How Much Does a Heat Pump Save Per Year?
The annual savings depend almost entirely on what you are replacing. Switch from electric heating: save about £870-£2,100. From oil: around £470 at current oil prices. From LPG: it depends on your LPG price. From gas: about £10 a year on the standard capped rate, or around £120 if you also remove the gas supply -- more with a heat pump tariff. Here is the working.
Using a baseline of 12,000 kWh annual heat demand (typical 3-bed semi), a heat pump at seasonal COP 3.0 (4,000 kWh of electricity) and 90% efficient boilers. Prices: Ofgem price cap (1 October 2026 to 31 December 2026) 26.32p electricity and 7.97p gas per kWh; heating oil about 11.4p per kWh (around 117p per litre, BoilerJuice average, October 2026, indicative). £ figures calculated at October 2026 prices. For full running cost data, see our running costs guide. For installation costs, see our cost guide.
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Savings vs Gas Boiler
At the standard capped rate: about £10/year (heat pump £1,053 vs gas £1,063). If you also remove the gas supply, the gas standing charge (29.68p a day, about £108 a year) goes too, taking the saving to around £120. A heat pump tariff can increase it further; rates vary by supplier and region, so check the supplier's current rates. The case for switching from gas rests on the BUS grant, avoided boiler costs, and future price trends. See our heat pump vs gas boiler comparison.
Savings vs Oil Boiler
Oil users save around £470/year on the standard capped electricity rate (oil boiler about £1,520 vs heat pump £1,053), more with a heat pump tariff. Heating oil is not price-capped and DESNZ figures show liquid fuel prices up sharply in 2026, so the saving moves with the oil price. Off-gas homes replacing oil also get the higher £9,000 BUS grant until 31 March 2027. They also eliminate delivery hassles and tank maintenance.
Savings vs LPG Boiler
LPG prices vary widely by supplier and are not price-capped, so use your last delivery price: divide the price per litre by about 7 kWh per litre and by your boiler efficiency to get a cost per kWh of heat, then compare it with about 8.8p for a heat pump at COP 3.0. Off-gas homes replacing LPG get the higher £9,000 BUS grant until 31 March 2027. See our dedicated LPG comparison.
Savings vs Electric Heating
The biggest savings opportunity: about £870 a year against storage heaters (assuming around 16p per kWh) and about £2,100 a year against panel heaters on the standard rate. See our detailed electric heating comparison.
Savings Summary
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Factors That Increase Your Savings
- Heat pump or time-of-use electricity tariff: can cut running costs noticeably; savings depend on the tariff and region, so check the supplier's current rates (last reviewed October 2026)
- Higher COP through good installation: COP 3.5 saves 14% more than COP 3.0. See our installation guide
- Larger properties: Greater absolute savings
- Solar panels: Adding solar offsets 15-25% of heat pump electricity
Will Savings Increase Over Time?
Energy levy rebalancing, declining North Sea gas, possible carbon pricing, and improving heat pump technology all suggest savings will grow. For the full long-term picture, see whether heat pumps are worth it.
Frequently Asked Questions
Will I definitely save money with a heat pump?
From oil or electric: almost certainly. From LPG: usually, but check against your own delivery price. From gas: savings are small and depend on COP, tariff and whether you remove the gas supply.
How much will I save switching from oil?
Around £470/year for a typical 3-bed home at October 2026 oil prices (about 117p per litre); more if oil prices rise or you use a heat pump tariff.
Do savings account for installation cost?
No -- these are running cost savings only. Divide net cost by annual saving for payback.
How much do owners actually save in practice?
Energy Saving Trust data shows gas switchers save £200-£400/year; oil switchers save £400-£800/year.
Will the government make heat pumps cheaper to run?
The stated policy is to rebalance levies from electricity to gas. Timeline uncertain.
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About this guide: This article quantifies the annual savings from heat pump installations across all UK fuel types. Savings are highest when replacing electric, LPG, or oil heating. The BUS grant reduces the upfront investment, improving the payback calculation. Combining with solar panels further increases annual savings.