The Energy Saving Trust has crunched over a million combinations of heat pumps, tariffs and add-on technologies. The headline is simple: the right tariff matters as much as the right pump.
As reported by the Energy Saving Trust, the study modelled every plausible combination across 100,000 UK homes. The finding that matters most: a heat pump on a time-of-use tariff (Economy 7, Octopus Agile or similar) can cut annual heating bills by up to 40% compared with a gas boiler on a standard variable tariff. That is roughly £300 a year for a typical 3-bed semi using 12,000 kWh of gas and 3,000 kWh of electricity.
Why the tariff matters more than the hardware
Heat pumps run most efficiently when they operate for long periods at low output. Time-of-use tariffs reward that pattern by offering cheaper electricity overnight or during off-peak windows. The study found that pairing a heat pump with a standard flat-rate tariff delivers savings of only 15–20% over gas, decent, but not transformative. Add a smart tariff and the savings double.
The catch is that not every home can access these tariffs. Ofgem data shows that around 60% of UK households are on standard variable tariffs, though smart meter rollout has opened time-of-use options to most. Octopus Energy now offers its Agile tariff to any home with a smart meter, and British Gas, EDF and E.ON have followed with similar products.
Smart controls and thermal storage are the real game-changers
The analysis also tested 15 different control strategies. The best-performing combination used a smart thermostat that learned the home’s heat loss profile and preheated the fabric of the building before the cheap-rate window ended. This approach cut peak-time electricity use by 55%.
Thermal storage, essentially a well-insulated hot water cylinder, was the second most impactful variable. Homes with a 200-litre cylinder and a heat pump saved an extra £80 a year compared with those using a combi-style setup, because they could store cheap-rate heat for morning showers and evening radiators.
What this means for your EPC and grant eligibility
EPC ratings improve by at least two bands when a heat pump is paired with a smart tariff and a cylinder, according to the Trust’s model. That moves a typical D-rated home to a B rating, unlocking access to the £7,500 Boiler Upgrade Scheme grant and potentially raising the property’s value by 5–8%.
But the study is honest about the barriers. Not every home has space for a 200-litre cylinder, and not every roof can take the solar panels that make the tariff optimisation even more powerful. Homes with lofts that can fit 300 mm of insulation and cavity walls that can be filled will see the biggest gains.
What to do now
Households considering a heat pump should first check their current tariff. If it is a flat-rate standard variable, switching to a time-of-use tariff before installation can add £100–150 a year to the savings. Second, measure the hot water cylinder space. If there is room for at least 150 litres, the payback period on the heat pump shortens by about two years. Third, apply for the Boiler Upgrade Scheme through a certified installer, the £7,500 grant is available until March 2028.
Frequently Asked Questions
Yes, most time-of-use tariffs require a smart meter to track when you draw electricity. If you don't have one, your supplier will typically install it free of charge. Octopus Agile, for example, requires a smart meter to access half-hourly pricing.
The Energy Saving Trust study found that homes with uninsulated cavity walls or less than 100 mm of loft insulation saw savings drop by about 30% compared with well-insulated homes. Insulation should be the first upgrade, not the heat pump.
