Heat Pumps Could Cut UK Household Energy Bills Despite Contrary Claims

Electric heat pumps are emerging as a cornerstone of the UK’s climate strategy while simultaneously reducing the nation’s dependence on imported fossil fuels, according to government plans and independent research.

The technology took center stage in the UK government’s recent “warm homes plan,” which highlighted potential household energy savings of “hundreds of pounds” annually. Innovation agency Nesta supports this assessment, estimating typical households could reduce annual energy bills by nearly £300 by transitioning from gas boilers to heat pumps.

Despite these projections, several major UK publications, including the Times, Sunday Times, Daily Express, and Daily Telegraph, have covered a report claiming heat pumps are “more expensive” to run than traditional heating systems. The report comes from the Green Britain Foundation, established by Dale Vince, owner of energy firm Ecotricity, who has publicly opposed heat pumps while investing in “green gas” alternatives.

Experts have questioned the foundation’s methodology and conclusions. One specialist described the report as based on “flimsy data,” while another stated it “combines a series of worst-case assumptions to present an unduly pessimistic picture.”

Heat pumps function by using electricity to transfer heat—typically from outside air—into buildings, operating similarly to refrigerators in reverse. Their high efficiency allows them to deliver three to four units of heat for each unit of electricity consumed. In contrast, gas boilers always provide less than one unit of heat per unit of gas burned due to combustion losses.

This efficiency differential means heat pumps can warm buildings while using three to five times less energy than gas boilers. The technology reduces fossil fuel imports by cutting gas demand by at least 40%, even if all required electricity were generated from gas-fired power stations.

With UK electricity supplies now at their cleanest levels ever, heat pumps can reduce heating-related carbon emissions by approximately 85% compared to gas boilers, making them the “central” technology for decarbonizing buildings.

While installation costs exceed those of gas boilers, both government analysis and Nesta research indicate significant operational savings. Nesta’s data shows even greater potential when heat pumps are combined with other clean energy technologies like solar panels and batteries, with possible annual savings reaching £1,000 compared to gas boilers.

These savings estimates rely on conservative assumptions. The government bases its projections on a heat pump delivering 2.8 units of heat per unit of electricity on average—known as the “seasonal coefficient of performance” (SCoP)—derived from the government-backed “electrification of heat” trial conducted during 2020-2022. Nesta assumes a slightly higher SCoP of 3.0.

Both analyses account for households disconnecting from the gas grid, eliminating the daily standing charge of approximately £130 per year. They also consider the impact of “smart tariffs,” which vary electricity prices throughout the day and are specifically designed for heat pump owners. Government data suggests around half of heat pump owners already utilize such tariffs, significantly reducing average electricity costs.

In contrast, the Green Britain Foundation report assumes gas boilers operate at 90% efficiency, whereas real-world data indicates 85% is more typical. It also assumes homes with heat pumps remain connected to the gas grid and use only standard electricity tariffs.

Professor Jan Rosenow, energy programme leader at Oxford University’s Environmental Change Institute, criticized the report for “cherry-picking assumptions to reach a predetermined conclusion,” particularly highlighting the inflated gas boiler efficiency estimate.

More recent data from hundreds of UK heat pump systems shows significantly higher efficiency than assumed in both the government and Vince’s analyses. The Heat Pump Monitor website reports an average SCoP of 3.9, substantially higher than the 2.8 figure used in earlier assessments. Systems with such efficiency levels would deliver even larger bill savings than government and Nesta estimates suggest.

Academic research indicates that heat pump installations in the UK have become increasingly efficient over time as engineers become more familiar with the technology. Recent data suggests newly installed heat pumps are 64% more efficient than those in early trials.

Carbon Brief analysis indicates that typical households could reduce annual energy bills by nearly £200 with a heat pump—even on standard electricity tariffs—if the system achieves the 3.9 SCoP currently being observed in real-world installations. Savings would be even greater with smart heat-pump tariffs.

As the UK continues its transition to cleaner energy sources, the evidence suggests heat pumps represent not only an environmental benefit but also a potential economic advantage for households seeking to reduce energy costs.