Heat pump vs oil boiler running costs in 2026

An air source heat pump outside a brick house

At today’s prices a well installed heat pump is usually cheaper to run than an oil or LPG boiler, and the saving grows when oil is expensive. Against mains gas it is roughly break even. Whether you save money depends mostly on how efficiently the heat pump runs, which comes down to the design and installation.

The figures below are our estimates. We show every assumption so you can redo the sums with your own fuel bills.

The prices we used

Electricity and gas are the Ofgem price cap for 1 October to 31 December 2026, the GB average for Direct Debit customers:

Fuel	Unit rate	Standing charge
Electricity (no VAT until 31 March 2027)	26.32p per kWh	54.83p per day
Mains gas (includes 5% VAT)	7.97p per kWh	29.68p per day

Rates vary by region and by tariff. Most of Shropshire is in Ofgem’s Midlands region and the north west of the county is in North Wales and Mersey, so check the rate for your postcode.

Heating oil is volatile, so we used three prices. The national average was 120.13p a litre on 22 September 2026, according to BoilerJuice figures reported by Selectra. The Independent gave a summer 2026 low of 80p and a 12 month average of 97p.

LPG: we could not find a reliable 2026 price for bulk domestic LPG, so we use the Energy Saving Trust’s published savings figures instead.

Our assumptions

12,000 kWh of heat a year. This is a round figure to make the sums easy, not a sourced average. A large or draughty farmhouse may need far more.
Boilers are 90% efficient. Older oil and LPG boilers are often less efficient, which makes the heat pump look better.
1 litre of heating oil gives 10.35 kWh.
Heat pump seasonal efficiency (SCOP) of 3.5 for a good installation and 2.8 as a cautious case. A SCOP of 3.5 means 1 kWh of electricity gives 3.5 kWh of heat.
Unit costs only. You pay the electricity standing charge whichever system you choose, so we leave it out. Gas is the exception: shown separately below.

The comparison

Heating	Cost per kWh of heat	Annual cost for 12,000 kWh of heat
Heat pump, SCOP 3.5	7.5p	about £900
Heat pump, SCOP 2.8	9.4p	about £1,130
Mains gas boiler	8.9p	about £1,060, plus about £108 gas standing charge
Oil boiler, oil at 80p a litre	8.6p	about £1,030
Oil boiler, oil at 97p a litre	10.4p	about £1,250
Oil boiler, oil at 120p a litre	12.9p	about £1,550

The sums are simple. For the heat pump, 26.32p divided by 3.5 is 7.5p per kWh of heat. For oil at 97p, one litre gives 10.35 kWh, and at 90% efficiency that is about 9.3 kWh of useful heat, or 10.4p per kWh.

As a cross check, The Independent modelled a 3 to 4 bedroom off-grid home needing 17,700 kWh of heat a year, using a SCOP of 3.5 and the July 2026 electricity rate. It put the heat pump at £1,320 a year against £1,843 for oil at 97p, a saving of about £500.

LPG

The Energy Saving Trust estimates that an average home switching from an A rated LPG boiler to a heat pump saves about £270 a year, and up to £700 a year when replacing an older LPG system. Marches Energy Advice, a Shropshire based energy charity, quoted these figures in July 2026.

When a heat pump saves money

You are replacing oil or LPG, especially an older, less efficient boiler.
The system is designed properly. A room by room heat loss calculation, radiators sized for a low flow temperature and a correctly sized heat pump give a higher SCOP. The MCS design standard says high temperature heat pumps should be avoided unless a flow temperature above 55°C is really needed.
Oil prices are high. Oil reached 132p a litre in spring 2026, according to The Independent. A heat pump’s running costs follow the electricity cap, which changes every three months.
You come off gas entirely, which saves the gas standing charge of about £108 a year.

When it does not

You are on mains gas with a good condensing boiler. On a standard tariff the saving is small or nil.
The heat pump is poorly designed or installed. At a SCOP of 2.8 it costs about 9.4p per kWh of heat, more than gas and similar to oil at 80p to 90p a litre.
Oil is cheap. At 80p a litre, a cautious heat pump costs more to run than oil.
VAT comes back on electricity. Electricity is VAT free from 1 October 2026 to 31 March 2027. When 5% VAT returns in April 2027, heat pump running costs rise by about 5%, all else being equal.

A time of use electricity tariff designed for heat pumps can change these figures. Tariffs vary too much to model here, so ask your installer and supplier.

Maintenance

Heat pumps need regular checks. Under the MCS heat pump standard, your installer’s handover pack must include the maintenance requirements, the maintenance services available, the manufacturer’s warranty details and the recommended interval for the first periodic inspection.

Ask for the servicing cost and interval in writing with your quote, and check whether the manufacturer’s warranty depends on annual servicing. We could not find a reliable published figure for typical servicing costs, so we have not quoted one.

The rural Shropshire picture

In the Shropshire Council area, 33.4% of homes were off the gas grid in 2024, according to government estimates. In the 2021 Census, 15.0% of households heated with oil only and 3.3% with LPG only. In some rural wards, including Llanymynech, Clun and Corvedale, more than 40% of households used oil only.

Those are the homes where the comparison above favours a heat pump most. Many will also qualify for the £9,000 rate of the Boiler Upgrade Scheme until 31 March 2027, eligibility criteria apply. Nationally, 17% of homes using the scheme have replaced oil.

Older stone and solid wall farmhouses can still work well, but the design needs more care. See our guide to heat pumps in old houses, and our heat pump cost guide for what installation typically costs.

Doing your own sums

Take your last year of oil or LPG deliveries in litres. Multiply oil litres by 10.35 and by your boiler’s efficiency (try 0.85 for an older boiler) to get the kWh of heat you used. Divide that by the SCOP in your quote and multiply by your electricity unit rate.

That gives a fair first estimate. Your installer’s MCS performance estimate, which they must give you before you sign, should be in the same range. If an installer also gives you their own, rosier estimate, the MCS standard says it must not be more prominent than the MCS one and must carry a warning to treat it with caution.

Planning a heat pump? Get a quote from a checked local installer.

Common questions

Is a heat pump cheaper to run than an oil boiler?

Usually, at current prices. With oil at around 97p a litre (its 12 month average in mid 2026) a heat pump with a seasonal efficiency of 3.5 costs about 7.5p per kWh of heat, against about 10.4p for oil. The gap shrinks when oil is cheap and the heat pump is poorly installed.

Is a heat pump cheaper to run than a gas boiler?

Only just, if at all, on a standard tariff. At the October 2026 cap a gas boiler works out at about 8.9p per kWh of heat and a heat pump at 7.5p to 9.4p depending on efficiency. If you leave gas altogether you also stop paying the gas standing charge, about £108 a year.

What efficiency should my heat pump achieve?

Your installer must give you the system's seasonal coefficient of performance (SCOP) at the design flow temperature before work starts. Lower flow temperatures give higher efficiency. Our figures use 3.5 for a good installation and 2.8 as a cautious case.

Does a heat pump need servicing?

Yes. The MCS standard requires the installer to give you the maintenance requirements and the recommended interval for the first periodic inspection at handover. Ask for the cost of servicing when you get your quote.