If your home is off the gas grid, you’ve probably heated it with oil for years. With oil prices moving around and a £9,000 grant available for switching, it’s worth asking: is a heat pump actually cheaper to run than an oil boiler? Here’s a straight heat pump vs oil boiler comparison using current prices.
The short answer
Yes, in most homes. With prices as of November 2026, a well-designed air source heat pump costs roughly 7 to 9p per kWh of heat on a standard tariff, compared with around 12 to 15p for an oil boiler. On a cheaper off-peak tariff the gap gets wider still.
How to compare running costs fairly
Oil and electricity are priced differently, so the fairest comparison is the cost of each kWh of heat delivered into your home:
- Oil boiler: the price of oil, divided by the energy in a litre (about 10.3 kWh for heating oil), divided by the boiler’s efficiency.
- Heat pump: the price of electricity, divided by the heat pump’s efficiency. A heat pump’s seasonal efficiency (SCOP) is typically around 3 to 4, meaning it delivers 3 to 4 kWh of heat for every kWh of electricity it uses.
The prices we’ve used
- Heating oil: 116.8p per litre, the UK average kerosene price on 1 November 2026 (BoilerJuice).
- Electricity: 26.32p per kWh, Ofgem’s average price cap unit rate for October to December 2026.
Cost per kWh of heat
| Heating system | Cost per kWh of heat |
|---|---|
| Older oil boiler (75% efficient) | About 15.0p |
| Typical oil boiler (85% efficient) | About 13.3p |
| Modern condensing oil boiler (90% efficient) | About 12.5p |
| Heat pump, SCOP 3.0, standard tariff | About 8.8p |
| Heat pump, SCOP 3.5, standard tariff | About 7.5p |
| Heat pump, SCOP 4.0, standard tariff | About 6.6p |
| Heat pump, SCOP 3.5, heat used at a 14p off-peak rate | About 4.0p |
A worked example
Take a home that needs 15,000 kWh of heat a year for heating and hot water, which is typical for a medium-sized, oil-heated house:
- Oil boiler at 85% efficiency: about 1,700 litres of oil a year, roughly £1,990.
- Heat pump with a SCOP of 3.5: about 4,290 kWh of electricity a year, roughly £1,130 on a standard tariff.
That’s a saving of around £860 a year. Against a newer condensing oil boiler the saving is smaller, around £750. Running part of the heating and hot water on a cheaper off-peak tariff could save more. Every home is different, so we’ll work out the figures for yours from a proper heat loss survey.
What makes the biggest difference
- Good design: a heat pump sized from a room-by-room heat loss calculation, with the right radiators or underfloor heating, runs at a low flow temperature and a high efficiency. A poorly designed system can cost far more to run.
- Your tariff: heat pump tariffs with cheaper off-peak windows can cut costs significantly, especially with a well-insulated hot water cylinder or a home battery. See our guide to heat pump running costs.
- Solar panels: solar can cover some of the heat pump’s electricity, particularly for hot water from spring to autumn.
- The age of your oil boiler: the older and less efficient your boiler, the bigger the saving from switching.
Other costs to compare
- No oil deliveries or tank: no minimum orders, no tank to maintain or replace, and no risk of running out or of theft.
- Price stability: oil prices can swing a lot from month to month. Electricity is capped by Ofgem each quarter, and you can fix your tariff.
- Servicing: both need an annual service, so the cost is broadly similar.
The £9,000 grant for oil homes
If you’re replacing an oil or LPG boiler in England or Wales, the Boiler Upgrade Scheme gives £9,000 off an air source or ground source heat pump, until 31 March 2027. Installations also have 0% VAT. Read more about the £9,000 heat pump grant for oil and LPG homes and our heat pump grants guide. You may also be able to spread the rest of the cost with the Warm Homes Loan Scheme.
Will a heat pump work in my oil-heated home?
Many oil-heated homes are rural, older and stone-built, and people worry a heat pump won’t keep them warm. With the right design it can. Some homes need insulation upgrades or larger radiators first, and our heat loss survey shows exactly what, if anything, is needed. See our guide: will a heat pump work in my old Cotswold stone home?
Get your running costs worked out
We’re MCS-certified air source heat pump installers based in Cheltenham, replacing oil boilers across Gloucestershire and the Cotswolds. We’ll calculate your likely running costs, apply for the £9,000 grant on your behalf, and give you a clear, itemised quote. Get in touch to book a survey.
Prices correct as of 1 November 2026. Oil and electricity prices change regularly.