Heat Pump vs Gas Boiler Running Costs in London: 2026 Comparison

The Key Variables in Running Cost Comparisons

Comparing the running costs of a heat pump and a gas boiler for a London home requires accurate figures for four variables: the heat demand of the property, the efficiency of the gas boiler, the efficiency of the heat pump expressed as a seasonal coefficient of performance, and the unit costs of gas and electricity. All four variables differ from property to property and change over time as energy prices fluctuate. A comparison that was valid in 2023 may give a different result in 2026, and a comparison for a well-insulated modern flat gives a different result from a comparison for a poorly insulated Victorian terrace. The figures below are based on representative London conditions in 2026 and are intended to illustrate the methodology rather than to provide a precise figure for any specific property.

Worked Example for a Typical London Semi-Detached Home

Consider a typical three-bedroom semi-detached London home built in the 1930s with cavity wall insulation, 250 millimetres of loft insulation, and double-glazed windows. The annual heat demand for space heating and hot water is approximately 12,000 kilowatt hours per year. The existing gas boiler is a modern condensing boiler operating at a seasonal efficiency of 88 percent. At a gas unit rate of 6.5 pence per kilowatt hour, the annual gas cost for heating and hot water is approximately 12,000 divided by 0.88, which gives 13,636 kilowatt hours of gas, multiplied by 6.5 pence, giving an annual gas cost of approximately 886 pounds, plus the standing charge.

The same home with an air source heat pump operating at a seasonal coefficient of performance of 3.0 delivers the same 12,000 kilowatt hours of heat using 4,000 kilowatt hours of electricity. At an electricity unit rate of 24 pence per kilowatt hour, the annual electricity cost for heating and hot water is approximately 960 pounds, plus the standing charge. In this example, the running cost of the heat pump is broadly comparable to the gas boiler, slightly higher in absolute terms but with a lower carbon footprint. If the homeowner is on a smart tariff that offers lower overnight electricity rates for heat pump operation, the electricity cost reduces further.

How Insulation Level Affects the Comparison

The running cost comparison changes significantly with insulation level. For a London Victorian terrace with solid walls and no insulation, the annual heat demand may be 20,000 to 25,000 kilowatt hours per year. At these levels of heat demand, the gas boiler retains a clear running cost advantage in 2026 energy prices unless the property is first insulated to reduce the heat demand. Adding solid wall insulation, loft insulation, and modern windows to such a property can reduce the heat demand to 12,000 to 15,000 kilowatt hours per year, at which point the heat pump becomes cost-competitive.

For a modern well-insulated London flat with a heat demand of only 6,000 to 8,000 kilowatt hours per year, a heat pump operating at a SCOP of 3.0 to 3.5 will typically have lower running costs than a gas boiler, even at 2026 energy prices. The combination of low heat demand and high heat pump efficiency tilts the comparison decisively in favour of the heat pump in well-insulated properties.

Long-Term Running Cost Trajectory

The running cost comparison between heat pumps and gas boilers will continue to evolve as UK energy policy develops. The government has set a trajectory for increasing the carbon price for gas and for reducing electricity costs relative to gas through the removal of green levies from electricity bills and their transfer to gas bills. If this policy trajectory is maintained, the running cost of gas heating will increase relative to electricity-based heating over the next decade. London homeowners who install a heat pump now are therefore positioning themselves to benefit from an improving running cost position as well as avoiding the disruption of a mandatory switch away from gas when the 2035 new boiler ban takes effect. Prestige Engineers can calculate the expected running cost comparison for your specific London property based on its current heat demand and the likely system efficiency for a heat pump installation.