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Is a Heat Pump Cheaper Than Gas? The Honest Answer

This is the question everyone asks, and the honest answer is more nuanced than either the heat pump industry or its critics would have you believe. The short version: on running costs alone, a heat pump and a gas boiler are roughly similar at current UK energy prices. But running cost is only one part of the financial equation — and when you factor in the government grant, the longer lifespan of a heat pump, and the likely direction of energy prices, the full picture looks different.

Let us work through this properly, with real numbers.

Running Costs: The Straight Comparison

Using current Ofgem energy prices (early 2026):

  • Gas: 6.76p per kWh
  • Electricity: 24.50p per kWh

A modern gas boiler is approximately 90% efficient. A well-installed air source heat pump achieves a seasonal COP (efficiency) of approximately 3.0. This gives us:

  • Gas boiler: 7.51p per kWh of useful heat
  • Heat pump: 8.17p per kWh of useful heat

At standard tariff rates, the heat pump costs roughly 9% more to run than a gas boiler. For a typical three-bedroom semi-detached home with a heat demand of 12,000 kWh per year, that translates to about £80 more per year on the heat pump.

That is the honest starting point. Anyone telling you heat pumps are dramatically cheaper to run than gas at current standard electricity prices is not giving you the full picture. And anyone telling you they are vastly more expensive is also misleading you — the difference is small.

Why Running Cost Is Not the Whole Answer

If the question were purely "which has lower running costs on the standard electricity tariff," gas would narrowly win. But nobody makes a 20-year financial decision based on one variable. Here are the factors that change the equation.

The BUS Grant: £7,500 Off the Installation Cost

The Boiler Upgrade Scheme provides a £7,500 grant towards the cost of an air source heat pump. This is not a loan — it is a straight reduction in the installation price.

A new gas boiler costs approximately £2,500 to £4,500 installed. A heat pump costs £10,000 to £16,000 installed. After the BUS grant, a heat pump costs £2,500 to £8,500 out of pocket. For straightforward installations, the net cost can be comparable to a new gas boiler.

If you are replacing a gas boiler that has reached end of life, the comparison becomes: spend £3,000-4,000 on a new gas boiler, or spend a similar amount (after grant) on a heat pump that lasts longer, will not need replacing as soon, and protects you against future gas price increases.

Lifespan: 20 Years vs 12-15 Years

Gas boilers typically last 12-15 years before needing replacement. Heat pumps last 20-25 years. Over a 25-year period, you will likely need two gas boilers but only one heat pump.

Two gas boilers at £3,500 each = £7,000 in installation costs over 25 years. One heat pump at £12,000 minus £7,500 grant = £4,500. The heat pump saves £2,500 in installation costs alone over the full period.

Time-of-Use Tariffs: Changing the Running Cost Equation

The standard electricity tariff is not the only option. Time-of-use tariffs offer cheaper electricity during off-peak hours — typically overnight and during afternoon dips. Heat pumps are well suited to these tariffs because:

  • The hot water cylinder can be heated during off-peak hours
  • The building's thermal mass stores heat, so the house stays warm even if the heat pump reduces output during peak hours
  • Smart controls can optimise when the heat pump runs based on tariff periods

With a blended electricity rate of 18p per kWh (achievable on several time-of-use tariffs), the running cost comparison flips:

  • Gas boiler: 7.51p per kWh of heat
  • Heat pump on TOU tariff: 6.00p per kWh of heat
  • Heat pump saves approximately 20% on running costs

For the three-bedroom semi example, this turns a £80 annual premium into a £180 annual saving. Over 20 years, that is £3,600.

Gas Standing Charge Elimination

If you switch entirely from gas to a heat pump and disconnect your gas supply, you save the gas standing charge — approximately £128 per year at current rates. This is a real, immediate saving that offsets the small running cost premium on the standard tariff.

Energy Price Direction

Nobody can predict future energy prices with certainty. However, the structural trends are clear:

  • Gas prices are linked to volatile global fossil fuel markets
  • The UK government plans to increase carbon pricing on gas
  • Environmental levies are expected to shift from electricity to gas bills
  • Renewable electricity generation is increasing, putting downward pressure on wholesale electricity costs
  • The gas boiler ban for new builds is already in effect, signalling the direction of travel

The electricity-to-gas price ratio is currently about 3.6:1. Most energy analysts expect this to decrease over the coming decade, which would make heat pumps progressively cheaper relative to gas.

