Are Heat Pumps Really More Expensive Than Gas? We Did the Maths

"Heat pumps are too expensive." It is probably the second most common objection after the cold weather myth, and like that myth, it crumbles under scrutiny. The problem is that most people only look at one number — the upfront installation cost — and ignore everything else. When you examine the full picture — the BUS grant, running costs, maintenance, gas boiler replacement cycles, and the trajectory of energy prices — the economics tell a very different story.

We have done the maths properly. Not using cherry-picked numbers or best-case scenarios, but using real UK energy prices from Ofgem, real installation costs from MCS data, and real performance figures from monitoring studies. Every assumption is shown. Every calculation is transparent.

Our Assumptions — Full Transparency

Before we present any numbers, here are the assumptions behind every calculation. We believe in showing our working, so you can adjust for your own circumstances.

All prices as of March 2026. Sources: Ofgem, Energy Saving Trust, Energy Systems Catapult.

Upfront Cost Comparison

Let us start with the number that dominates the conversation: what you pay upfront.

After the £7,500 BUS grant, the upfront cost gap between an air source heat pump and a gas boiler system with hot water cylinder narrows to roughly £1,000-£3,000. That is the real comparison — not the pre-grant headline figure. And the gap is shrinking as heat pump costs fall with growing competition and manufacturing scale.

Running Cost Comparison: The Per-kWh Maths

This is where the heat pump advantage starts to show. The common mistake is comparing electricity and gas prices directly — 26.32p vs 7.97p — and concluding gas is cheaper. But that ignores the fundamental efficiency difference.

Gas boiler: To deliver 12,000 kWh of heat at 92% efficiency, you need 13,043 kWh of gas. At 7.97p/kWh, that costs £1,040/year. Add the gas standing charge (£108/year) and annual service (£90), and the total is £1,238/year.

Heat pump at COP 3.0: To deliver 12,000 kWh of heat at COP 3.0, you need 4,000 kWh of electricity. At 26.32p/kWh, that costs £1,053/year. The electricity standing charge is already being paid for lights, appliances, etc., so it is not an additional cost. Annual service is £120. Total: £1,173/year.

On the October 2026 price cap, the fuel cost alone is within about £15 a year; once the gas standing charge goes, the heat pump comes out about £65 a year cheaper in this example. Three factors widen the gap:

Factor 1: Heat Pump Electricity Tariffs

Some energy suppliers offer time-of-use tariffs aimed at heat pump owners. Octopus Cosy, for example, has cheaper windows during the day and night that Octopus prices at about half your regional day rate. Rates are regional and change often, so check the supplier's current rates (last reviewed October 2026). As an illustration, if your heating electricity averaged around 12p/kWh, the 4,000 kWh above would cost about £480 a year, well below gas.

Factor 2: Solar PV Offset

If you have solar panels, they generate free electricity that offsets heat pump consumption. Even in winter, a 4kW solar array generates useful daytime electricity. Over a full year, solar can offset 30-50% of heat pump electricity costs, reducing annual heating electricity costs to roughly £530-£740 on the standard price cap.

Factor 3: No Gas Standing Charge

Switching fully to a heat pump means you can disconnect from the gas grid entirely, eliminating the gas standing charge of about £108/year (29.68p/day). Over 20 years, that saving alone is about £2,170 (without inflation adjustment).

Maintenance Cost Comparison

Maintenance is often overlooked in cost comparisons, but over 20 years it adds up significantly.

The gas boiler's biggest hidden cost is replacement. A gas boiler typically lasts 12-15 years, meaning you will likely need to buy a second boiler within a 20-year period. A heat pump is engineered to last 20-25 years — one installation covers the whole period. This single factor is worth £3,000-£4,500 that gas boiler cost comparisons almost never mention.

The 20-Year Lifetime Cost: The Full Picture

Now let us put it all together — upfront, running, and maintenance costs over a 20-year period. This is the comparison that matters.

Calculations assume Ofgem price cap rates for 1 October 2026 to 31 December 2026, 3% annual energy price inflation, 12,000 kWh heat demand, COP 3.0. Smart tariff modelled at 12p/kWh average (an illustrative assumption, not a quoted supplier rate).

Even on a standard electricity tariff with no solar panels, the heat pump saves over £10,000 across 20 years compared to gas. On a smart tariff, the modelled saving is about £25,000. Add solar panels to the equation, and the economics become even more compelling.

5 Real Household Scenarios

Average numbers do not tell the whole story. Here are five realistic UK household scenarios showing how the economics vary.

Scenario 1: 3-Bed Semi, Replacing Aging Gas Boiler

Heat demand: 12,000 kWh. Old boiler (82% efficient). Radiator upgrades needed: 2 radiators (£800). After grant cost: £6,000. Annual running-cost saving vs the old boiler: about £220 on the standard price cap (fuel plus gas standing charge), more on a time-of-use tariff. Payback: around 13 years against the £3,200 new boiler you would otherwise buy.

Scenario 2: 4-Bed Detached, Oil Heating

Heat demand: 18,000 kWh. Oil at about 117p/litre (around 11.4p/kWh, October 2026, indicative BoilerJuice average), 85% efficient oil boiler. After the £9,000 grant for oil and LPG homes off the gas grid (available until 31 March 2027): £6,000. Annual saving vs oil: about £830 on the standard price cap. Payback: around 7 years. 20-year running-cost saving: about £22,000 before the upfront cost. Oil prices are volatile, so use your own last delivery price. Oil homes see the strongest financial case for heat pumps.

