A lot has been written about heat pumps, with the technology pushed as an efficient way to decarbonise our home heating and hot water systems. Yet, as brilliant as heat pumps are, there’s been a lot of negative coverage, including column inches on how homes can be colder and more expensive to run.
A lot of the negativity is based on myth, but some factors impact how much a heat pump could cost to run, and it’s time that the electricity system was overhauled to bring the cost down.
Gas vs electricity
Most homes in the UK have heat and hot water provided by a gas boiler, burning gas to create heat. The problem with this is twofold: gas releases CO2 when burned, and it’s also not particularly efficient.
In fact, UK Government research from July 2023 showed that gas boilers are typically between 75% and 85% efficient. That means that for every kWh of input, only between 0.75kWh and 0.85kWh of heat is generated.
With a brand-new condensing boiler set to the correct temperature, efficiency can increase, but you’re still looking at 90%+ efficiency, and under 100% for sure.
Traditional electric heating, such as provided by a fan heater, is pretty much 100% efficient. That is, all input electricity is converted to heat.
Look at heat pumps, and they work by absorbing heat from outside (air and ground are the most common sources), and move it inside. They effectively work like a fridge in reverse, moving heat from one place to another. As a result, they are highly efficient.
Heat pump efficiency is measured by the Coefficient of Performance (COP), which is the ratio of heat output in kWh compared to the input electricity in kWh. As the COP can vary over a season due to varying outdoor temperatures, heat pumps usually have a seasonal performance factor (SPF) rating, which is the average COP over a typical heating season.
How well insulated your home is, how well configured the heat pump is, as well as the model you’ve bought, all affect the SPF, but a typical air-source heat pump will have an SPF of 2.8 (280% efficiency) and a ground-source heat pump an SPF of 4.1 (410% efficiency).
In other words, for a typical air source heat pump, every 1kWh of electricity consumed delivers 2.8kWh of heating output. That’s a huge efficiency, so surely that should mean that they’re cheaper to run? Sadly, that’s not the case.
Heat pump running costs
The ‘problem’ with heat pumps is that they use electricity, and electricity is currently expensive. Under the current energy price cap, which runs to September 20 2025, electricity is charged at 25.73p per kWh, and gas is charged at 6.33p per kWh.
Using average figures, a UK home needs around 9200kWh of heat for hot water and central heating. With a gas boiler at 90% efficiency, that requires an input of 10,222kWh, which would cost £647.05 at current pricing.
An air-source heat pump would only need an electricity input of 3286kWh of electricity. At current prices, that’s £845.49 per year.
These figures are based on simple averages and full-rate tariffs. Homes with time-of-day electricity tariffs and solar panels will see lower prices, and better insulated homes and those with properly configured heat pumps will also see lower bills.
However, what the average figures highlight is that there’s something rotten with the utility market, as a highly efficient heat pump really should be cheaper to run.
Unfair pricing
The big issue in the UK is the way that gas and electricity markets are run, and the E3G think tank has produced a report suggesting that market reform and other changes could reduce heat pump running costs.
Core of the analysis is reforming the way that electricity is priced. Shifting the green levies that currently apply could save £150 a year on bills. And, reforming the electricity market, to prevent gas-powered plants forom generating unjustified profits could save another £90.
E3G also suggests that improving heat pump SFP from 2.8 to 3.5 through better installations could save £140 per year. And, finally, making it easier to access off-peak electricity and shift heat pump loads to cheaper times could save another £175.
These kinds of savings could cut the cost of heat pumps roughly in half, making them a lot cheaper to run than gas boilers, giving a real incentive for households to buy one. Who can argue with that?
