a standard flat-rate electricity tariff miss out on significant savings. Time-of-use tariffs offering cheap off-peak electricity are specifically designed for flexible loads like heat pumps. Not switching tariff is like buying a fuel-efficient car and only driving it in first gear.

How to Keep Heat Pump Running Costs Low

1. Get a Time-of-Use Tariff

This is the single most impactful thing you can do. TOU tariffs like Octopus Cosy offer reduced rates during specific hours. By running the heat pump primarily during off-peak periods (using your home's thermal mass and hot water cylinder to store heat), you can reduce electricity costs by 20-35%.

2. Optimise Flow Temperature

Ensure weather compensation is enabled and properly configured. This automatically adjusts the flow temperature based on outdoor conditions, keeping the system as efficient as possible. If your system is running at a fixed 55°C flow temperature, it is wasting energy. Aim for the lowest flow temperature that keeps your home comfortable.

3. Improve Your Insulation

Every improvement to insulation reduces how much heat the pump needs to produce. Loft insulation top-up, draught-proofing, and cavity wall insulation are cost-effective measures that reduce running costs and improve comfort.

4. Use the System Correctly

Heat pumps work best running continuously at low output, not cycling on and off. Allow the system to manage its own schedule through weather compensation. Setting the thermostat 1°C lower saves 8-10% on heating costs. Avoid using the immersion heater for hot water unless the heat pump cannot keep up (which should be rare).

5. Regular Servicing

An annual service (£100-£150) ensures the system maintains its efficiency. Dirty filters, low refrigerant, or misconfigured controls can gradually reduce COP without you noticing — until your electricity bill creeps up.

What About the Future?

Several trends point towards heat pump running costs becoming relatively cheaper:

  • Electricity levy rebalancing: The UK government plans to shift environmental levies from electricity to gas bills, reducing the electricity unit rate
  • Increasing renewable generation: As more wind and solar comes online, wholesale electricity costs trend lower
  • Smart tariff expansion: More and better TOU tariffs are becoming available as the smart grid develops
  • Heat pump efficiency improvements: Newer models achieve higher COPs, particularly at low ambient temperatures
  • Carbon pricing: If the UK introduces or strengthens carbon pricing on natural gas, gas heating costs will rise

These factors suggest that anyone installing a heat pump today is likely to see the running cost comparison improve over the system's 20-year lifetime. Use our calculator to estimate your specific running costs.

Frequently Asked Questions

How much does it cost to run a heat pump per month?

For a typical three-bedroom home, expect £50-£110 per month averaged across the year. Winter months will be higher (£80-£150) and summer months lower (£20-£40 for hot water only). The exact amount depends on your property's heat demand, the system's COP, and your electricity tariff.

Are heat pumps cheaper to run than gas?

At current prices, it is roughly even. On a standard electricity tariff, a heat pump may cost very slightly more than a modern gas boiler. On a time-of-use tariff, it typically costs slightly less. The gap is expected to widen in favour of heat pumps as electricity levies are rebalanced. For a detailed comparison, see our heat pump vs gas boiler guide.

Will my electricity bill go up if I get a heat pump?

Yes, your electricity bill will increase — typically by £600-£1,000 per year for heating and hot water. However, your gas, oil, or LPG bill will disappear entirely. The net effect depends on your current fuel: broadly similar for gas, lower for oil and LPG, much lower for electric heating.

What is the cheapest way to run a heat pump?

The cheapest approach combines a time-of-use electricity tariff, weather compensation at the lowest comfortable flow temperature, good insulation, and smart use of thermal mass (heating the home during off-peak hours and letting it coast during peak hours). This can reduce running costs by 25-40% compared to a standard tariff with default settings.

Are ground source heat pumps cheaper to run than air source?

Yes, typically by 15-25%. Ground source heat pumps achieve higher seasonal COPs (3.5-4.5 vs 2.8-3.5) because ground temperatures are more stable and warmer than air temperatures in winter. However, they cost significantly more to install. See our ground source guide for a full comparison.

Do heat pumps use a lot of electricity in winter?

Heat pumps use more electricity in winter than in summer — roughly 40-45% of the annual consumption occurs in December to February. On a cold day, a typical system might use 15-25 kWh for a three-bedroom home. This is higher than a summer day (3-5 kWh for hot water only) but still far less than electric heating would use for the same heat output. Get a personalised estimate with our suitability checker.