Heat pump running costs: how size, insulation and flow affect bills

What to know first

These figures show why three recognisable UK homes can have very different annual heat pump costs.

Heat pump running costs depend mainly on how much useful heat a home needs and how efficiently the installed system supplies it. Size matters, but insulation, draughts, room temperatures, local weather and hot-water use can change the answer substantially.

System design matters too. A heat pump serving adequately sized radiators at a lower water temperature may use less electricity than one working harder at a higher temperature. The figures below therefore show a range, not an “average”.

The quickest way to estimate a heat pump’s running cost

Use this starting calculation:

Annual useful heat demand ÷ seasonal performance factor × electricity price

“Useful heat demand” is the heat delivered for space heating and hot water. The seasonal performance factor, or SPF, is the useful heat delivered over a season for each unit of electricity used. An SPF of 3 means roughly three units of heat per unit of electricity.

A home needing 10,000 kWh of useful heat at SPF 3 would use about 3,333 kWh of electricity. At 26.11p/kWh, that is about £870 a year, before the electricity standing charge. This rate is Ofgem’s Great Britain average for a standard variable tariff paid by Direct Debit from 1 July to 30 September 2026.

Ofgem said on 27 May 2026:

Three modelled homes: from an insulated terrace to an older detached house

This table is a starting point, not a quotation or prediction. It uses rounded annual useful-heat assumptions covering space heating and stored hot water, with electricity fixed at 26.11p/kWh.

The heat demands are editorial assumptions, not national averages. The SPF values are sensitivity cases: flow temperature affects efficiency, but does not determine SPF by itself. Northern Ireland is outside the Ofgem cap and needs a local tariff input.

For context, a government-funded demonstration project installed 742 heat pumps in varied terraces, semis, detached houses and flats; 68% were built before 1980. Monitored air source systems had a median whole-system SPF of 2.78.

Expert insight

“Insulation and system design act on different parts of the calculation. Insulation reduces heat demand; efficient low-temperature design reduces the electricity needed to meet it.”

Giles Crosse

Energy Editor

Experienced editor, journalist and communications consultant specialising in consumer energy and low carbon technologies.

• Editor and campaign author for Shell, EDF Energy and Good Energy.
• Consultant to the United Nations and contributor to the World Economic Forum.
• Journalist for Reuters, the BBC, The Economist and The Guardian.

More about Giles Crosse

Why flow temperature can change the bill

Flow temperature is the temperature of water leaving an air-to-water heat pump for the radiators or underfloor heating. A smaller temperature lift between the outside air and this water generally makes the heat pump’s job easier.

Lowering it only works if the heat emitters can still deliver enough warmth. That may require larger radiators, underfloor heating, lower heat loss or longer operating periods.

Weather compensation automatically lowers the water temperature in milder weather and raises it when it is colder. Energy Saving Trust said on 19 May 2026 of the heating curve:

A design flow temperature normally applies at the local winter design condition, not every day. Product seasonal coefficient of performance, or SCOP, figures may also be stated at different test temperatures, so compare like with like.

Good to know

Ask for the cold-weather design flow temperature and heating-curve settings. “55°C system” does not necessarily mean 55°C all year.

How house size and insulation change the result

Larger homes generally need more heat because they have more exposed fabric and air volume. Shape matters: a compact mid-terrace can lose less heat than a detached home of the same floor area.

Official 2026 analysis found that energy consumption increased with property floor area. More energy-efficient houses tended to use less gas even after floor area was considered, while newer properties generally used less gas per square metre.

Past gas use is only a clue. It can include cooking and hot water, some fuel is lost through boiler and system inefficiency, and household behaviour changes consumption.

An older home is not automatically unsuitable. The demonstration project covered many ages and property types. The practical test is whether a correctly sized system and its heat emitters can meet each room’s heat loss at the proposed flow temperature.

MCS guidance calls for room-by-room heat-loss calculations covering building fabric, dimensions, ventilation, target indoor temperatures and local winter conditions. It warns that a property survey is needed before final design or contract.

Will a heat pump cost less to run than a gas boiler?

Not necessarily. From 1 July to 30 September 2026, Ofgem’s capped averages are 26.11p/kWh for electricity and 7.33p/kWh for gas. Electricity is therefore about 3.56 times the gas unit price.

Assume, for illustration, that a gas boiler converts 85% to 90% of its fuel into useful heat over a season. On those unit rates, a heat pump’s unit-cost break-even point is roughly SPF 3.0 to 3.2. This is editorial arithmetic, not an official threshold.

At SPF 2.5, a heat pump may cost more per unit of useful heat than gas under these assumptions; at SPF 3.6, it may cost less. Tariffs, boiler performance, settings and whether the gas supply is removed can change the result. Other fuels need separate comparisons.

Good to know

The average capped gas standing charge is 29.04p a day for this quarter, about £106 over a year. It normally remains while the property keeps a gas meter.

What to ask before accepting a running-cost estimate

1. What annual heat demand is assumed? Ask for space heating and hot water in kWh, not only heat-pump output in kW.

2. Was heat loss calculated room by room? Each radiator or other emitter should meet its room’s requirement.

3. What flow temperature and heating curve are proposed? Ask about both the coldest design day and milder weather.

4. What does the efficiency figure include? A product SCOP and predicted whole-system SPF are not interchangeable. Check pumps, hot water and backup immersion use.

5. How sensitive is the result? Ask for costs at higher and lower SPFs and electricity prices.

An MCS-certified contractor can produce the formal heat-loss and system design for an MCS installation. Energy Saving Trust recommends certified installers and at least three quotations. Each quote should identify the heat pump, cylinder, emitters, controls, electrical work and other changes.

Upfront cost and grants are separate

Energy Saving Trust put a typical air source heat pump installation at about £11,000 in February 2026. Property size, pump size, radiator upgrades and other work can change the quotation.

In England and Wales, the Boiler Upgrade Scheme offers £7,500 towards an air-to-water heat pump. From 21 July 2026 to 31 March 2027, £9,000 applies to eligible off-gas-grid properties replacing oil or liquefied petroleum gas with an air-to-water or ground source system. The installer applies and detailed conditions still matter.

Scotland lists up to £7,500 grant funding for qualifying heat pumps, an optional £7,500 interest-free loan and a £1,500 rural or island uplift. Energy Saving Trust said Northern Ireland had no specific domestic heat-pump grant when checked on 24 July 2026, although insulation support may be available.

Key takeaways

• Heat demand and seasonal efficiency matter more than bedroom count alone.

• At July 2026 capped electricity prices, the model spans about £440 to £2,090 a year.

• Insulation lowers heat demand and may make lower-temperature design easier.

• Higher flow temperatures can make the running-cost case harder, but do not automatically make a home unsuitable.

• Heat pumps are not automatically cheaper than gas at current unit rates.

• Use a room-by-room survey and transparent cost calculation before relying on an estimate.

Frequently asked questions