Executive summary
Heat pumps are central to the UK's plan to decarbonise home heating, but for households the decision comes down to cost. This report sets out realistic installation costs, running costs against a modern gas boiler, and how grants change the maths.
The verdict is nuanced: a well-installed heat pump in a reasonably efficient, well-insulated home on the right electricity tariff can be cost-competitive with gas — but insulation and tariff choice matter as much as the unit itself.
Key findings
- Running cost parity with gas depends heavily on the electricity-to-gas price ratio and the pump's efficiency (SCOP).
- Grants can cover a large share of installation cost, transforming the payback calculation.
- Poorly insulated homes see far worse running costs — efficiency work should come first.
- A time-of-use electricity tariff can significantly cut heat pump running costs.
Installation costs in 2026
Typical installed costs vary with property size and system complexity. Grants available through government schemes substantially reduce the upfront figure for eligible households.
The biggest cost variable is whether radiators and pipework need upgrading to run at lower flow temperatures.
Running costs versus gas
A heat pump delivers several units of heat per unit of electricity, so its effective cost depends on its efficiency and your electricity price. On a standard tariff the saving over gas can be marginal; on a well-chosen time-of-use tariff it improves markedly.
We model typical scenarios to show where a heat pump wins and where it does not.
Download the full PDF report
Get the complete, high-resolution PDF companion — free, with an optional subscription to PowerGuardian Energy Intelligence.
Methodology
- Running costs are modelled using typical heat pump SCOP values and current electricity/gas unit rates.
- Installation and grant figures reflect published UK scheme parameters at time of writing.
Sources & references
- DESNZ — UK energy statistics — Department for Energy Security & Net Zero
- Ofgem — Energy price cap — UK regulator's quarterly price cap announcements
- Ofgem — Typical Domestic Consumption Values — Standard usage assumptions for UK households
Figures are checked against primary sources before publication. See our methodology for details.
Editorial note
PowerGuardian publishes independent, UK-focused research, analysis and commentary on household energy costs. Confirmed data, our own estimates, forecasts and scenarios are labelled separately so you can see which is which.
This report is reviewed at each Ofgem price cap announcement and whenever a source dataset it relies on is revised. It was last reviewed on 9 July 2026.
We take no commission from energy suppliers for the rankings, scores or figures shown here.
Read our editorial policy and corrections policy.