Scenario 3: 2-Bed Terrace, New Gas Boiler

Heat demand: 8,000 kWh. New 94% efficient boiler. No radiator upgrades. After grant cost: £4,000. Annual saving: about £85 (standard price cap, including the gas standing charge) to about £465 (time-of-use tariff modelled at 12p/kWh). Payback: not realistic on the standard price cap alone; around 9 years if most heating runs on cheap-rate electricity.

Scenario 4: 3-Bed Semi with Solar Panels

Heat demand: 12,000 kWh. 4kW solar array offsetting 35% of electricity. After grant cost: £5,500. Annual running cost: about £685 vs gas £1,148 (fuel plus standing charge). Payback: around 12 years on running costs alone.

Scenario 5: Well-Insulated New Build

Heat demand: 6,000 kWh. High insulation levels. Small 5kW heat pump. After grant cost: £3,500. Annual running cost: about £525 vs gas £628 (fuel plus standing charge). Payback is long on running costs alone, but this has the lowest absolute costs of any scenario.

The Electricity-to-Gas Price Ratio: The Key Variable

The single most important variable in the heat pump vs gas cost equation is the ratio of electricity to gas prices. Currently, electricity costs about 3.3 times more than gas per kWh (26.32p vs 7.97p, Ofgem price cap 1 October 2026 to 31 December 2026). With a 92% efficient boiler, a heat pump at COP 3.0 breaks even on unit rates at a ratio of about 3.26, so today the two are almost level before the gas standing charge, and any COP above 3.0 tips it to the heat pump.

The government and the Climate Change Committee (CCC) have recommended rebalancing this ratio by shifting environmental levies from electricity bills to gas bills. This would reduce the electricity price and increase the gas price, making heat pumps the clear winner on running costs without any tariff optimisation.

Even without policy changes, the trend is moving in the right direction. As the electricity grid decarbonises and renewable generation increases, wholesale electricity costs are falling. Meanwhile, gas prices are subject to international market volatility, as the 2022 energy crisis demonstrated dramatically.

Hidden Costs People Forget

Several costs are routinely ignored in simplistic comparisons. They all favour heat pumps.

Carbon taxes: The UK government has committed to net zero by 2050. Gas heating will face increasing carbon costs through taxation or the ETS. This is not speculative — it is government policy. These costs will make gas increasingly expensive.

Gas boiler ban: From 2035, new gas boiler installations in existing homes will face restrictions. Your current gas boiler will eventually need replacing with a low-carbon alternative regardless. Installing a heat pump now avoids a rushed, potentially more expensive future transition.

Property value: A heat pump can improve your EPC rating, and better-rated homes may sell for more. There is no reliable published figure for a heat pump premium specifically, so treat any added value as a possible bonus rather than part of the payback sum. See do heat pumps add property value?

Health costs: Gas boilers produce nitrogen dioxide and other combustion byproducts. While the direct health cost is hard to quantify per household, the transition away from domestic gas combustion has significant public health benefits.

Honest Assessment: When Gas Is Actually Cheaper

We believe in honest analysis, so here are the scenarios where gas heating remains cheaper — at least for now.

• Brand new gas boiler just installed: If you installed a new gas boiler last year, the upfront cost is sunk. Running costs are roughly level on the standard price cap. It makes financial sense to run the boiler for several years before switching.
• Very poorly insulated home with no plans to improve: A leaky home needs a higher flow temperature, reducing heat pump COP. However, improving insulation first (often grant-funded) solves this and delivers its own savings.
• Extremely low gas consumption: If your annual gas bill is under £400, the absolute savings from a heat pump are small, making the payback period very long.

Even in these scenarios, the gap is narrowing. And none of these scenarios account for future gas price increases, carbon taxes, or the eventual need to replace gas heating entirely.

Frequently Asked Questions

Are heat pumps more expensive to run than gas?

On the October 2026 price cap, heat pump unit-rate costs are roughly level with a new gas boiler, and the heat pump comes out ahead once you drop the gas standing charge. On a time-of-use tariff the gap widens; check the supplier's current rates. With solar panels, savings are even greater.

How much does a heat pump cost after the grant?

Typically £4,000-£7,500 after the £7,500 BUS grant (£9,000 for oil and LPG homes off the gas grid until 31 March 2027). This is comparable to a premium gas boiler installation with a hot water cylinder.

How long is the payback period?

Replacing oil: around 7 years in our example (use your own delivery price; LPG prices vary). Replacing an old gas boiler: around 13 years once you count the new boiler you would otherwise buy. Replacing a new gas boiler: much longer on the standard price cap. Time-of-use tariffs and solar shorten these significantly.

Will electricity get cheaper relative to gas?

Government policy is moving towards rebalancing prices by shifting green levies from electricity to gas. The CCC recommends this shift, which would make heat pumps clearly cheaper to run than gas.

What about maintenance costs?

Heat pumps have lower lifetime maintenance costs. The key factor is that gas boilers need replacing every 12-15 years (£3,000-£4,500), while heat pumps last 20-25 years.

Do I need to factor in radiator upgrades?

Most homes need only 2-3 radiator upgrades (£500-£1,500). Many homes need no upgrades at all. This cost is included in our calculations.