Air source heat pump costs and savings

It can cost more than £10,000 to buy and install an air source heat pump. But government grants can considerably reduce that. Find out more about heat pumps and how installing one might help you save on your energy bills. 

You can buy a heat pump from an energy company or from a private installer. The costs you should expect will be vary according to the size of the heat pump and the changes needed to your home. This will need to be assessed by an expert before you begin. 

While the up front costs are high, government support is currently available, which takes a significant chunk off the total bill. Heat pumps can also be much more efficient than gas boilers when installed and used properly, in well-insulated homes with the right sized radiators. 

Read on to understanding more about the savings you could get from a heat pump. 

Find out more about: ground and air source heat pumps explained

How much does an air source heat pump cost to install?

Air source heat pumps (ASHPs) differ in size and complexity, so pinpointing an exact price is difficult. To find out more about the types available, read our introduction to heat pumps guide.

The Energy Savings Trust says that air source heat pumps tend to cost between £14,000 and £19,000 to install.

The amount of heating and hot water your household uses will determine the size of the heat pump you need, which will in turn affect the installation cost.

You'll also need to allow for the cost of any extra work, such as upgrading your radiators or installing a hot-water storage tank. You might also need extra insulation.

The Boiler Upgrade Scheme also offers a grant of up to £7,500 to install an air source heat pump in homes in England and Wales. 

How much does an air source heat pump cost to run?

How much energy your heat pump will use depends on several factors, including:

• the size of your home
• how well insulated your home is
• the temperature you want your home to be. 

Heat pumps use electricity, which, if bought at the price-capped rate, costs more per unit than gas. Therefore heat pumps can be more expensive to run than gas boilers. However, some energy companies are offering specialist tariffs which cut the cost of electricity used for heat pumps.

Dr Jan Rosenow,  principal and director of European programmes at the Regulatory Assistance Project (RAP), told us that: ''A household could save more than 50% on running costs with a heat pump compared to a gas boiler. But this requires the heat pump installation to be of high quality, the efficiency of the heat pump to be high and the customer to be on a heat pump tariff.' 

The payback time (how long it takes to recoup the upfront installation cost in energy savings) depends on:

• the type of heating system you're replacing
• whether you get a grant to help pay for installation
• how efficiently your system works (including how well the heat is dispersed and how well your home retains it)
• the price you pay for electricity
• how you use the heat generated by the pump.

How to calculate air source heat pump savings

As we said before, an air source heat pump can save you money if it is well-designed and properly installed. 

To get a better idea of how much a heat pump would cost to run, and whether it would be cheaper than your existing heating system, you can make a rough calculation using your own data.

We've worked out an example, below, for a typical household currently using a gas boiler.

Existing heating and hot water costs using gas

Typical household gas consumption is 11,500Wh a year, according to Ofgem's latest calculations for a 'medium' consumption household. Your own figures may be higher or lower than that. 

Gas used for cooking makes up around 2.5% of the total (287.5kWh), so that leaves 11,212.5kWh a year as the typical quantity of gas used for heating and hot water in your home.

From 1 April 2024, the average price cap for gas is 6.04p per kWh, or £0.06 per kWh, so the annual cost of gas consumption is 11,212.5 x £0.06 = £672.90 or £673.

From 1 April 2024, the average gas standing charge is £0.31 per day, so the annual standing charge cost is 365 (days) x £0.31 = £113.15 or £113. 

The total gas bill for heating and hot water (excluding cooking) is £786.05 or £786. 

What's your heat demand?

To calculate the cost of running a heat pump, you need to work out your household heat demand using your current annual gas consumption and boiler efficiency.

A new A-rated gas boiler must be a minimum of 92% efficient; however, studies have shown that the actual in-use performance is generally lower. Older boilers are also less efficient, so we've assumed an average of 85% efficiency.

Current gas consumption is 11,500kWh but, as only 85% of that is being turned into heat, we calculate actual heat demand at 11,500 x 0.85 = 9,775kWh.

Potential heating and hot water costs using a heat pump

A typical air source heat pump should generate three or more units of heat for each unit of electricity it uses. We've assumed a COP (Coefficient of Performance) of 3.0 (300% efficient). Your savings would be more with a very efficient heat pump of SCoP 4.0.

To deliver the heat demand of 9,775kWh, the amount of electricity required will be 9,775 ÷ 3 = 3,258kWh.

From 1 April 2024, the price cap for electricity is 24.5p per kWh, or £0.25 per kWh. So the annual cost of electricity for heating and hot water is 3,258 x £0.25 = £814.50 or £815.

We've assumed that all households already pay the standing charge for electricity, so there's no need to add this.

Which is cheaper?

In this example, running a heat pump would cost you £30 more per year. 

If your gas boiler is less efficient, or you install a more efficient heat pump that exceeds 300% efficiency, then you will begin to see cost savings if you switch to a heat pump. 

Changes in energy prices will affect future comparisons. If gas prices continue to rise at a faster rate than electricity, then the running costs of a heat pump will be more attractive than a gas boiler in years to come.

Read our boiler reviews to find out more.

Calculate your own savings

To make a similar calculation using your own data, use the following formula:

heat demand x 1/heating efficiency x fuel price (+ annual standing charge) = annual heating cost

Heat demand: You can find your fuel consumption (in kWh) on your energy bills. If you use gas for cooking, deduct around 2.5% to calculate how much is used for heating and hot water. Multiply this by the heating efficiency (if your boiler is 85% efficient, multiply by 0.85). This is your annual heat demand (for heating and hot water in your home).

