Air source heat pumps in the UK: installation cost, running costs and the £7,500 grant

An air source heat pump takes heat from the outside air and moves it into your radiators and hot water cylinder. In England and Wales the Boiler Upgrade Scheme pays £7,500 towards one, so the real question for most households is not the grant but the running cost: will it be cheaper than gas? With today’s price cap the honest answer is roughly the same on unit rates for an average home — and cheaper only if the system is designed and run well.

This guide shows the sums, what the grant covers, and what to check before you get quotes.

How an air source heat pump works

A heat pump uses electricity to run a compressor, not to make heat directly. For every unit of electricity it uses, it delivers several units of heat. That ratio is the coefficient of performance (COP); averaged over a whole year it is called the seasonal COP (SCOP).

• A SCOP of 3 means 1 kWh of electricity delivers about 3 kWh of heat over the year.
• SCOP falls when the water in your radiators has to be very hot, and rises when the system runs at a lower flow temperature for longer.
• That is why installers check radiator sizes and insulation: they decide whether the heat pump can run efficiently.

Running cost compared with a gas boiler

The figures below use Ofgem’s price cap unit rates for 1 October to 31 December 2026 and Ofgem’s typical “medium” gas use of 9,500 kWh a year. The boiler efficiency (90%) and heat pump SCOP (3) are example assumptions — your survey will give real numbers.

	Gas boiler	Heat pump
Fuel used per year	9,500 kWh gas	2,850 kWh electricity
Heat delivered (90% boiler efficiency)	8,550 kWh	8,550 kWh
Unit rate (Ofgem cap, Oct–Dec 2026)	7.97p/kWh	26.32p/kWh
Fuel cost per year	≈ £757	≈ £750

Standing charges are not included. If you remove your gas supply entirely you stop paying the gas standing charge, which improves the heat pump side of the comparison.

What this means:

• At SCOP 3 the costs are almost identical. At SCOP 3.5 the heat pump would use about 2,440 kWh (≈ £643); at SCOP 2.5 about 3,420 kWh (≈ £900).
• Tariffs matter. Some suppliers offer heat pump or time-of-use tariffs with cheaper electricity at certain hours. Compare them before you decide.
• Replacing oil, LPG or old electric storage heaters usually shows a bigger saving than replacing mains gas.

Run your own numbers in the heat pump cost calculator. It pre-fills the same Ofgem rates and lets you change the SCOP, fuel and grant.

The Boiler Upgrade Scheme grant

• £7,500 towards an air source (air-to-water) heat pump in England and Wales, according to the GOV.UK notice of grant values.
• The Energy Saving Trust reports a higher £9,000 rate for eligible off-gas-grid homes from 21 July 2026 to 31 March 2027. Check the current rules on GOV.UK before relying on it.
• The installer applies for the grant and deducts it from your quote. Your installer must be MCS-certified.
• Scotland and Northern Ireland have separate schemes. In Scotland, contact Home Energy Scotland.

Grant rules, amounts and end dates change. Always confirm on GOV.UK or with Ofgem, which administers the scheme, before signing a contract.

What to check before you get quotes

1. Insulation first. Loft and cavity wall insulation reduce the heat the pump has to supply, so a smaller, cheaper unit may do.
2. Room-by-room heat loss calculation. A proper quote is based on a heat loss survey, not just the size of your old boiler.
3. Radiators and flow temperature. Ask which radiators need upsizing and what flow temperature the design assumes. Lower flow temperatures mean a higher SCOP.
4. Hot water cylinder and space. Most systems need a cylinder. If you have a combi boiler now, plan where it will go.
5. Outdoor unit position. It needs airflow and must meet noise and distance rules. Your installer checks permitted development limits.
6. Ask for the expected SCOP and annual electricity use in writing, so you can compare quotes on running cost, not just price.

Is a heat pump worth it for you?

A heat pump is most likely to pay off if:

• you are replacing oil, LPG, or direct electric heating
• your home is reasonably well insulated
• you can use the £7,500 grant and a heat pump tariff
• your boiler is near the end of its life anyway.

If your gas boiler is new and your home is draughty, insulation work will usually save more per pound spent first.

Heating systems involve electrical and plumbing work. This article is general information and does not replace a survey by an MCS-certified installer.