Heat Pump vs Gas Boiler Payback Calculator (UK)

Heat Pump vs Gas Boiler Guide (UK)

How Heat Pumps Work?

An air source heat pump (ASHP) extracts heat from outside air using a refrigeration cycle and delivers it to your radiators or underfloor heating. Works even at -10°C outside — heat is moved, not generated. SCOP (Seasonal Coefficient of Performance): the average ratio of heat delivered to electricity used over a full UK heating season. Modern ASHPs: 2.8-3.5 SCOP typical. 3.5-4.0+ for ground source or well-designed installations. A SCOP of 3.0 means 1 kWh electricity delivers 3 kWh heat. Compared to a gas boiler's efficiency of roughly 90%, even a modest SCOP of 3.0 delivers noticeably more heat per unit of energy input.

What should I know about Cost Comparison Reality (2026/27)?

Per kWh of heat delivered (UK price cap 2026/27): gas: ~7p/kWh fuel cost. ÷ 90% efficiency = ~7.8p per kWh of heat. Heat pump: ~25p/kWh electricity. ÷ SCOP 3.0 = ~8.3p per kWh of heat. Basically the same on current tariffs. Where heat pumps win: heat pump tariffs (Octopus Cosy, British Gas Heat Pump tariff) offer 18-22p/kWh during off-peak heating windows. Bring heat pump cost per kWh of heat down to 6-7p — cheaper than gas. Heat pump tariffs typically have higher peak rates — for example Octopus Cosy, which offers cheaper rates specifically during typical heat pump running hours, in exchange for a higher rate at other times.

What's the key thing to understand about Installation Cost and BUS Grant?

Typical ASHP installation: £10,000-£16,000 unmodified. Includes: outdoor unit, indoor unit (or hydrobox), hot water cylinder, controls, installation labour, commissioning. Larger systems for poorly-insulated homes: £14,000-£20,000+. Boiler Upgrade Scheme (BUS): £7,500 grant for air source heat pump (was £5,000, increased October 2023). Available to homeowners and small landlords in England, Wales, Scotland. Net cost after grant: £2,500-£8,500 typical for ASHP. Versus £2,500-£4,500 for a replacement gas boiler, meaning the upfront cost gap after the grant is often smaller than people expect.

What do I need to know about Suitability Checklist?

Heat pumps work well in: well-insulated homes (EPC C or better ideally — D acceptable if no major draughts). Homes with low-temperature heating systems (underfloor heating preferred; oversized radiators acceptable). Homes with outdoor space for unit (1m+ clearance, not in enclosed alcove). Homes with reliable electricity supply. Heat pumps work poorly in: poorly-insulated solid wall pre-1920 properties (need expensive insulation upgrades first). Homes with undersized radiators kept at high-temperature settings, since heat pumps work best with larger radiators or underfloor heating running at lower flow temperatures than a gas boiler typically uses.

What's the key thing to understand about Why Heat Pumps Are More Efficient Than Gas Boilers?

A heat pump doesn't generate heat by burning fuel the way a gas boiler does — instead, it extracts existing heat from the outside air (or from the ground, for ground source systems) and concentrates it to a useful temperature using a refrigeration cycle, similar to how a fridge works in reverse. This means a heat pump can typically deliver three to four units of heat energy for every one unit of electrical energy it consumes (expressed as a Coefficient of Performance, or CoP, of roughly 3–4), compared with a modern gas boiler converting close to, but never more than, one unit of heat for each unit of gas burned, since a boiler is fundamentally limited by combustion efficiency in a way a heat pump isn't. Whether this efficiency advantage translates into lower running costs depends on the relative price of electricity versus gas per unit of energy, which varies significantly by country and over time — in markets where electricity costs several times more than gas per unit of energy, a heat pump's efficiency advantage can be partly or fully offset by the higher price of the electricity it runs on, while in markets with a smaller price gap between electricity and gas, heat pumps more clearly deliver lower running costs. This is why a genuine, locally accurate running-cost comparison needs both the specific heat pump's expected CoP for the property and current local electricity and gas prices, rather than a generic assumption that heat pumps are always cheaper to run simply because they're more efficient.

What should I know about Property Suitability and Upfront Cost Differences?

Heat pump performance, and therefore the realistic payback calculation, depends significantly on how well-suited a specific property is to lower-temperature heating. Heat pumps generally work most efficiently when paired with a well-insulated property and larger heat emitters (bigger radiators, or ideally underfloor heating) that can deliver comfortable warmth at a lower water temperature than a traditional gas-boiler-sized radiator system is designed for — retrofitting a heat pump into a poorly insulated older property with small, high-temperature-designed radiators often requires radiator upgrades or additional insulation work to achieve good efficiency and comfort, adding to the upfront cost beyond the heat pump unit itself. Upfront installation cost for a heat pump is typically substantially higher than for a comparable gas boiler replacement, even before accounting for any necessary radiator or insulation upgrades, though government grants or incentive schemes in many countries (which change periodically and should be checked for current eligibility and amount) can significantly offset this gap for qualifying households. Because of this higher upfront cost, the payback period calculation needs to weigh the higher initial investment against the ongoing running cost difference over a realistic number of years, and for many properties — particularly those requiring significant additional upgrade work — the honest payback period can be considerably longer than the running-cost saving alone might suggest, which is worth factoring in alongside the genuine environmental benefits of moving away from fossil fuel heating.

Reference: Efficiency by Heat Pump Type

SCOP (Seasonal Coefficient of Performance) matters more than the manufacturer's headline COP figure, because COP is usually measured at a single, favourable outdoor temperature, while SCOP averages performance across a full heating season including cold spells when a heat pump works hardest and its efficiency drops.

Worked Example: Payback on a Typical 3-Bedroom Semi

A gas boiler replacement would cost around £3,000 and the home currently uses 12,000 kWh of gas a year, costing roughly £420 at a typical gas unit rate of around 3.5p/kWh plus standing charge. Switching to an air source heat pump with a SCOP of 3.2 needs roughly 12,000 / 3.2 = 3,750 kWh of electricity (heat demand is similar, but a heat pump running at a lower flow temperature for longer periods in a home without extra insulation upgrades may need a modest uplift — this example keeps it simple). At a typical electricity rate of around 25p/kWh: 3,750 x £0.25 = approximately £938 a year — more expensive to run than the gas boiler at these specific rates. Installed cost: heat pump around £11,000 minus the Boiler Upgrade Scheme grant of £7,500 (England and Wales, current scheme) = £3,500 net, against roughly £3,000 for a straight boiler swap. On running costs alone this example heat pump costs more to run per year than gas at current UK retail price ratios, which is a real and common outcome — the economics only clearly favour a heat pump where the home has a lower electricity-to-gas price ratio (some fixed heat-pump tariffs offer this), where the property is well insulated enough to need a genuinely lower heat demand, or where the comparison also counts a boiler's remaining lifespan and future gas price risk, not running cost in isolation.

Running Cost at Different Electricity-to-Gas Price Ratios

Heat pump running costs depend heavily on the ratio between electricity and gas unit prices, since a heat pump uses electricity but typically needs only a fraction of the energy input a gas boiler needs for the same heat output (thanks to its coefficient of performance, or COP).

Because this ratio shifts with energy policy and wholesale prices, the running-cost comparison can flip within a few years even without any change to the property or the heat pump itself. A heat pump with a consistently high COP (3.5-4.0, typical of well-sized systems in well-insulated homes) stays competitive across a wider range of price ratios than an undersized or poorly-installed system running at COP 2.0-2.5.