What is the best tariff for my heat pump in the UK in 2025?
Many UK homeowners are taking advantage of generous heat pump grants. But after installation, some are seeing higher energy bills instead of savings. The problem? Both, standard electricity tariffs and dedicated heat pump tariffs, are too expensive. But there is a solution: You can get cost under control by choosing the right tariff and pairing your heat pump with a home battery.
The topic in a nutshell
Despite 400% efficiency, standard tariffs (25 p/kWh) make heat pumps as costly as gas. Cheaper time-of-use tariffs (15-20 p/kWh) are key to savings.
Only British Gas (14 p/kWh for 12 months) and OVO (limited access) hit the 15 p/kWh target. Most tariffs stay closer to 20 p/kWh.
Shifting use to off-peak (5.6 p/kWh) drops costs below 13.6 p/kWh—cheaper than any heat pump tariff.
Get a personalised assessment for the best home battery and tariff combination for your heat pump in a consultation.
Why are heat pumps expensive to run without the right tariff?
Heat pumps are more efficient than gas boilers, but electricity is more expensive than gas. A well-installed heat pump can achieve an efficiency rating (known as SCOP) of around 400%. This means that for every 1 kWh of electricity used, you can generate about 4 kWh of heat.
However, electricity on a standard tariff costs around 25p per kWh, which is roughly 400% more expensive than the average gas tariff of about 6p per kWh. As a result, if you use a standard tariff, you won’t see savings compared to running a gas boiler. Additionally, you may struggle to recoup the thousands of pounds invested in your heat pump.
To recover an extra investment of around £5,000 (after grants) within 15 years, you would need to save approximately £300 per year on electricity. The average UK home uses about 12,000 kWh of heat annually, which translates to 3,000 kWh of electricity for a 400% efficient heat pump. To achieve £300 in savings over 3,000 kWh, you would need to cut electricity costs by 10p per kWh, bringing the effective rate down to around 15p per kWh.
So, how do current heat pump tariffs compare to this target?
What are the best heat pump tariffs on the market?
Most heat pump tariffs are so-called “time-of-use tariffs”. This means, their rates vary depending on the time of day, with most tariffs structured in two or three periods.
To make tariffs comparable, we need to look at the “effective rate”. The effective rate weighs the tariff rates by the time periods during which the heat pump operates to keep your home nice and warm (see Table 1).
Looking at the effective rates, you will see that most effective rates are closer to 20p per kWh, with only British Gas and OVO offering an effective rate at or below 15p per kWh. However, both come with a big catch: The OVO tariff is only accessible for OVO customers who bought their heat pump via OVO or their partners. The British Gas rate of 14p applies only for 12 months.
How can I further lower my bill?
To fully recover your heat pump investment, you need to use more electricity during off-peak hours. The most effective way to do so is with a home battery.
A home battery ensures that 100% of your electricity—both for your heat pump and home—is drawn from cheaper off-peak times.
The best tariffs for a home battery cost as little as 5.6p per kWh during off-peak times with a tariff called “Tomato Lifestyle”.
A 15 kWh home battery will cost you about £5,500. Let us assume that about two thirds of your electricity consumption (3,000 kWh) is for running your heat pump. Now depreciating these two thirds of your battery investment of 15 years means that the battery will cost you about 8p per kWh (£3,700 / 15 / 3,000 kWh p.a.). If you are taking into account potential grid rewards your battery can earn, this value will decrease further.
This means that pairing your heat pump with a home battery can produce an effective rate of less than 13.6p per kWh—cheaper than any heat pump tariff and protecting you from future price hikes!
How can I get started?
At Capture Energy, we provide a free tailored proposal for home batteries and pair it with the best tariff to seamlessly connect your heat pump system and consume more cheaply. Get a free personalised quote by answering the quick survey below:
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