How much can you save with a heat pump?

First we need to calculate the heat demand for hot water and heating.

Based on the average gas consumption observed of Octopus customers, this worked out to be 12,273kWh.

Gas used for cooking makes up around 2.5% of this, or 307kWh. This means 11,966kWh is needed for heating and hot water, or your heat demand.

A live study by the UK government energy department (DESNZ) found the average gas boiler to be around 85.3% efficient.

This means, of the 11,966kWh of heat demand, only 85.3% is converted into heat.

This works out to be 10,207kWh (11,966kWh x 0.853).

From January 2025, the average unit rate price cap for gas is 6.34p/kWh.

A standing charge also applies for a gas supply. From January 2025, this will be an average of 31.65 pence per day, or £116 per year, for those on a flexible / variable tariff.

The annual average electricity usage of a medium UK home is 2,700kWh.

For a flexible tariff, the average unit rate price cap from January 2025 for electricity is 24.86 pence per kWh.

A standing charge also applies for an electricity supply. From January 2025, this will be an average of 60.97 pence per day for those on a flexible / variable tariff.

Using this information, we can calculate the total energy bill cost with a gas boiler:

(11,966kWh x £0.0634) + (307kWh x £0.0634) + (£0.3165 x 365) + (2,700kWh x £0.2486) + (£0.6034 x 365) = £1787

Assumptions for figures below are explained in FAQ above:

Average gas usage observed - 12,273kWh

Gas used for cooking - 307kWh

Gas used for heating and hot water - 11,966kWh

For heat pump efficiency, we have used a figure of 310%, this is the real world efficiency we observed from a fleet of our low temperature air source heat pumps. If running at higher temperatures, the efficiency may be lower

The heat demand for a gas boiler was previously calculated to be 10,207kWh.

A heat pump that is 310% more efficient would require only 3,293kWh to deliver the same heat demand (10,207kWh / 310%).

If you keep your gas supply as well, a gas standing charge applies. From January 2025, this will be an average of 31.65 pence per day.

The annual average electricity usage (not for heating & hot water) of a medium UK home is 2,700kWh.

This means, with a heat pump, your annual electricity consumption for heating, hot water and general electricity usage is 5,993kWh.

For a flexible tariff, the average price cap from January 2025 for electricity is 24.86 pence per kWh.

A standing charge also applies for properties with an electricity supply. From January 2025, this will be an average of 60.97 pence per day for those on a flexible tariff.

The heat demand for cooking remains the same at 307kWh.

Using this information, we can calculate the total energy bill cost for a heat pump on a flexible tariff:

(3,293kWh x £0.2486) + (307kWh x £0.0634) + (£0.3165 x 365) + (2,700kWh x £0.2486) + (£0.6097 x 365) = £1,847

Assumptions for figures below are explained in FAQ above:

• Average observed gas usage - 12,273kWh
• Heat pump efficiency vs gas boiler - 310%
• Boiler heat demand - 10,207kWh
• Cooking gas usage - 307kWh (2.5%)
• Gas unit rate - 6.34 pence per kWh
• Gas standing charge - 31.65 pence per kWh
• Heat demand with a heat pump - 3,293kWh
• Annual general electricity usage for a medium property - 2,700kWh
• Total annual electricity usage for a property with a heat pump - 5,993kWh

Based on our expectations of customer consumption patterns on the Cosy Octopus tariff, with the introduction of a third dip rate, we calculated the weighted average Cosy Octopus rate to be 20.416p/kWh as of January 2025.

From January 2025, the average standing charge for the Cosy Octopus tariff will be 59p/kWh.

Assuming gas is kept at the property, your total energy bill with a heat pump on the Cosy Octopus tariff works out to be:

(3,293kWh x £0.20416) + (307kWh x £0.0634) + (£0.3165 x 365) + (£0.59 x 365) + (2,700kWh x £0.20416) = £1,574

Total annual energy bill for a gas boiler on Flexible Octopus = £1,574

£1,787 - £1,574 = £213 saving

The environmental levies considered are:

RO - Renewable Obligation Certificates

CfD - Contracts for Difference

FiT - Feed in Tariff

ECO - ECO Scheme

Together, these levies make up 6.06 pence (25%) of your electricity unit rate, which is already included in the total bill and savings figures above.

Electricity Levy Cost with Gas Boiler

If you have a gas boiler in your property, following our previous assumptions, your annual electricity usage is 2,700kWh.

Therefore cost of levies works out to be:

2,700kWh x £0.0606 = £164

Electricity Levy Cost with a Heat Pump

If you have a heat pump in your property, following our previous assumptions and calculations, your total annual electricity usage is 5,993Wh.

Therefore cost of levies works out to be:

5,993kWh x £0.0606 = £363

Net Levy Savings with a Heat Pump

The net difference between the two calculations above work out to be:

£363 - £164 = £199

If these levies were to be removed, something the government is considering, by having a heat pump in your property, you would save £199 more than you would with a gas boiler.