Oil boiler or heat pump: running costs
Figures updated 15 November 2026
At 109.5p a litre, heating oil delivers heat for 13.1p per kWh. A heat pump on the energy price cap delivers it for 9.5p.
| Home | Oil a year | Heat pump saves | Cost after grant | Pays back |
|---|---|---|---|---|
| Semi-detached 1,040 litres | £1,137 | £306 a year | £3,826 | 12.5 years |
| Detached 1,350 litres | £1,480 | £398 a year | £3,826 | 9.6 years |
| Bungalow 1,000 litres | £1,099 | £297 a year | £3,826 | 12.9 years |
Homes in Llandeilo, Carmarthenshire with no mains gas, using the median heat demand for each type of home (DESNZ). The heat pump runs on Cosy Octopus and replaces the oil boiler, including hot water. Annual savings at electricity prices from April 2027, when VAT is due to return. Use the calculator below with your own litres.
Cost after grant includes a £9,000 Boiler Upgrade Scheme (off-gas oil or LPG) grant. England and Wales only, for applications made by 31 March 2027. You must own the property (homeowners, landlords and small businesses can apply), be replacing oil or LPG heating, have no mains gas connection, and use an MCS-certified installer, who applies for the grant. GOV.UK
Why oil costs more per unit of heat
A litre of heating oil holds 10.3 kWh. A condensing oil boiler turns about 81% of that into heat for the house. A heat pump turns each kWh of electricity into 2.78 kWh of heat on average, which is what makes up for electricity costing more per kWh.
Oil prices move
The figures use the oil price from the Nottingham Energy Partnership, Energy Cost Comparison (November 2026). Put your own price per litre into the calculator below.