How much does a heat pump cost to run?
There are two costs to consider when updating your heating: the upfront investment and the ongoing running costs. Here, we compare air source heat pump running costs with gas, oil and LPG boilers. And the short answer is, as well as being greener, a heat pump is more cost effective, too.
Heat pump running costs and savings compared to other heating systems vary from property to property. Costs depend on several things including:
- the price of the fuel you’re switching from
- how efficient your old heating system was
- the heat loss at your property
- how much hot water you use
- the temperature you’d like your heating to be.
With that in mind, here are some realistic figures to help you understand whether a heat pump will make financial – and not just environmental – sense for your home.
How we’ve worked out heat pump running costs
For the examples below, we use an average annual heat demand of 12,000 kWh, which is based on Ofgem’s typical domestic consumption values for a medium-sized household. Please note, these graphs below compare the potential costs for heating your home, and do not include your other electricity uses.
Our calculations assume that your air source heat pump will meet a Seasonal Coefficient of Performance (SCOP) of 3.4. According to our monitoring data from previous installs, we can see that our customers’ heat pumps use around 80% of their annual energy between 01 October and 31 March. Our calculations below reflect this too.
Air source heat pump vs oil boiler
Air source heat pumps are far more cost-effective than oil-fired boilers, even when oil prices are low. One of the other main advantages is that electricity prices tend to change much less frequently than heating oil, which can spike and drop on a daily basis. So, as well as being cheaper to run, a heat pump gets rid of the hassle of keeping an eye on volatile oil prices and having to schedule deliveries.
As our example shows, an air source heat pump can be cheaper to run than an oil boiler, particularly if you are replacing an old, innefficient oil boiler.
Estimated annual heating costs of air source heat pumps and oil boilers for a medium-usage household with a heat demand of 12,000kWh. Running costs based on the following kWh prices (April 2024 price cap): £0.245 for electricity;12 month average oil price up until April 2024 of £0.064/kWh; heating efficiency of 70% for old oil boilers, 90% for modern oil boilers and 340% for air source heat pumps.
Air source heat pump vs LPG boiler
The relatively low efficiency of LPG boilers compared to air source heat pumps makes them more expensive to run. This is especially true if you have an older LPG boiler running at about 70% efficiency, which could currently cost you more than twice as much in annual heating costs compared to an air source heat pump.
What’s more, LPG boilers are more exposed to frequent price chances due to volatility in the gas market, with LPG prices reaching peaks of nearly 90p per litre in 2022.
Estimated annual heating costs of air source heat pumps and LPG boilers for a medium-usage household with a heat demand of 12,000kWh. Running costs based on the following kWh prices (April 2024 price cap): £0.245 for electricity; average LPG price as of April 2024 of £0.072/kWh; heating efficiency of 70% for old LPG boilers, 90% for modern LPG boilers and 340% for air source heat pumps.
Air source heat pump vs gas boiler
An air source heat pump is likely to be cheaper to run than a gas boiler because of the greater efficiency, even though gas rates are lower than electricity rates. Moving from a gas boiler to an air source heat pump could also save you £114 a year in gas standing charges, as you wouldn’t need a gas connection anymore. We have reflected this saving in our graphs.
The potential savings may even grow in the future. This is because the government is indicating that levies currently raised on electricity (around 25% of its price) may be partly raised on gas instead or shifted away from electricity altogether.
Estimated annual heating costs of air source heat pumps and gas boilers for a medium-usage household with a heat demand of 12,000kWh. Running costs based on the following kWh prices (April 2024 price cap): £0.245 for electricity; £0.06 for gas with a £0.31 daily standing charge; heating efficiency of 70% for old gas boilers, 90% for modern gas boilers and 340% for heat pumps.
In summary, despite gas and oil being cheaper per unit, the higher efficiency of an air source heat pump means that you’re not just likely to balance out your electricity costs – a properly designed system can save you money too.
How to work out a more personalised heat pump running cost estimate
If you know your annual space heating demand (your EPC should detail this information), the efficiency of your heating source and the price for your heating fuel, you can calculate the running costs for your own property to get an initial idea before starting a heat pump quote. It won’t replace the insights gained from a properly conducted heat loss survey but it’s a good place to begin.
How to reduce your electricity bills further
One of the most direct ways to save money on your electricity bills long term is to start generating it. Getting solar panels installed means you can meet some of your home’s electricity demand yourself, rather than buy it from an energy supplier. New tariffs such as export tariffs, which pay you for any electricity you send to the energy grid, help make solar panels even better value. Find out more about how solar panels can help you make your home greener and more energy self-sufficient on our blog.
