Heat pump calculator: How much would a heat pump cut your energy bill?

Combining an efficient heat pump with an energy tariff that discounts the energy used to run it can make heat pumps a temptingly cost-effective choice.

We've released a new online calculator tool, which shows that by switching to the most appropriate electricity tariff, heat pump owners' ongoing energy bills can be lower than those of the equivalent gas or oil boiler.

With the right combination of an efficient heat pump and the most suitable tariff, households with a typical energy demand could save more than £500 a year on bills. 

Sounds too good to be true? We’ve looked at the options to find out how to do it.

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But aren’t heat pumps expensive?

While the initial upfront cost to install a heat pump can be more than £10,000, it may be much cheaper depending on your situation. The government-funded Boiler Upgrade Scheme offers a discount of £7,500 on the upfront price for homeowners in England and Wales. The Scottish government also offers a similar scheme.

However, as well as that initial outlay, another commonly cited concern around installing a heat pump is the risk of potentially high running costs. And with good reason: heat pumps are powered by electricity, which is currently much more expensive, per unit of energy, than gas. 

The energy price cap between 1 April and 30 June 2025 is 27.03p/kWh for electricity and 6.99p/kWh for gas. Even allowing for the relative inefficiency of a gas boiler, to match the running costs of gas central heating, a heat pump would have to be more than three times as efficient to make up for the difference in price.

And although heat pumps can have a seasonal coefficient of performance (SCOP) of 4.0 or more, indicating 400% efficiency across the year, there has been criticism that in cold weather they simply don’t perform at that level. That can result in higher bills or a cold home, which few people are willing to risk.

But what if the electricity running them was considerably cheaper than the current price cap rate? Suddenly the calculations look more promising.

Can heat pump running costs match those of gas boilers? 

Our new heat pump cost savings calculator, below, shows how much you might save compared with your current gas boiler. The tool was created in collaboration with Ambient, an independent not-for-profit organisation that supports the acceleration of electrified heating and cooling solutions, and Dr Jan Rosenow, Energy Programme Leader at the Environmental Change Institute at the University of Oxford*.

The calculator is interactive, so you can input your own annual consumption figure to see a tailored savings estimate.

Using the average annual household gas consumption (11,500kWh) and typical boiler efficiency (85%), the running costs for a heat pump can match or beat the costs for a gas boiler, even when paying standard capped energy prices. For a heat pump with a SCOP of 3.0 (300% efficient), households can save around £43 a year on a standard price-capped tariff.

Get more details on how to make the most of the calculator and see a worked example in our guide to air source heat pump costs and savings. 

Heat pump electricity tariffs make for the best savings 

The biggest energy bill savings for people with heat pumps can be made by switching to a time-of-use tariff or a heat pump tariff that means the electricity powering your heat pump is considerably cheaper than the price cap.  

On an Octopus time-of-use tariff with a unit price of 17.99p/kWh, typical energy use households can save around £331 per year at SCOP 3.0 or as much as £476 per year at SCOP 4.0, compared to running a gas boiler.

OVO’s Heat Pump Plus tariff offers a rate of 15p/kWh for the energy used by the heat pump only; a standard rate applies to all other energy use. This could result in annual savings of £428 for a SCOP 3.0 heat pump, and more than £500 for SCOP 4.0, compared to running a gas boiler.

Start by saving on heat pump installation

Unless you have plenty of cash that you're willing to spend, you'd be forgiven for thinking a heat pump is out of reach. But there's a surprising amount of money to be saved on a heat pump at the moment. 

A government grant available under the Boiler Upgrade Scheme (BUS) contributes £7,500 for homes in England and Wales. This can be used to pay for a heat pump installation when replacing an existing fossil fuel heating system.

You'll need an MCS-certified installer who can apply for the BUS grant on your behalf. MCS hosts a database of MCS-certified contractors you can use.

The Scottish Government funds the Home Energy Scotland grant and loan scheme. For air-source heat pumps the grant is up to £7,500, plus an additional £1,500 for households that qualify for a rural uplift. The remainder of the cost may be offered as an interest-free loan up to £7,500.

The UK government's Energy Efficient Home website helps you find out about the actions you can take to make your home more energy efficient. It includes links to find out if your home is suitable for a heat pump, and to check if you're eligible for a grant.

Many energy suppliers offer heat pumps and installations, with some claiming prices as low as £500 with a BUS grant. 

Get more information about buying a heat pump through an energy company.

If your home is well insulated, with suitably sized radiators and an existing hot water tank, you may get a heat pump installed for that price. For most, however, it's likely to cost more, as you may need insulation, radiator upgrades and other 'extras'.

Once you've had your heat pump installed at a significant discount, the numbers show that your savings will mount up more quickly if you use a specialist heat pump tariff.

Which heat pump tariff is best?

There are relatively few tariffs currently on the market designed for heat pump owners. As new tariffs become available, the savings calculator above will be updated to show them for comparison purposes.

You'll need to have a smart meter that records half-hourly consumption to sign up for one of these, or any other time-of-use tariff.

As more switching options become available, expect to see heat pump tariffs from other energy suppliers. Other time-of-use (ToU) tariffs may also be suitable, depending on your pattern of use, but be careful of tariffs with very high peak rates, as you may not save money if you’re unable to shift your energy use away from those times (typically 4-7pm).

The cheapest tariff for you will depend on when you use the most energy, and how flexible you can be with your electricity use. To make the greatest savings, you'll probably need to schedule your heating, hot water and appliances using electronic timers or smart programmers, or be at home most of the day to manually switch things on and off at the right times.

Bear in mind that specialist time-of-use tariffs won't show up on energy comparison services, so you'll need to look into what specific providers can offer for your circumstances.

Get more information about time of use tariffs or head to our guide on how to get the best energy deal.

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Note: The heat pump running costs savings calculator was developed in collaboration with Ambient, an independent not-for-profit organisation that supports the acceleration of electrified heating and cooling solutions, and Dr Jan Rosenow, Energy Programme Leader at the Environmental Change Institute at the University of Oxford and Jackson Senior Research Fellow at Oriel College, Oxford.