Heat Pump vs Gas Boiler Running Costs: Which Is Cheaper in London?

When replacing a heating system, installation cost is only part of the decision. Long-term running costs matter too.

For London homeowners, comparing a modern gas boiler with an air source heat pump can be confusing. Electricity costs more per unit than gas, yet a heat pump can produce several units of heat from each unit of electricity. A boiler burns gas to produce heat.

The answer depends on efficiency, heat demand, energy prices, insulation and system design.

Why Energy Price Alone Does Not Tell the Full Story

For the Ofgem price-cap period from 1 July to 30 September 2026, average Direct Debit rates are 26.11p per kWh for electricity and 7.33p per kWh for gas. Electricity is around 3.6 times more expensive per unit.

If both systems converted energy into heat similarly, gas would win. But they work differently: a boiler burns fuel, while an air source heat pump uses electricity to move heat from outdoor air into the property.

How Efficient Are They?

Energy Saving Trust describes a typical new gas boiler as operating at around 85% efficiency, while an older boiler may average closer to 75%. At 85% efficiency, about 85 kWh of useful heat comes from 100 kWh of gas input.

Heat pumps use the Seasonal Performance Factor, or SPF, comparing heat produced with electricity used over time. Energy Saving Trust guidance says heat pumps tend to operate with an SPF around 3.1. Earlier field trials measured 2.45. Design, commissioning and installation quality can affect performance.

Heat Pump vs Gas Boiler: Running-Cost Example

Suppose a property requires 10,000 kWh of useful heat annually. This is an example, not a prediction of an individual bill.

Gas boiler at 85%: 10,000 ÷ 0.85 = approximately 11,765 kWh of gas. At 7.33p per kWh, that costs approximately £862.

Heat pump at SPF 3.1: 10,000 ÷ 3.1 = approximately 3,226 kWh of electricity. At 26.11p per kWh, that costs approximately £842.

On these assumptions, the heat pump costs around £20 less.

At an SPF of 2.45, it would use approximately 4,082 kWh of electricity, costing around £1,066, about £204 more than the 85%-efficient boiler.

This demonstrates why neither option is always cheaper. Actual system performance matters.

What Is the Break-Even Point?

Using these Ofgem rates and an 85%-efficient gas boiler, the simplified break-even SPF is roughly 3.03. A heat pump operating around this level would have a similar energy cost per unit of useful heat.

This calculation excludes standing charges, maintenance, installation costs, grants, tariff differences and future energy-price changes. It is only a current snapshot.

Why Your Home Matters

The heating appliance is only part of the equation. A well-insulated property generally needs less heat than one losing energy through its roof, walls and windows.

Assess insulation, windows, doors and draughts. Reducing heat loss reduces the heat the system must replace.

Heat pumps generally work most efficiently at lower flow temperatures. Existing radiators may need assessment or replacement if they cannot provide enough heat at lower temperatures. A room-by-room heat-loss calculation can identify requirements.

Older Boilers and Standing Charges

A heat pump may compare differently with an older boiler. At around 75% efficiency, an older boiler needs more gas to provide the same useful heat than an 85%-efficient boiler, so compare the proposed heat pump with the actual boiler being replaced.

For July - September 2026, average Direct Debit standing charges are 57.19p per day for electricity and 29.04p per day for gas. Removing gas may change total costs, depending on supplier arrangements.

Which System Is Better?

There is no universal winner.

A heat pump may suit a reasonably well-insulated property with good seasonal performance, lower-temperature heating, a suitable electricity tariff or a wider energy-efficiency plan. Lower-carbon heating may also be a priority.

A gas boiler may remain competitive when the existing boiler is efficient, gas remains substantially cheaper than electricity, the property requires high-temperature heating, major changes would be needed for a heat pump, or the proposed heat pump would have poor seasonal performance.

The right decision should be based on the actual property rather than a generic online comparison.

How Infinity Can Help

At Infinity, we understand that heating costs should be considered alongside overall property performance.

Infinity provides energy-efficiency solutions including insulation, air source heat pumps, solar panels and other home energy measures. Considering these together can help homeowners assess energy use, comfort and long-term costs before replacing a gas boiler.

Conclusion

The comparison between a heat pump and gas boiler is more complicated than looking only at energy prices.

At current Ofgem rates, electricity costs substantially more per kWh than gas. However, a well-performing heat pump can deliver multiple units of heat from each unit of electricity, while a gas boiler loses some energy contained in the fuel.

Our example shows how efficiency changes the result. An SPF around 3.1 can make a heat pump close to an 85%-efficient gas boiler, while an SPF of 2.45 produces a different result.

The key question is which system can efficiently meet your home's heat demand.

Infinity Energy Organisation can help homeowners consider heating efficiency, insulation and renewable energy options. A property-specific assessment can provide a meaningful basis for deciding what suits your home and long-term energy plans.