Deep-dive guide
Heat Pump vs Gas Boiler 10-Year Simulator: Installation, COP and Energy Prices
Executive industry analysis
Replacing a gas boiler with a heat pump is one of the largest home energy decisions, and the answer is rarely obvious. A heat pump moves heat rather than burning fuel, so each unit of electricity delivers three or more units of heat. That sounds like an easy win until you notice that electricity usually costs two to three times as much per unit as gas, and that the installation can cost several times a new boiler. Whether the pump pays depends on a race between efficiency and the price ratio, run over ten years and carried by installation, maintenance and the way energy prices drift. This simulator makes that race visible in a single monthly number.
The structure of the problem is a ratio. Divide the electricity price by the real seasonal COP to get the cost of one unit of heat from the pump. Divide the gas price by boiler efficiency to get the same figure for gas. If the pump's number is lower, every unit of heat saves money; if it is higher, the installation has to be repaid by something else. On top of that sit fixed items: the pump's capital cost, its servicing, and the boiler you would have had to replace anyway. Heat demand scales everything, so a draughty, high-demand house gains more from a good pump than a small, well-insulated one.
The domino cascade begins with real efficiency, the COP after cold snaps and defrost cycles. It sets the cost of each unit of heat, which together with the installation spread over ten years determines how large a share of the pump's cost is capital. That feeds the ratio of gas cost to pump cost, and finally the monthly saving. A weaker COP therefore does not only raise the electricity bill; it also makes the capital share look worse, because a smaller saving has to repay the same installation. Small changes at the top of the chain can flip the last box.
The iceberg separates the bills you see from the costs you forget. Above the waterline are the electricity bill and the installation, spread over ten years. Below it sit three items that rarely appear in a sales quote: yearly servicing, the extra electricity used in cold snaps and defrost cycles when real COP falls below the headline figure, and the radiator, pipework and electrical work that many houses need before a pump can run well. These can turn a promising saving into a modest one. Use the simulator to find the electricity price, COP or install cost at which gas wins, then ask installers for numbers that fit your house.
Formula and methodology blueprint
The model compares two yearly costs over a ten-year horizon and shows the difference per month. Heat demand is fixed by your house. The heat pump needs demand divided by real COP in electricity, priced at your tariff with a ten-year average inflation uplift, plus servicing and the installation cost repaid over ten years at a 6% cost of money. The gas option needs demand divided by boiler efficiency in gas, with its own inflation uplift, plus boiler servicing and a reserve for the boiler replacement the pump avoids.
- Real COP
- COP_real = COP × (1 − cold-weather loss)
- The headline COP is trimmed by 6% for cold snaps, defrost cycles and hot-water peaks.
- Heat-pump yearly cost
- HP = demand ÷ COP_real × electricity price × f_e + service + annuity(install)
- Electricity with ten-year average inflation, servicing and the installation repaid over ten years.
- Gas yearly cost
- Gas = demand ÷ 0.9 × gas price × f_g + service + boiler reserve
- Gas at boiler efficiency of 90%, with a yearly reserve for replacing the old boiler.
- Average price uplift
- f = ((1 + g)^10 − 1) ÷ (10 × g)
- The multiplier on today's price that represents the ten-year average under yearly inflation g.
- Monthly saving
- Net = (Gas − HP) ÷ 12
- Positive means the heat pump beats gas over the ten years. The breaking point is where this reaches zero.
Cascading elasticity
Installation cost, electricity price and gas price move the result most, because they act on the largest components of each yearly cost. COP matters through the electricity bill and is strongest where electricity is expensive. Heat demand scales both options at once, so it widens a positive gap and a negative one. Gas inflation is slow but compounding: a few points a year add a double-digit uplift over ten years, which is why it deserves a low and a high test.
Three real-world case studies
Bootstrapped starter
A small, well-insulated home
A compact home with modest heat demand and a good pump. The saving is positive but small because there is little heat to save on. Loading it shows how installation cost dominates when demand is low.
Scaling mid-market
A large, draughty house
A big house with high heat demand, a well-designed system and gas that has been getting dearer. Every unit of heat saved brings a large benefit. Loading it shows how demand lifts the monthly saving well above the base.