Heating efficiency: If you know your boiler's efficiency, you can use that figure. If you know the make and model, you can check the efficiency in the product characteristics database. New gas boilers must be at least 92% efficient, but an older one may be much less efficient. Boilers often run less efficiently than rated, as our boiler efficiency guide explains.

The efficiency of an air source heat pump is typically between 2.5 and 3.5. If you're thinking of installing a specific model, you can find the COP in the manufacturer's product specification, but your installer should let you know what efficiency range to expect. 

Are there any other costs?

If you plan to replace your gas boiler with an air source heat pump, you may also consider swapping your gas cooker for an electric one. Retaining a gas supply just for cooking will mean the standing charge is disproportionately high. 

If you terminate your gas supply, you may have to pay for removal of the meter. The cost varies according to supplier. If you don't remove the meter, you must continue to pay a standing charge.

Whether or not you decide to get an air source heat pump, it's worth making sure you're on the best energy deal for you. Use Which? Switch, to compare gas and electricity prices.

Getting your heat pump through an energy company

Some energy companies offer heat pump surveys and installations with MCS-certified installers who can apply for government grants on your behalf.

Energy companies offering heat pumps and installations include:

• British Gas offers a survey, installation and aftercare. Its 'Warm Home Promise' means it will give you your money back if your heat pump doesn't reach an agreed temperature for your home. In practice, this just means fitting a system that's the right size, but it doesn't guarantee a specific level of efficiency. 
• EDF Energy partners with a company called CB Heating, which installs Daikin heat pumps with a five-year warranty.
• E.ON Energy is a Which? Trusted Trader offering Daikin, Mitsubishi and Samsung heat pump installations with seven-year guarantees, as well as an online costs calculator. 
• Good Energy offers Midea heat pumps with a 10-year warranty and remote monitoring, which it claims are '20% more efficient than industry standards on average'.
• Octopus Energy offers survey, quote, installation and aftercare, including to non-customers. It offers a five-year warranty on parts and labour.
• Ovo has partnered with installer network Heat Geek to offer heat pump installation 'from £500 – including the £7,500 Boiler Upgrade Scheme grant'. 
• Scottish Power offers Daikin, Vaillant and Mitsubishi heat pumps with two years of annual servicing from Domestic & General. 

Getting your heat pump through a private installer

When it comes to finding a private installer or a company to install your heat pump, you need to make sure they are MCS (Microgeneration Certification Scheme) certified. This is necessary for them to apply for a government grant on your behalf.

Installers certified by MCS agree to follow a code of conduct known as RECC (Renewable Energy Consumer Code). This means they should not use high-pressure selling techniques, nor should any subcontractors they employ.

Among other things, it means installers cannot quote you an inflated price and then offer you a discount if you buy immediately, or give you a discount if you agree to perform marketing activities for the business.

It also means they can't make unreasonable price projections, 'oversell' the heat pump by giving you misleading impressions about its performance, or refuse to give you price information during a visit to your property.

MCS hosts a database of MCS-certified contractors you can check. 

A Which? Trusted Trader is vetted by us and has verified reviews you can rely on. All Trusted Trader heat pump installers are MCS certified.

The installer base will need to grow in order to meet the demand the government is aiming for. 

In March 2024 the Heat Pump Association announced that the number of qualified heat pump installers had risen by 166% from just under 3,000 in 2022 to close to 8,000 in 2023.  We expect to see more installers in the future, especially if consumer demand for heat pumps continues to grow. 

Green mortgages and loans for heat pumps explained

Energy-efficient homes are increasingly seen as a good investment by lenders and we've seen a growth in so-called 'green mortgages' and low-interest loans by lenders for existing mortgage customers. 

Green mortgages offer a specific interest rate on your mortgage, or cashback, when your home is energy efficient (generally measured by its EPC). It's available to homebuyers and people looking to remortgage.

Some offers also give existing mortgage customers loans with reduced interest rates or cashback to fund energy-efficiency improvements. This can help to pay for improvements necessary to get a good heat pump installation or even to buy the heat pump itself. 

Examples of offers by high-street banks include:

• Nationwide has a 'green additional borrowing mortgage' which offers between £5,000 and £15,000 on a two or five-year fix to fund improvements, including air source and ground source heat pumps, solar panels and insulation 
• Barclays offers a 'greener home reward' to its mortgage customers. £2,000 is available for low carbon heating installations, and lesser amounts for other works, such as £1,000 for solid wall insulation. 
• Halifax customers can get £1,000 cashback towards a heat pump or £500 for other 'green home improvements', such as insulation and solar panels.
• Virgin Money offers £250 cashback when you spend £2,500 on energy-efficient upgrades, including air source and ground source heat pumps. 

These loans can be added to the money provided by a government grant, such as the Boiler Upgrade Scheme (England and Wales) or the Home Energy Scotland Scheme.

Other trials of green finance projects are being funded by the Department for Energy Security and Net Zero, with a view to expand consumer access to finance for low carbon heating, and to improve the options for consumers.

Find out more about green mortgages.

Financing a heat pump

While you can get 0% APR loans for boiler installations from energy companies and installers that let you pay off your heating system over several years, this isn't as commonplace for heat pump installations.

However, E.ON Energy allows you to spread the cost of an air source heat pump with up to two years 0% APR interest free credit, or three, five, seven or ten years at 3.9% APR. Daikin offers a 0% interest loan for 12 months on all air source heat pumps installed under the Boiler Upgrade or Home Energy Scotland Schemes, if you pay a 20% deposit or more.