Heat Pump vs Electric Storage Heater Costs UK 2026

If you heat with electric storage heaters or panel heaters, you are paying the highest heating bills of anyone in the UK. A heat pump can cut those costs substantially -- by about two-thirds against panel heaters and around 45% against storage heaters on a standard rate, roughly £850-£2,100 a year for a three-bedroom house -- because it produces three units of heat for every unit of electricity consumed.

The confusion around heat pump economics disappears when you compare them to electric heating. Electric resistance heating -- whether storage heaters, panel heaters, or convectors -- operates at a COP of 1.0. That means every 1kWh of electricity produces exactly 1kWh of heat. A heat pump, by contrast, produces 2.5 to 3.5 kWh of heat from the same 1kWh of electricity. The savings potential is enormous.

For the complete picture across all heating types, see our heat pump cost guide.

Why Electric Heating Is So Expensive

The fundamental problem with electric storage heaters, panel heaters, and other direct electric heating is simple physics. They convert electricity to heat at a 1:1 ratio. At the Ofgem price cap electricity rate of 26.32p per kWh (1 October 2026 to 31 December 2026), every kilowatt-hour of heat costs you 26.32p.

Economy 7 off-peak rates vary by supplier and region, so check your own bill (last reviewed October 2026). Storage heaters also tend to run out of stored heat by evening, so many homes top up with peak-rate electricity, which pushes their real cost per unit of heat towards the standard rate.

Standard rates: Ofgem price cap, 1 October 2026 to 31 December 2026 (Direct Debit, GB average). The gas and heat pump figures are calculated from 7.97p and 26.32p per kWh.

The Storage Heater Problem

Storage heaters were designed for a world where overnight electricity was very cheap. They charge up using off-peak electricity (typically midnight to 7am) and release heat during the day. In practice, they release most of their heat in the morning when you may not need it, and by evening they have often run out of stored heat. You then use expensive peak-rate panel heaters to top up.

What Electric Heating Actually Costs Per Year

The storage heater figures are illustrative and assume an average of about 16p per kWh across off-peak charging and peak-rate top-ups; your own bills are the best guide. A three-bedroom house heated with panel heaters on the standard capped rate (26.32p) would spend about £3,160 a year on 12,000 kWh of heat.

Heat Pump Costs for the Same Properties

Using a seasonal COP of 3.0 and the standard capped electricity rate of 26.32p per kWh (1 October 2026 to 31 December 2026). A heat pump tariff would lower these figures; rates vary by supplier and region.

The Savings Are Enormous

Approximate annual savings from switching to a heat pump on a standard rate, compared with the illustrative storage heater costs above (a 4-bed house on storage heaters would cost about £2,880 on the same basis; a heat pump tariff would increase the savings):

Compared to panel heaters on standard tariff, the savings are even larger -- about a two-thirds reduction in heating costs (roughly £2,100 a year for the 3-bed example). For a detailed breakdown, see our running costs guide.

Installation Costs and Payback

The Challenge: No Existing Wet System

The biggest consideration for homes currently heated electrically is that there is usually no existing wet central heating system -- no radiators, no pipework, no hot water cylinder. Installing a heat pump means installing an entire wet heating system from scratch, which increases the cost significantly.

After the BUS grant of £7,500, typical costs reduce to the figures below. (The higher £9,000 grant applies only when an air source or ground source heat pump replaces oil or LPG heating in a home without mains gas, from 21 July 2026 to 31 March 2027, so it does not apply when replacing electric heating.)

• 1-bed flat: £2,500-£6,500 after grant
• 2-bed flat: £4,500-£8,500 after grant
• 3-bed house: £6,500-£12,500 after grant
• 4-bed house: £8,500-£16,500 after grant

Despite the higher installation cost, the massive running cost savings mean payback can be surprisingly quick -- typically 5-13 years for a three-bedroom house.

Practical Considerations for Electric-to-Heat-Pump Switches

Flats and Apartments

Many electrically heated properties are flats. Installing a heat pump in a flat presents specific challenges: you need space for an external unit, permission from the freeholder, and space inside for a hot water cylinder and pipework. It is possible but requires careful planning.

Disruption During Installation

Because you are installing an entirely new heating system, the work is more disruptive than a simple boiler swap. Expect pipework to be run through the property, radiators installed in each room, and a hot water cylinder fitted. This typically takes 3-5 days. Plan for spring or autumn when you are least dependent on heating. Our installation guide walks through the full process.

Electrical Supply Advantage

Homes with electric heating already have a robust electrical supply, which is actually an advantage. Many already have higher-rated fuses, meaning the heat pump can be connected without any electrical upgrade.

If you also have access to a roof, adding solar panels can offset a large proportion of the heat pump's electricity consumption, making the savings even more dramatic for electrically heated homes.

What About Air-to-Air Heat Pumps?

Air-to-air heat pumps (essentially reversible air conditioning units) are a lower-cost alternative that can work well in some electrically heated properties. They cost £1,500-£3,000 per unit and operate at COP 3.0-4.0. However, they provide warm air rather than radiator heating, do not provide hot water, and typically heat individual rooms rather than the whole house.

For a single room or open-plan flat, an air-to-air unit can be a pragmatic intermediate step. For whole-house heating and hot water, an air-to-water heat pump with a wet system is the better long-term solution. For more on system types, see our complete guide to air source heat pumps.

Frequently Asked Questions

Is it worth switching from storage heaters to a heat pump?

In most cases, yes. Running costs typically fall by around 45% compared with storage heaters and by about two-thirds compared with panel heaters on a standard rate (more with a heat pump tariff), the largest saving of any heating switch. Even with the higher installation cost of fitting a complete wet system, the payback period is typically 5-15 years, well within the 20-year lifespan of the heat pump. The improvement in comfort is also significant.

Can I get the BUS grant if I have electric heating?

Yes. The Boiler Upgrade Scheme covers replacement of any existing heating system, including electric storage heaters and other electric heating. The grant is £7,500 for an air source or ground source heat pump. You do not need to buy an EPC to apply; your MCS-certified installer confirms eligibility and applies for you.

What if I only have panel heaters, not storage heaters?

The case for switching is even stronger. Panel heaters use standard-rate electricity at 26.32p per kWh (Ofgem cap, 1 October 2026 to 31 December 2026), making them the single most expensive way to heat a home. A heat pump at COP 3.0 cuts heating costs by about two-thirds compared to panel heaters.

Will the heat pump need a bigger electrical supply?

Usually not. Most electrically heated homes already have a sufficient electrical supply for a heat pump. A typical air source heat pump draws 2-5kW of electricity, which is less than many electric heating systems combined.

How much will my electricity bill change?

Your overall electricity consumption will drop significantly. If you currently use 12,000 kWh for heating, a heat pump at COP 3.0 will use only 4,000 kWh for the same heat output. Your electricity bill for heating falls by roughly two-thirds.