Heat pump, boiler, air conditioning or electric heating: what do they really cost in Essex?

Illustrative estimates dated 15 October 2026, based on the Ofgem price cap for 1 October to 31 December 2026. Your own costs depend on your home, your tariff and your installer's quote.

Thinking of replacing your boiler or adding air conditioning? Here is a straight comparison using official rates, with every assumption shown.

What are electricity and gas costing right now?

Ofgem's price cap for 1 October to 31 December 2026 averages 26.32p per kWh for electricity (no VAT until 31 March 2027) and 7.97p per kWh for gas (including 5% VAT). Gas also has a standing charge of 29.68p a day, about £108 a year. Electricity costs roughly three and a third times as much as gas per unit, which is why efficiency matters so much.

How much heat does a home need?

Using the government's benchmark figures for homes built 1960 to 1975, a 1–2 bed flat needs about 8,650 kWh of heat a year for heating and hot water, a 3-bed semi about 16,000 kWh and a 4–5 bed detached about 24,100 kWh. Newer or better-insulated homes need less.

How much does each option cost to run?

We assumed a gas boiler at 88% efficiency, an air source heat pump at a seasonal efficiency (SCOP) of 3, air conditioning used for heating at 3.5, and direct electric heaters at 100%. Annual running costs (illustrative estimates, 15 October 2026):

1–2 bed flat

• Gas boiler: £892

• Heat pump: £759

• Air conditioning: £899

• Electric heaters: £2,277

3-bed semi

• Gas boiler: £1,563

• Heat pump: £1,409

• Air conditioning: £1,635

• Electric heaters: £4,228

4–5 bed detached

• Gas boiler: £2,291

• Heat pump: £2,114

• Air conditioning: £2,329

• Electric heaters: £6,343

The boiler figure includes the gas standing charge. The heat pump and air-conditioning figures assume the gas is disconnected. Air conditioning figures assume hot water comes from an electric immersion heater. A heat pump that performs less well than SCOP 3 will cost more to run, and one that performs better will cost less.

What does each option cost to install?

The Energy Saving Trust gives typical prices of £3,500 for a new gas boiler, £12,000 for an air source heat pump and £3,700 for air conditioning in a 3-bed semi. Panel heaters cost £300 to £500 a room. Prices for flats and detached homes are our scaled estimates, so please ask us for a survey and quote.

Are there grants and VAT savings?

Yes. The Boiler Upgrade Scheme takes £7,500 off an air source heat pump for eligible homeowners in England and Wales who are replacing a fossil-fuel or direct-electric system. Your installer applies for you, and you should check the current terms on GOV.UK. Installing heat pumps is also 0% VAT until 31 March 2027, rising to 5% after that. A £2,500 grant for air-to-air systems has been announced, but installers cannot claim it yet.

What would it cost over 10 years?

Install cost after grant plus ten years of running costs, at today's prices (illustrative estimate only, 15 October 2026):

1–2 bed flat

• Gas boiler: £12,420

• Heat pump (with £7,500 grant): £7,592

• Air conditioning: £10,991

• Electric heaters: £24,375

3-bed semi

• Gas boiler: £19,133

• Heat pump (with £7,500 grant): £18,594

• Air conditioning: £20,047

• Electric heaters: £44,683

4–5 bed detached

• Gas boiler: £26,408

• Heat pump (with £7,500 grant): £31,642

• Air conditioning: £28,889

• Electric heaters: £67,026

The heat pump comes out ahead in the flat and the semi, mainly because of the grant. In a large detached house, our scaled estimate puts it above the boiler. The flat figure assumes the grant covers the full estimated price. If electricity gains 5% VAT after March 2027, heat pump totals rise by roughly £380 to £1,060. We have not included servicing, price changes or equipment lifespan.

So which should I choose?

• Heat pump: best long-term value in a well-insulated home with the grant, and it does hot water.

• Air conditioning: a good fit for flats and small homes, and it cools in summer.

• Gas boiler: cheapest to install, and running costs are close to a heat pump.

• Direct electric: cheap to fit, but expensive to run in anything but a small, well-insulated home.

FAQs

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

At current capped rates it is a little cheaper or about the same, not dramatically cheaper. A heat pump tariff can improve this.

Can I get the £7,500 grant for any home?

You must own the property, replace a fossil-fuel or electric heating system, and use an MCS-certified installer. New builds and social housing are generally excluded.

Can air conditioning heat my home?

Yes, reverse-cycle units heat as well as cool, but they do not normally heat your hot water.

Will energy prices change?

Yes. Ofgem updates the cap every three months, and electricity VAT relief ends on 31 March 2027.

Get a quote from CPW Electrical Solutions

We are an Upminster-based electrical contractor, NICEIC Approved and MCS certified. CPW is also a certified Tesla installer for Powerwall batteries and Tesla Wall Connector chargers. Call us on 07545 571230 or get in touch here. See our heat pump, air conditioning and EV charger services.

Sources: Ofgem price cap (Oct–Dec 2026); DESNZ heat demand benchmarks; Energy Saving Trust; GOV.UK Boiler Upgrade Scheme and VAT Notice 708/6; MCS.