Heat Pump Running Costs: What to Actually Expect

Running costs are where heat pumps really earn their keep. The upfront cost is higher than a boiler, but the ongoing bills are significantly lower. Here are the real numbers.

Typical Annual Running Costs

For a typical three-bedroom house in the south of England, here is what heating and hot water costs look like with different systems:

Heating System	Annual Cost (3-bed house)
Air source heat pump	£800–£1,100
Gas boiler	£1,400–£1,800
Oil boiler	£1,800–£2,400
LPG boiler	£2,000–£2,800

Those are realistic ranges based on current energy prices and a reasonably insulated home. The savings are most dramatic for homes coming off oil or LPG — you could be saving £1,000 or more per year.

Why Are Heat Pumps Cheaper to Run?

It comes down to efficiency. A gas boiler is about 90% efficient — for every £1 of gas you burn, you get roughly 90p of heat. The rest goes up the flue.

A heat pump is around 300% efficient. For every £1 of electricity you use, you get about £3 of heat. This sounds like magic, but it is simple physics. A heat pump does not generate heat — it moves heat from the outside air into your home, using electricity to drive the process. Even when it is cold outside, there is still heat energy in the air.

What Is COP and SCOP?

You will see these terms used a lot. They are simpler than they sound:

• COP (Coefficient of Performance) is the ratio of heat output to electricity input at a specific moment. A COP of 3.0 means 3kW of heat for every 1kW of electricity.
• SCOP (Seasonal Coefficient of Performance) is the average COP over a whole year, accounting for the fact that the heat pump works harder in winter and less in summer. A typical SCOP for a well-installed system is 3.0–3.5.

An SCOP of 3.0 means that over the year, your heat pump delivers three units of heat for every one unit of electricity. That is what makes it so much cheaper than gas, despite electricity costing more per unit.

What Affects Your Running Costs?

Insulation

A well-insulated home needs less heat. Less heat means less electricity. If your home has good loft insulation, double glazing, and reasonable wall insulation, your running costs will be towards the lower end. A poorly insulated home will cost more — but it will still cost less than gas or oil.

How You Use the Heating

Heat pumps work most efficiently when they run at a low, steady temperature for longer periods. Short blasts of high-temperature heating — the way most people run a gas boiler — makes a heat pump work harder and reduces its efficiency.

The good news is that this is easy to adapt to. Most people simply set the thermostat to their preferred temperature and let the heat pump manage itself. It is actually simpler than running a boiler with a timer.

Your Electricity Tariff

This makes a bigger difference than most people realise. Standard electricity tariffs charge roughly 24p per kWh. But there are heat pump-specific tariffs that offer significantly cheaper rates for off-peak heating.

Octopus Cosy and similar tariffs offer cheap rates during off-peak hours — sometimes as low as 10–12p per kWh. Because a heat pump with a hot water cylinder can heat water during cheap periods and store it, you can shift a lot of your energy use to the cheapest times.

On a heat pump tariff, annual running costs of £600–£800 for a three-bedroom house are achievable.

System Design

A well-designed system with properly sized radiators, running at the right flow temperature, will achieve a higher COP than a poorly designed one. This is why installation quality matters so much. A badly designed system can cost 30–40% more to run than a good one. We cover this in our main heat pump page.

What About Maintenance Costs?

Heat pumps need an annual service, which typically costs £100–£150. There is no gas safety certificate to pay for, no combustion analysis, and no flue inspection. There are fewer moving parts than a gas boiler, so repairs are less frequent.

Over the lifetime of the system, maintenance costs are lower than a gas boiler.

The Long-Term Picture

Over a 20-year lifespan, the running cost savings from a heat pump compared to gas are typically £10,000–£14,000. Compared to oil, they can be £16,000–£26,000. That more than covers the higher upfront cost, even before the £7,500 grant.

And as electricity prices continue to shift relative to gas and oil — particularly as more renewable generation comes online — the economics are only likely to improve.