An air source heat pump (ASHP) typically costs between £400 and £800 per year to run, compared to £900 to £1,200 for a gas boiler, making the heat pump around 30-50% cheaper on average under current 2026 fuel prices (Energy Saving Trust, 2026). This gap widens with a well-insulated home and a high-efficiency heat pump.
The exact saving depends on your heating system’s efficiency, your home’s insulation, and the fuel prices you pay. An ASHP with a Seasonal Coefficient of Performance (SCOP) of 3.5 uses 1 kWh of electricity to produce 3.5 kWh of heat. A gas boiler at 90% efficiency uses 1 kWh of gas to deliver 0.9 kWh of heat. With electricity at 24p/kWh and gas at 6p/kWh in 2026, the heat pump’s running cost per kWh of heat is about 6.9p, compared to 6.7p for gas, nearly identical at current rates. However, the heat pump often operates at higher efficiency in milder conditions, and the boiler loses efficiency over time.
How electricity-to-gas price ratio decides the winner
The key variable is the ratio of electricity to gas prices. As of early 2026, Ofgem’s price cap sets electricity at roughly 24p/kWh and gas at 6p/kWh, a ratio of 4:1 (Ofgem, 2026). For an ASHP with a SCOP of 3.5 to break even with a gas boiler at 90% efficiency, the ratio must be 3.9:1 or lower. At the current 4:1 ratio, the heat pump is marginally cheaper per unit of heat. If the ratio drops below 3.5:1, for example, if electricity falls to 20p/kWh, the heat pump becomes significantly cheaper. If the ratio rises above 4.5:1, gas wins.
Insulation and home size shift the cost gap
A poorly insulated home forces the heat pump to run at lower efficiency, especially in cold weather. The Energy Saving Trust notes that a heat pump’s SCOP can drop to 2.5 in a draughty home, raising running costs to around 9.6p per kWh of heat, 43% more than gas (Energy Saving Trust, 2026). Conversely, a well-insulated home with cavity wall and loft insulation can keep the SCOP above 4.0, cutting costs to 6p per kWh, 10% cheaper than gas. Home size also matters: a 3-bed semi-detached house uses roughly 12,000 kWh of heat per year, while a 4-bed detached uses 18,000 kWh. The annual saving in the well-insulated semi is about £100; in the detached, £180.
Boiler efficiency and heat pump grants affect the real cost
A new gas boiler at 94% efficiency costs about 6.4p per kWh of heat, narrowing the gap. But older boilers often run at 75-80% efficiency, costing 7.5-8p per kWh, making the heat pump cheaper even at a 4:1 ratio. The 2026 Boiler Upgrade Scheme offers a £7,500 grant for an ASHP installation, reducing upfront cost by roughly a third (GOV.UK, 2026). Without the grant, an ASHP installation costs £10,000-£14,000, versus £2,500-£4,000 for a new gas boiler. Over a 15-year lifespan, the heat pump’s lower running costs typically offset the higher upfront cost, saving £1,000-£2,000 total.
A worked example
A typical 1930s semi-detached home in the Midlands, with 90mm loft insulation and cavity wall insulation, saves roughly £320 per year by switching from a gas boiler to an air source heat pump. The gas boiler, running at 85% efficiency, costs around £1,050 annually to heat the home and provide hot water. The replacement heat pump, with a Seasonal Coefficient of Performance (SCOP) of 3.6, costs about £730 per year to run at 2026 electricity rates of 24p/kWh. After the £7,500 Bus grant, the net upfront cost for the heat pump installation is approximately £5,500. The Energy Saving Trust estimates that a well-installed system in a moderately insulated home delivers a 6-8 year payback on this investment. Over a 25-year lifespan, the total savings on fuel bills reach around £8,000, assuming fuel prices track the Ofgem price cap.
| Item | Figure |
|---|---|
| Upfront cost after grants | £5,500 |
| Yearly savings | £320 |
| Payback period | 7 years |
| 25-year lifetime savings | £8,000 |
What homeowners often get wrong
The most common mistake is assuming a heat pump’s running cost depends only on the electricity-to-gas price ratio. In reality, system efficiency and home insulation matter just as much. Here are three frequent errors.
- Ignoring the SCOP variance across seasons Many homeowners compare peak winter performance only. A heat pump’s SCOP can drop to 2.5 in freezing weather but average 4.0 in spring and autumn, meaning annual savings are higher than a single winter figure suggests. This oversight can lead to underestimating total yearly savings by up to 30%.
- Assuming all heat pumps need the same radiator temperature Some believe a heat pump requires larger radiators everywhere. In reality, a properly designed system often keeps flow temperatures at 45-50°C, which works with most existing radiators in a well-insulated home. Installing unnecessary oversized radiators can add £2,000 to £3,000 to the installation cost without improving efficiency.
- Overlooking the 0% VAT deadline Many homeowners delay installation thinking the grant alone is the only incentive. The 0% VAT on heat pump installations runs until March 2027, saving around £1,000 on a typical £12,000 system. Missing this window means paying the full 20% VAT, effectively increasing the upfront cost by that amount.
Quick reference
- An air source heat pump with a SCOP of 3.5 costs roughly 6.9p per kWh of heat delivered at 2026 electricity prices of 24p/kWh.
- A gas boiler at 90% efficiency costs about 6.7p per kWh of heat at 2026 gas prices of 6p/kWh, making the two nearly identical at current fuel ratios.
- The £7,500 BUS grant is available to all homeowners in England and Wales, regardless of income, and does not require repayment.
- For a heat pump to beat a gas boiler on running costs, the electricity-to-gas price ratio must be below 3.9:1 for a SCOP of 3.5, or below 4.5:1 for a SCOP of 4.0.
- Failing to insulate your loft to 270mm and your cavity walls can double a heat pump’s running costs, erasing any potential savings over gas.
Frequently Asked Questions
An air source heat pump costs between £400 and £800 per year to run, based on 2026 figures from the Energy Saving Trust. That’s roughly 30–50% less than a gas boiler.
Yes, a heat pump is typically cheaper to run than a gas boiler in 2026, saving 30–50% annually according to the Energy Saving Trust. The exact saving depends on your home’s insulation and the electricity-to-gas price ratio.
For an ASHP with a SCOP of 3.5 to beat a 90% efficient gas boiler, the electricity-to-gas price ratio must be 3.9:1 or lower. Ofgem’s 2026 price cap sets it at 4:1, making the heat pump marginally cheaper per unit of heat.