Black-swan crisis
An expensive pump on cheap gas
A costly installation, a pump that struggles to reach COP 2.4, electricity at a high price and cheap, flat gas. The pump never repays itself. Loading it shows which input restores the saving.
Industry benchmark matrix
| Metric | Danger zone | Industry average | Top 10% elite |
|---|---|---|---|
| Seasonal COP (air-source pump) | Below 2.5 | 3.0–3.8 | Above 4.0 |
| Electricity-to-gas price ratio | Above 3.0 | 2.0–2.8 | Below 1.8 |
| Installation cost as share of ten-year heat cost | Above 60% | 30–45% | Below 25% |
| Heat demand per year (typical house) | Below 8,000 kWh | 12,000–18,000 kWh | Above 20,000 kWh |
| Gas-to-pump yearly cost ratio | Below 1.0 | 1.05–1.3 | Above 1.4 |
Variables and levers
Heat pump installation cost
Total installed price after any grants or subsidies you are sure of, including the cylinder and commissioning.
Lever: Collect three detailed quotes, check which grants apply today and avoid paying for capacity the house does not need.
Yearly heat demand
Heat the house needs for space heating and hot water in a year, taken from past gas bills or an energy certificate.
Lever: Cut demand first with draught proofing and loft insulation, because a smaller heat load means a smaller, cheaper pump and lower bills.
Seasonal efficiency (COP)
Heat delivered per unit of electricity over the whole year. Well-designed systems reach about 3 to 4.
Lever: Lower the flow temperature with larger radiators or underfloor heating and use weather compensation, since each extra point of COP cuts electricity use directly.
Electricity price
Your all-in unit price including standing charges spread over the units used.
Lever: Ask for a heat-pump or time-of-use tariff and move running to cheaper hours, because electricity is the largest running cost.
Gas price
Your all-in unit price for gas, including the share of standing charges you would stop paying.
Lever: Check your real gas unit price and standing charge, as a cheap gas contract makes the pump harder to justify.
Gas price inflation
How fast you expect the gas price to rise each year over the ten years. Electricity is assumed to rise 3% a year.
Lever: Run the model with a low and a high gas inflation rate, because the answer over ten years depends on it heavily.
How to use this simulator
- 1Enter your yearly heat demand from past gas bills and your current gas and electricity unit prices.
- 2Enter the installation quote after any grants you are sure of, and an honest seasonal COP.
- 3Read the five domino boxes to see whether efficiency, capital share or the cost ratio is the weak point.
- 4Press Find my breaking point to see the electricity price, COP or install cost where gas wins.
- 5Open the Parallel universe tab to compare your plan with the optimised heat pump over 24 months.
Mistakes to avoid
- Using the maximum lab COP. Real systems lose efficiency in cold weather and when producing hot water, so the headline number overstates the saving.
- Comparing running costs only. Without the installation spread over ten years, the heat pump always looks better than it will feel in the bank.
- Ignoring the radiators and electrics. Undersized radiators force high flow temperatures and lower COP, and an old fuse board can add a large unplanned bill.
- Assuming gas stays cheap or expensive forever. The ten-year answer is sensitive to both price paths, so test a low and a high case before deciding.
Frequently asked questions
Is a heat pump always cheaper than gas?
No. It depends on the electricity-to-gas price ratio, your real efficiency, the installation cost and how long you stay. Test your own numbers instead of relying on averages.
What COP should I use?
Use the seasonal figure an installer is willing to put in writing for your house, not the best lab figure. Values around 3 to 3.5 are common for well-designed air-source systems.
Are subsidies and grants included?
Only if you subtract them from the installation cost. Grant rules change, so check current schemes and eligibility before counting on one.
Why is electricity inflation fixed?
To keep the model focused, it assumes electricity prices rise 3% a year. If you expect them to rise faster, raise the electricity price input to compensate.
What about cooling and solar panels?
Neither is included. A pump that also cools, or one fed by your own solar, usually improves the result, so treat this as a conservative estimate.
How accurate is this?
It is an educational planning model with stated assumptions, not engineering or financial advice. Ask for a heat-loss survey and written quotes before deciding.
This is an educational planning model with stated assumptions. It is not financial, tax or legal advice. Replace the inputs with your own figures and verify important decisions with a qualified professional.