How we calculate
Gas and electricity running-cost figures are based on Ofgem's 1 July – 30 September 2026 default tariff cap; oil figures are based on BoilerJuice's UK average kerosene price, 4 August 2026; install cost ranges are based on 2024 calendar year MCS installation data. Last reviewed August 2026. Gas, electricity and oil prices reflect the 1 July – 30 September 2026 Ofgem cap. However, the LPG running-cost figure and the Octopus Cosy tariff rates are not on that same basis and should be treated as less current — see the methodology for details. Treat all running-cost figures here as indicative, not a quote — get a fixed quote from an installer before deciding.
Install cost
Drawn from aggregated MCS installation records (2024 calendar year). We use a low–high range to reflect regional variation, complexity (radiator upgrades, pipework, cylinder replacements), and installer pricing differences. Mid-point is shown for payback calculations.
Heat demand
Per-property heat demand baselines come from Energy Saving Trust modelling, adjusted by an insulation multiplier:
- Good insulation: 85% of base demand
- Average insulation: 100% of base demand
- Poor insulation: 125% of base demand
Running cost
Calculated as useful heat × cost per kWh of heat delivered. Cost per kWh of
heat depends on fuel efficiency and tariff:
- Heat pump on Octopus Cosy: £0.053–£0.07 per kWh useful heat
- Heat pump on standard variable: £0.061–£0.079 per kWh useful heat
- Gas boiler: £0.084 per kWh useful heat
- Oil boiler: £0.106 per kWh useful heat
- LPG boiler: £0.155 per kWh useful heat
- Direct electric: £0.261 per kWh useful heat
Gas and direct electric are Ofgem's 1 July – 30 September 2026 default tariff cap (7.33p/kWh gas, 26.11p/kWh electricity, direct debit, incl. 5% VAT), converted to useful heat using a 87% gas boiler efficiency and 1:1 for direct electric resistive heating. Oil is BoilerJuice's UK average kerosene price of 93.03p/litre inc. VAT (4 August 2026), converted at 10.35 kWh/litre and 85% oil boiler efficiency. Heat pump standard-variable figures use the same 26.11p/kWh electricity price divided by SCOP (3.3 ASHP, 4.3 GSHP).
LPG has not been re-sourced. Bulk domestic LPG isn't covered by the Ofgem cap, and the figures we could find conflict: one aggregator quotes around 92p/litre, which looks like forecourt autogas rather than bulk domestic LPG; anecdotal domestic bulk reports cluster around 45–70p/litre instead. Rather than invent a number, the LPG figure above is carried over unchanged from an earlier, unverified basis (last reviewed 2024-10-01) — treat it as the least reliable figure on this page.
Octopus Cosy figures use a stated modelling assumption, not just a published
rate. Cosy's own published time-of-use rates for 1 April – 30 June 2026
— an earlier quarter than the Ofgem cap above — are 14.53p/kWh
off-peak (8 hours/day), 33.28p/kWh day rate, and 51.68p/kWh
peak (16:00–19:00). We blend these into a single effective rate by
assuming 60% of heat
demand is drawn in the off-peak window, 35%
at the day rate, and 5% in the
peak window — a load-shifting pattern a heat pump running mostly overnight and topping up
during the day could plausibly achieve, but not a guarantee for any individual household.
That gives 0.60 × 14.53 + 0.35 × 33.28 + 0.05 × 51.68 = 22.95p/kWh,
which we then divide by SCOP as above. If your household's actual usage pattern draws
more from the day or peak windows, your real Cosy running cost will be higher than shown
here.
Payback period
Calculated as net install cost (after grant) ÷ annual running cost saving.
Where saving is zero or negative, payback is "N/A" — the heat pump is run on running-cost
grounds alone, not financial payback.
What we don't model (yet)
- Annual maintenance cost differences (typically minor: £80–£150/yr both for HPs and gas boilers)
- Equipment replacement at end of life (HP unit ~15–20 yrs; boiler ~10–15 yrs)
- Carbon emissions / future carbon pricing
- EPC rating uplift effect on property value
These each have modest effect on totals but compound over time. Conservatively, modelling them tends to improve the heat pump case further — particularly versus oil and LPG.
Sources
- MCS installation cost data: MCS Installation Database, 2024 calendar year (unchanged in this refresh — not re-sourced).
- Heat demand baselines: Energy Saving Trust, "Heat Pump Performance Study", 2024.
- Gas and electricity prices: Ofgem default tariff cap, direct debit, incl. 5% VAT, 1 July – 30 September 2026.
- Heating oil: BoilerJuice UK average kerosene price, inc. VAT, 4 August 2026.
- LPG: not re-sourced — see the running cost note above. Figure retained from a basis last reviewed 2024-10-01.
- Octopus Cosy rates: Octopus Energy published Cosy tariff rates, 1 April – 30 June 2026.
- Boiler and heat pump efficiency assumptions used to convert the above into useful heat: 87% gas boiler, 85% oil boiler, 10.35 kWh/litre kerosene, SCOP 3.3 ASHP / 4.3 GSHP.