Are Heat Pumps Worth It for Business in 2026?
Sometimes yes and sometimes no: the answer turns on a handful of conditions you can check against your own building and bills.
Start with the running-cost arithmetic
A fair answer has to begin with the number most articles skip. Cost per kWh of heat is the energy price divided by efficiency. DESNZ’s Quarterly Energy Prices for Q1 2026 (provisional, published 30 June 2026, excluding VAT, including the Climate Change Levy) put the medium-business average at 25.0p per kWh for electricity and 4.55p for gas. Assuming an 88% boiler efficiency (an assumption, not a measured figure), gas heat costs about 4.55 ÷ 0.88 = 5.17p per kWh of heat.
The break-even SCOP is the electricity price divided by that figure. The table shows how it moves with the electricity price, holding gas and boiler efficiency fixed.
| Electricity price (p/kWh) | Break-even SCOP against gas at 5.17p per kWh of heat |
|---|---|
| 25.0 | about 4.8 |
| 20.0 | about 3.9 |
| 15.0 | about 2.9 |
| 12.0 | about 2.3 |
Only the 25.0p row is a published average; the others are what-ifs to show sensitivity. Your own contract prices are what count.
When a heat pump is worth considering
- The boiler is at end of life. The comparison is then between two replacements, not a heat pump and a free existing boiler. Avoided boiler cost narrows the gap.
- Your electricity is cheaper than average. A negotiated, time-of-use or on-site-generated supply moves the break-even SCOP down sharply, as the table shows.
- The design SCOP is high. That usually means a low flow temperature, well-matched emitters and a building with modest heat loss. Ask for the figure to BS EN 14825 and the conditions behind it.
- Funding or tax relief applies. A building needing 45 kW thermal or less for a single heat pump (70 kW thermal for a multi-unit system) in England or Wales may qualify for a Boiler Upgrade Scheme grant. Capital allowances can reduce the net cost for any size. See grants and funding.
- Carbon matters. Savings depend on grid carbon intensity and the SCOP achieved, so ask your installer to show the assumptions rather than quote a percentage.
- You also need cooling. A reversible unit can serve both, which changes the value of the investment.
When it is probably not worth it yet
- The boiler is new and efficient and nothing forces a change. Spending capital to swap a working plant needs another driver.
- The heating system needs hot flow temperatures and replacing emitters is impractical. The SCOP will fall and the arithmetic worsens. A hybrid arrangement may suit better.
- Gas is much cheaper than your electricity and no cheaper tariff is available.
- The electricity connection cannot take the load and the network upgrade would be expensive or slow. Ask your distribution network operator early.
- The building has a very low heat demand where fixed capital cannot be spread over enough saved kWh.
Being honest about this matters: a heat pump that is wrong for the building is a poor investment however good the grant looks.
Heat demand profile deserves a sentence of its own. A building that runs heating for long hours across many months spreads the capital over more saved kWh than one used a few hours a week. A site with a steady daytime load also suits a heat pump better than one with sharp morning peaks, because the unit can be sized nearer the average than the peak. If your demand is spiky, a cascade of smaller modular units or a hybrid with a peaking boiler may fit better than one large machine. Ask for the load profile to be shown in any proposal, not just the peak figure.
Tax and funding in the decision
Capital allowances are worth modelling early. A heating system is a special-rate integral feature, so full expensing does not apply, but the Annual Investment Allowance gives 100% relief up to £1m a year and companies can claim a 50% first-year allowance above that. The saving equals the relief times your corporation tax rate. Confirm the classification with your accountant.
Schemes that once helped larger sites, the Public Sector Decarbonisation Scheme and the Industrial Energy Transformation Fund, have closed. Do not plan around them.
A short decision test
- Get your design heat load in kW and annual heat demand in kWh.
- Work out your gas cost per kWh of heat and the break-even SCOP at your electricity price, using the calculator.
- Compare that with the SCOP in written quotes, not a headline COP.
- Subtract any grant and tax relief from capital (see the payback method).
- Add the non-energy factors: boiler replacement date, carbon aims, cooling, resilience.
If steps 2 and 3 fail by a wide margin and no other driver exists, waiting is a reasonable answer. Published price bands are in the cost guide.