What will a heat pump actually cost to run?

The question we get asked most often before a heat pump survey is: what will it actually cost to run? The honest answer is that it depends on the property, the system design and how efficiently the heat pump is operated.

A blanket figure is almost always misleading. Two similar homes can have very different running costs if one is well insulated, has correctly sized radiators and runs at low flow temperatures, while the other is draughty and needs a higher flow temperature to stay warm.

What is useful is a framework for working out a realistic estimate for your specific situation. That is what this post provides.

What is the July 2026 price cap position?

From 1 July 2026, the Ofgem price cap for a typical household on a standard variable tariff is set at £1,862 per year. The electricity unit rate is 26.11p per kWh and the daily standing charge is 57.19p. Gas unit rates have risen more steeply to 7.33p per kWh, reflecting the ongoing exposure of gas prices to international wholesale markets.

For heat pump running costs, the electricity unit rate is the key figure. A heat pump runs on electricity. The more electricity it uses and the more that electricity costs per unit, the higher the running cost.

At 26.11p per kWh, and assuming a heat pump operating at an average Coefficient of Performance of 3, the effective cost of heat from a heat pump is around 8.7p per kWh of heat delivered. That compares with around 7.33p per kWh for gas, now closer than it was a year ago, and around 7 to 8p per kWh for oil at current prices.

What does COP mean and why does it matter?

COP stands for Coefficient of Performance. It describes how much heat a heat pump produces for each unit of electricity it consumes. A COP of 3 means the heat pump delivers 3 units of heat for each unit of electricity used. A COP of 4 means 4 units of heat per unit of electricity.

The COP of a heat pump is not fixed. It varies with the outdoor temperature and the flow temperature the heating system requires. A heat pump running at a flow temperature of 35 degrees in mild Devon winter conditions might achieve a COP of 3.5 to 4. The same heat pump running at 55 degrees flow temperature to compensate for an undersized radiator system or a poorly insulated property might achieve only 2 to 2.5.

This is why system design and property preparation matter so much for heat pump running costs. A heat pump installed into a well-insulated property with correctly sized radiators, running at low flow temperatures, will have significantly lower running costs than the same heat pump installed into a draughty property with undersized radiators running at high flow temperatures.

How do heat pump running costs compare with oil in Devon?

Devon has around 41,000 homes heated by oil. For these households, the comparison with a heat pump is often the most commercially relevant one.

Oil prices are not covered by the Ofgem cap and have been volatile. In July 2026, domestic heating oil is trading at around 63 to 67 pence per litre, depending on supplier and delivery volume. A typical Devon oil-heated home uses around 1,500 to 2,000 litres of oil per year for heating and hot water. At 65p per litre, that is an annual fuel cost of between £975 and £1,300 for the oil alone.

A heat pump replacing that oil system in the same property, assuming a modest average COP of 2.8 and the July 2026 electricity rate of 26.11p per kWh, would deliver similar heat at an annual electricity cost of between £900 and £1,250. At a COP of 3.2, which is achievable in a reasonably well-insulated Devon property, the annual cost falls to between £790 and £1,100.

The comparison is competitive and becomes more favourable when the Boiler Upgrade Scheme grant is factored in, since this reduces the upfront cost of switching and shortens the payback period relative to continuing to replace ageing oil equipment.

Can solar panels reduce heat pump running costs?

If your property has solar panels, or you are planning to add them alongside a heat pump, the running cost calculation changes significantly. Solar electricity generated during the day can power the heat pump during mild spring and autumn weather when heating demand and solar generation overlap.

A 5kWp solar system in Devon generates around 4,500 kWh per year. A heat pump serving a well-insulated 3-bedroom Devon property uses around 3,500 to 4,500 kWh of electricity per year for heating and hot water.

In a property where both are installed together and the heat pump controls are configured to maximise solar self-consumption, a meaningful proportion of annual heat pump electricity demand can be met from solar generation at no ongoing cost per unit.