Commercial heat pump running costs vs gas: the break-even method
Whether a heat pump is cheaper to run than a gas boiler comes down to one comparison: the electricity-to-gas price ratio against the heat pump’s seasonal efficiency.
The one formula that decides it
Both technologies turn a purchased unit of energy into heat. What differs is how many units of heat you get per unit bought.
- Gas boiler: cost per kWh of heat = gas price ÷ boiler seasonal efficiency. A modern boiler is commonly assumed at 85-90%; state the figure you use.
- Heat pump: cost per kWh of heat = electricity price ÷ SCOP, where SCOP is the seasonal coefficient of performance (rated seasonally to BS EN 14825) for the whole heating season.
Set the two equal and solve for SCOP:
Break-even SCOP = electricity price ÷ (gas price ÷ boiler efficiency)
If the design SCOP is above the break-even figure, the heat pump costs less per kWh of heat. If it is below, it costs more. Annual running cost is then annual heat demand in kWh multiplied by the cost per kWh of heat, so the comparison scales with the building but the break-even does not.
Using the DESNZ prices
DESNZ Quarterly Energy Prices for Q1 2026 (provisional, published 30 June 2026, excluding VAT, including the Climate Change Levy) give a medium-sized business an average of 25.0p per kWh for electricity and 4.55p per kWh for gas. Averaged across all non-domestic users the figures are 24.14p and 5.17p.
Gas heat cost at 88% boiler efficiency: 4.55p ÷ 0.88 = 5.17p per kWh of heat. Break-even SCOP: 25.0 ÷ 5.17 = about 4.8. A system with a design SCOP of 3.5, a plausible figure for illustration only, would deliver heat at 25.0 ÷ 3.5 = about 7.1p per kWh, around 38% more than gas in this example (7.14 ÷ 5.17 = 1.38).
The honest reading is that at national average prices a heat pump does not beat gas on energy cost alone. One published installer guide (Fuse Energy, 2026) uses different assumptions: it quotes heat at about 7.5p per kWh for a COP of 3.2 at 24p per kWh electricity, against 7-8p per kWh for gas boilers. That implies a higher gas cost than the DESNZ medium-business figure, although the guide does not state its gas price. The method is the same; only the gas price differs. Use your own bills.
A newer DESNZ edition, Quarterly Energy Prices: September 2026, reports Q2 2026 all-non-domestic averages of 24.51p per kWh for electricity and 5.28p per kWh for gas. At those figures and an 88% boiler the break-even SCOP is about 4.1 (24.51 ÷ (5.28 ÷ 0.88)). The medium-business band used above is defined by annual consumption and covers large users, so smaller sites should rely on their own bills.
Sensitivity table: break-even SCOP
The table applies the formula at an assumed 88% boiler efficiency, for two DESNZ Q1 2026 gas prices (4.55p, medium business; 5.17p, all non-domestic average) and a range of electricity prices. Electricity prices below 24p are assumptions to show the effect of a cheaper tariff or generation, not published averages.
| Electricity price (p/kWh) | Break-even SCOP, gas 4.55p | Break-even SCOP, gas 5.17p |
|---|---|---|
| 25.0 (DESNZ medium business) | 4.84 | 4.26 |
| 24.14 (DESNZ all non-domestic) | 4.67 | 4.11 |
| 20.0 (assumed) | 3.87 | 3.40 |
| 15.0 (assumed) | 2.90 | 2.55 |
| 12.0 (assumed) | 2.32 | 2.04 |
| 10.0 (assumed) | 1.93 | 1.70 |
Each cell is electricity price ÷ (gas price ÷ 0.88). For example, 15.0 ÷ (4.55 ÷ 0.88) = 15.0 ÷ 5.17 = 2.90. Boiler efficiency also moves the result: at 25.0p and 4.55p, an 85% boiler gives a break-even of 4.67 and a 90% boiler gives 4.94.
What moves the result
- Tariff type. A fixed, flexible or negotiated contract and a half-hourly or time-of-use arrangement all give different unit rates. The average hides a wide spread, and a heat pump with heat storage can shift charging to cheaper periods.
- On-site generation. Electricity you generate yourself and use on site costs you less than the grid rate, which pulls the break-even SCOP down. For generation options, see the sister hub renewable energy for businesses.
- SCOP and flow temperature. Lower flow temperatures raise SCOP. A design that must produce hot gas-boiler-style water all winter will sit nearer the bottom of the performance range. See the air-source heat pump guide.
- Standing and capacity charges. A heat pump adds electrical demand. Depending on your contract and connection, that can change standing, availability or capacity charges, and in some cases needs a network upgrade. Ask your supplier and DNO early.
- Climate Change Levy. From 1 April 2026 the main rate is 0.801p per kWh on both electricity and gas (0.827p on both from 1 April 2027). The rates are equal, so the levy does not tilt the comparison towards either fuel. Reduced rates exist for some energy-intensive users, so check your own contract.
- Gas and electricity price movement. Both are volatile. Test your answer at several prices rather than one.
Beyond unit cost
Energy price is only one line. A reversible heat pump can supply cooling, which may displace a separate cooling system. Servicing costs differ between a boiler and a heat pump. Carbon and reporting drivers, tenant or lender requirements and the cost of replacing an ageing boiler anyway can matter more than a small running-cost gap. Grants and tax relief change the capital side: see the cost guide and the grants and funding guide. A simple payback is the extra capital cost of the heat pump, after any grant and tax relief, divided by the annual running-cost saving (which may be negative); this page publishes no typical payback because it depends entirely on those inputs.
A method you can run yourself
- Collect your last twelve months of gas and electricity bills and note the unit rates actually charged, excluding VAT.
- Convert annual gas use to heat delivered by multiplying by the boiler efficiency you assume.
- Divide your electricity unit rate by your gas unit rate divided by that efficiency to get the break-even SCOP.
- Ask each installer for the design SCOP, the flow temperature behind it and the standard it was calculated to.
- Compare, then test the result at a higher gas price and a lower electricity price.
The calculator does these steps for you.