Energy crisis: air source heat pump vs. oil boiler running costs

by Mars

I had massive concerns in February 2021 about the potential running costs of air source heat pumps (which I expressed in this post) as electricity tariffs started to edge up. As it turns out my fears of electricity at 17p per kWh were way off the mark, and little did I know that 18 months later our tariff would be 29p/kWh, 52p/kWh as of October, and probably over 70p/kWh by this coming January.

With OFGEM’s latest announcement, as we head into the winter, the situation is more worrying than ever. So let’s break things down because we’ve been inundated with questions about the running costs of air source heat pumps and how the rising electricity tariffs impact them, and how it compares to running an oil (kerosene) boiler.

Looking at our data from January 2021 (which was a cold month for us) when we heated the house exclusively using our heat pump, we consumed 2,231 kWh of electricity, just for the air source heat pump, equating to around 72kWh per day.

To put things in context, our property is around 400 square metres with a mixture of UFH and radiators, and we set our target temperature at 21C. In January 2021, which feels like an eon ago, we were paying 11p per kWh.

In January 2022, we primarily ran off HVO which in heating output terms is virtually identical to kerosene – it’s just much cleaner as a fuel with 88% less CO2 emissions. This gives us a great comparison to work from. We were getting through around 500-550 litres per month to heat the entire house and water. It’s worth mentioning that we ran our system with a flow temperature of 45C and maintained a target temperature of 21C.

So let’s do some basic maths. Using our heat pump data from January 2021, if we heated the house using the heat pump exclusively on the newly announced tariff of 52p/kWh (the UK average) this would cost us a staggering £1,160 per month.

By comparison, 500 litres of kerosene would cost us around £425 per month based on the most recent price of £0.85 per litre from our local oil club. Just for context, HVO would cost us between £1,200-£1,400 per month which is largely due to the UK government’s perplexing reluctance to remove duties and levies off this fuel for home heating.

As a result, HVO won’t be a financially viable option for most rural households in the UK this winter, but organisations like OFTEC and UKIFDA are hard at work and are also trying to get import tariffs lifted off US HVO (the United States is now the largest HVO producer) which would increase competition and reduce prices.

We have no point of reference on heating our property with gas, but the European gas benchmark now trades at what would be an equivalent of $410 per barrel of crude oil, which will be of definite concern to many households across the UK, and it’s this inflated price that has had such a devastating economic impact on much of Europe and the UK.

But we digress. If you currently heat your home using kerosene and are considering a heat pump, it’s going to be a tough decision to make. In our case, it’ll be much cheaper to run off kerosene. It’s not good for the planet, but it’s not going to drain the bank account. The heat versus eat dilemma is real, with millions of households that are bound to fall into fuel poverty this winter.

We’re massive believers in being green, but we need to be realistic, and the other factor that has to be considered is the source of electricity. It’s far from green most of the time, especially when the wind stops blowing.

Looking at our electricity sources for the past few weeks it’s been a steady source of gas, up to 95% on certain days. In most parts of England it’s been gas, nuclear and coal is gaining in traction. So the air source heat pump is not that clean a lot of the time, especially if you’re solely powering it from the grid.

In my opinion, this is going to be biggest challenge for heat pump owners this year. For us, the heat pump must run 24/7 when temperatures drop into single digits. When it does, the house remains cosy. If we turn it off for a few hours or have a power outage, the heat-losses kick in, and the house cools. If we leave the heat pump off for a day, it’ll take us 24-36 hours to get the house back to temperature if the outside temperature is under 7C. It’s not ideal, unless you have HT air source heat pump, which we don’t.

Just like gas, kerosene and HVO work much faster. We can get cold rooms to temperature in a couple of hours still using a flow temperature of 45C. If we raise that to 50C, the coldest rooms (where we have K3 rads) are warm again in 30-60 minutes.

If the scheduled blackouts that are predicted in the UK come to fruition, this’ll have an impact on homes heated by heat pumps. With kerosene or HVO you also have the option of turning the heating off on milder winter days, which saves fuel. That’s not really realistic for our heat pump and our house.

Obviously, if you’ve invested in batteries, PV and are on a time of use tariff, this can be more favourable when it comes to running an air source heat pump, but that is a significant investment.

So we’re all faced with serious decisions to make this winter. How are we going to stay warm and not drain the bank account? Do you use a log burner to supplement your heating? Do you turn the thermostats down and invest in thermals and wooly jumpers?

We’ve now insulated the house as much as we can and we’ll be using the log burner to help heat our kitchen and living room. We’ll move our TV into the living room and turn down the thermostats in rooms we don’t use. We’ll also run our heat pump bivalently, and it’s going to be an exercise in heating efficiency, coupled with wearing mohair socks and thermals.

One thing that is undeniable is that environmental sustainability, climate change and the well-being of the planet will take a back seat this winter as many homes will burn fossil fuels to heat their homes in one way or another.

Let us know what your heating strategy is for this coming winter by leaving a comment below.

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anna mycoe
anna mycoe
1 year ago

Hi Mars, we have a HT ASHP. And like you were paying 11p kWh this time last year. Our annual consumption is around 11000 kWh. Our only back up is wood stoves (thankfully)
We have just had solar panels fitted with 17kw battery, so since the 4th august we have consumed little or no electricity from the grid, which will
Offset the payment for the panels nicely. I have also managed to get onto Octopus energy, and literally days before the price cap was announced I have gotten into their GO tariff which fixes prices at .38/kWh until august 23. This tariff also gives usage at 7.5 p per kWh between the hours of 00.00 and 04.30 am, which we can use to top up the battery, or when it arrives in October charge my new electric car.

