Anyone who’s asked three different installers whether a heat pump will save them money has got three different answers. That’s not salesmanship — it’s because the honest answer is “it depends,” and this article shows you exactly what it depends on, with real numbers.
How running costs are actually worked out
Running cost isn’t just “which fuel is cheaper per unit.” It’s unit price divided by how efficiently your system turns that unit into heat in your home.
- A gas boiler burns fuel and loses some of it up the flue and in standby losses. Its output is measured as a percentage efficiency — how much of the gas’s energy actually ends up as useful heat.
- A heat pump doesn’t generate heat by burning something — it moves heat from the outside air (or ground) into your home using electricity to run a compressor. Its efficiency is expressed as a Coefficient of Performance (COP), or a seasonal average called SPF (Seasonal Performance Factor). An SPF of 3 means you get 3 kWh of heat into your house for every 1 kWh of electricity you put in.
So the real comparison is:
Cost per kWh of heat = (unit price of fuel) ÷ (efficiency of the system)
That single formula is why this is genuinely contested. A heat pump can win or lose depending on three things layered on top of it: the gap between electricity and gas prices, and the SPF you actually achieve — which in turn depends on your house.
Why electricity-to-gas price ratio matters so much
In the UK, electricity has historically cost roughly 3.5–4 times as much per kWh as gas, largely because a chunk of policy costs (funding renewables subsidies etc.) sits on electricity bills rather than gas ones. Under Ofgem’s price cap for October to December 2026, the average direct debit unit rates are 26.32p/kWh for electricity and 7.97p/kWh for gas — a ratio of about 3.3:1.
That ratio is the number a heat pump has to beat. If gas costs a third of electricity per unit, a heat pump needs to be roughly three times more efficient than the boiler just to break even on running costs, before it starts actually saving you money.
What determines whether you get there
Three things decide the real-world SPF a heat pump achieves in your specific house — and they’re the difference between a heat pump that saves you money and one that costs more than the boiler it replaced:
- Insulation quality. A well-insulated home needs a lower flow temperature to stay warm, and heat pumps are dramatically more efficient at lower flow temperatures (35–45°C) than at the 60–70°C a gas boiler comfortably runs at. Poor insulation forces the heat pump to work harder, tanking its efficiency.
- Radiator (or underfloor heating) sizing. Because heat pumps work best at low flow temperatures, they generally need bigger radiators than a gas system to deliver the same heat output into a room. Skip this step — a very common corner cut by installers to save cost — and the installer compensates by cranking up the flow temperature, which quietly wrecks the COP.
- COP achieved in practice vs lab conditions. Manufacturer COP figures are lab-tested under standardised, ideal conditions. Real installations rarely match them, because British weather, badly set-up controls, oversized or wrongly-specified units, and existing radiators all pull performance down.
The scale of this gap is well documented. The government-backed Electrification of Heat Demonstration Project, run by DESNZ (formerly BEIS) and monitoring 742 real heat pump installations across the UK, found a median SPF of 2.93 for air source heat pumps — a meaningful improvement on earlier field trials, but still a long way from the 4+ figures quoted in some marketing material. Crucially, it also found that only around 8% of air source heat pumps reached an SPF of 3.5 or higher, while a third of ground source systems did — underlining that installation quality, not just the technology itself, drives the outcome.
A worked example for a typical 3-bed home
Here’s the maths, using figures you can check yourself.
Inputs:
- Ofgem price cap, Oct–Dec 2026 (Direct Debit): electricity 26.32p/kWh, gas 7.97p/kWh
- Ofgem’s Typical Domestic Consumption Value (TDCV) for medium gas use, effective July 2026: 9,500 kWh/year (this covers heating, hot water and cooking for a typical home — a reasonable stand-in for a 3-bed semi’s heat demand)
- Gas boiler real-world efficiency: 84% (the fossil-fuel comparator figure used in the DESNZ Electrification of Heat report)
- Heat pump SPF: we’ll run three scenarios — 2.5 (poor installation), 2.93 (the DESNZ median for real installations), and 3.5 (a well-designed system)
Step 1 — work out useful heat demand: 9,500 kWh gas × 84% efficiency = 7,980 kWh of actual heat delivered per year
Step 2 — gas boiler running cost: 9,500 kWh × 7.97p = £757/year
Step 3 — heat pump running cost at each SPF:
| Scenario | SPF | Electricity needed | Annual cost |
|---|---|---|---|
| Poorly installed | 2.5 | 7,980 ÷ 2.5 = 3,192 kWh | 3,192 × 26.32p = £840 |
| Median real-world (DESNZ) | 2.93 | 7,980 ÷ 2.93 = 2,724 kWh | 2,724 × 26.32p = £717 |
| Well-designed | 3.5 | 7,980 ÷ 3.5 = 2,280 kWh | 2,280 × 26.32p = £600 |
What this means: at current prices, the break-even SPF is about 2.77 (26.32 ÷ (7.97 ÷ 0.84)). The DESNZ median of 2.93 sits just above that line — so a typically-installed heat pump today comes out modestly cheaper than gas, around £40/year in this example. But that margin is thin. Drop to a poorly designed system (undersized radiators, high flow temperature) and you’re paying roughly £80/year more than gas, not less. Get a well-specified system with decent insulation and correctly sized emitters, and the saving grows to roughly £150/year.
One more thing worth knowing: if switching to a heat pump lets you disconnect gas entirely, you also drop the gas standing charge (29.68p/day, or about £108/year at the current cap) — a saving that’s separate from the unit-rate maths above and often left out of comparisons.
This is a simplified illustration, not a quote — it ignores things like hot water cylinder losses, weather compensation controls, and your specific heat loss calculation. Treat it as showing the mechanism, not predicting your bill.
The bottom line
There is no universal answer to “will a heat pump cost more or less to run than my gas boiler” — anyone who tells you otherwise, in either direction, is oversimplifying. At current UK prices, a heat pump running at the average real-world performance found in the government’s own field trials comes out slightly cheaper than gas, but the margin is small and easily wiped out by a poor installation. The single biggest lever is not the technology — it’s whether your insulation, radiators and installer get the flow temperature down and the SPF up. Energy prices, tariffs and household heat demand vary significantly, so check the current Ofgem price cap before doing your own sums, and get a proper heat loss survey and MCS-certified installer quote — ideally through the Boiler Upgrade Scheme process — rather than relying on averages alone.
Sources:
- Ofgem: Energy price cap unit rates and standing charges
- Ofgem: Changes to the energy price cap, 1 October–31 December 2026
- Ofgem: Review of Typical Domestic Consumption Values — decision
- Heat Pump Association: Improvement in Heat Pump Performance highlighted by new Electrification of Heat Demonstration Report
- Energy Saving Trust: Boiler Upgrade Scheme explained
- GOV.UK: Apply for the Boiler Upgrade Scheme — what you can get