The 20-Year Financial Summary

Here is the full picture for a typical three-bedroom semi-detached home (12,000 kWh heat demand), comparing a new gas boiler against a heat pump with the BUS grant:

Scenario 1: Standard Electricity Tariff

  • Gas boiler over 20 years: Installation £3,500 + replacement at year 13 £4,000 + running costs £18,020 + servicing £2,000 + gas standing charge £2,560 = £30,080
  • Heat pump over 20 years: Installation £12,000 - grant £7,500 + running costs £19,600 + servicing £3,000 = £27,100
  • Heat pump saves approximately £2,980 over 20 years

Scenario 2: Time-of-Use Electricity Tariff

  • Gas boiler over 20 years: £30,080 (same as above)
  • Heat pump over 20 years: Installation £12,000 - grant £7,500 + running costs £14,400 + servicing £3,000 = £21,900
  • Heat pump saves approximately £8,180 over 20 years

Even in the least favourable scenario (standard tariff, no price changes), the heat pump works out cheaper over 20 years. With a time-of-use tariff, the savings are substantial.

When Gas Genuinely Makes More Financial Sense

To be fair, there are situations where sticking with gas is the pragmatic financial choice:

  • Your gas boiler is relatively new (under 5 years old): It has many years of life left. Replacing a working boiler purely for financial savings does not make sense unless you have other motivations.
  • Your property needs major work before a heat pump can be installed: Extensive radiator upgrades, insulation improvements, or electrical supply upgrades can push the net cost well above the BUS grant's offset. Check our suitability checker first.
  • You are planning to sell the property within 2-3 years: You will not recoup the investment in running cost savings, though a heat pump may add value to the property.
  • You cannot access the BUS grant: Without the grant, the installation cost premium is significant and takes longer to recover.

When a Heat Pump Is the Clear Financial Winner

  • Your gas boiler needs replacing soon (over 10-12 years old)
  • You can access the BUS grant
  • Your property is reasonably well insulated (EPC C or better)
  • You are willing to use a time-of-use electricity tariff
  • You plan to stay in the property for 5+ years

In this scenario, the heat pump is cheaper from the start on total cost of ownership, and the advantage grows over time.

Beyond the Money

Financial comparison is important, but it is not everything. Heat pumps also offer:

  • Carbon reduction: A heat pump with UK grid electricity produces approximately 75% less carbon than a gas boiler
  • No combustion in your home: No carbon monoxide risk, no annual gas safety check requirement
  • Improved EPC rating: Beneficial if you ever sell or let the property
  • Cooling capability: Some heat pumps can provide cooling in summer
  • Future-proofing: Gas boilers will eventually be phased out — a heat pump avoids a forced future switch

For our comprehensive analysis of whether a heat pump is the right choice, see are heat pumps worth it.

Frequently Asked Questions

Is a heat pump cheaper than gas right now?

On running costs alone at the standard electricity tariff, a gas boiler is marginally cheaper — about 9% less per kWh of heat. However, when you factor in the BUS grant, longer lifespan, gas standing charge savings, and the option of time-of-use tariffs, a heat pump is cheaper over the full ownership period for most homeowners.

How much would I save by switching from gas to a heat pump?

On a standard tariff, running costs are similar — you might pay £50-130 more per year on the heat pump. On a time-of-use tariff, you could save £150-300 per year. The biggest saving comes from the combined effect of the BUS grant, not needing a boiler replacement at year 12-15, and eliminating the gas standing charge.

What if the BUS grant ends?

Without the grant, the financial case for switching from a working gas boiler weakens significantly. The running cost difference is small, so you are relying on the longer lifespan and future energy price changes to justify the higher installation cost. If your boiler needs replacing anyway, the heat pump still makes sense if the net cost is manageable for your budget.

Should I get a heat pump now or wait for cheaper electricity?

The BUS grant is available now and is not guaranteed to continue at the current level. If your boiler is approaching end of life, acting now secures the grant and starts the clock on your heat pump's 20-year lifespan. Waiting for perfect conditions means potentially missing the grant window. Use our calculator to see the numbers for your specific situation.

Would a hybrid heat pump be a better compromise?

A hybrid system uses a heat pump for most of the year and switches to a gas boiler during the coldest periods. This can reduce running costs compared to a gas-only system while avoiding the higher upfront cost of a full heat pump installation. However, hybrid systems do not qualify for the full BUS grant, and you retain the gas supply and its standing charge. For many homes, a full heat pump with a time-of-use tariff is financially better.

Do heat pumps increase property value?

Evidence suggests that energy-efficient homes with heat pumps sell for a premium — estimated at 1-3% of property value, though this varies by location and buyer preference. The improved EPC rating is a tangible benefit, particularly as energy efficiency becomes a greater focus for mortgage lenders and buyers.