It’s been a tricky balance and we are still far worse off than if we had gas, however that’s not an option here so……

We run the ASHP at 21 between 5&9pm
19 degrees from 5am to 5 pm
17 the remainder – we will see if that’s enough.

We have invested in some rather fetching hoodies and warm bottoms for the winter.

We’re very
Lucky, I work in social housing and there is going to be some people in dire straits this winter


1 year ago

We looked at ASHP to replace our ancient oil boiler early last year. Even with the larger grant that was available at the time, I couldn’t make the numbers tip in favour of going down the ASHP route. And that was with the low cost electricity tariffs available last year. With the current and projected costs, I am just so relieved we decided to stick with oil and install a new modern condensing oil boiler. Even with oil at £1 a litre, that works out at around £0.10 per kWh. If we assume a reasonable ASHP can achieve a COP of 3 during the winter months with cold outside temperatures, then electricity would need to be £0.30 per kWh, to match the running costs for oil. Like you, we were keen to go green, but not if it broke our financial stability.
I really worry about families who switched to ASHP last year and who have no back up now in the form of gas or oil.

Stephen Durrant
Stephen Durrant
1 year ago

We are running into the same problem and will be using our wood burners. Also thinking of adding zone controls on the house, so that the central heating only heats the down stairs during the day. The government should have put a cap on the price of electricity and made the suppliers absorb any higher prices on gas and electricity, as they are making large profits for the share holders.

Bob Bazley
Bob Bazley
1 year ago

Mars, I feel your pain with the ASHP costs, its what has kept me away from purchasing one as Oil is just so much cheaper at present. I’m on a fixed rate till March at around 30p per Kwh all in (includes the standing charge). The UK is doing absolutely nothing to improve the situation, we are walking blindly forward into a position where they are stopping gas but have no viable option to replace it, hydrogen !!! or ASHP its a cost that people will just not have the funds or the ongoing cost to accept, They need to get more people to insulate housing yet do nothing to help with it !

1 year ago

Our strategy will be to turn the heating down and try and run the ASHP more efficiently. We don’t have the option of oil but do have wood and coal burners. A lot of our wood is free so that helps. It’s still going to cost a lot more though.

Di Sutton
Di Sutton
1 year ago

Hi Mars and thanks for another really interesting post. It was shocking to see your figures and yet again see how little is really being done to address the twin problems of climate change and energy efficiency, which are hardly contradictory

We moved into a sprawling 1830s farmhouse in November 2020 and invested in a 17KW ASHP in June 2021 and like you, luckily, kept the oil boiler, mainly because it was not very old and would have been a waste of resources to get rid of it. In October 2021 we had 6.4 kw of solar panels installed and in December 2021 a 13kw battery.
We used 1810 kwH in Jan 2022. Since Nov 2021 we have insulated many of the vaulted ceilings of the house, with more still to come, so there are many variables to consider, making comparisons from year to year difficult.
What I can say is that the battery and solar have saved us an estimated 1350.00 so far (8 months, though these include the most productive months) and the house has been from 46% self-powered in March and then 56% April, 71% May, 86% June, July 92% and Aug 96% respectively. These figures also include charging the car.
We had solar pv in our last house, which generated approximately the same amount of electricity that we used in the whole year, though clearly not at times such that that we could use it all, so a fair amount was exported. The battery has exceeded my expectations in the effect it has had in our degree of self-sufficiency over the last 6 months.

I think I’d seen reasonable loan rates a few months ago from building societies for people who wanted to improve insulation/instal renewables. Though the capital investment is high, at current rates of increase for energy prices might some people find it worth considering these loans?

I think we’ll try a different approach this winter with the heat pump and also discuss how we can control the interaction between the heat pump and oil boiler if/when that kicks in. Firstly we’ll see how long the house stays comfortable with 4 hours of heat pump use and then battery charge during the night on the Octopus Go rate that Anna mentioned. We’ll then run a wood burner for as long as is needed in the day to send warmth around the main side of the house. If possible we’ll light another one in the evening on the other side of the house in the most comfortable room for sitting in, but that will depend on how all this pans out. We’ll continue to wear our outdoor weather gear inside once thermal underwear and wool jumpers are no longer sufficient! The main issues arise when we need to be sitting for long periods at computers. I’ve found an infra red 150w heater under the desk works really well for me, though my husband needs a bit more general room warmth in his room.

Once we have sorted out some problems with the flow to specific radiators we’ll also look at smart thermostatic radiator valves and different heating zone possibilities.

The other tip we find really useful for cooking that needs a bit more direct heat is a Remoska which only uses 400w. Slow cooker for the rest.

I’ll be very interested to hear how others find any changes they make to the way they run their ASHPs.

1 year ago

Hi Mars, you may remember the trials and tribulations we had when our heat pump failed Dec 20 and we could not get it fixed until Feb 2022. We had to look at alternative heating solutions. I am glad we did this because now we have alternative, less electric consuming, methods of heating.

We could not reinstate the old smelly oil fired system, we have no mains gas and LPG was too difficult. We already had a small AGA multi-fuel burner in the lounge but this was not going to heat the house. The old flue was still in place in the kitchen from the removed floor mounted oil boiler, so I started researching log burners that could fit the space and connect to the flue.

I had set a budget of £500. I soon found that was totally unrealistic regarding what was available in the UK, so started looking for second hand on Ebay, and stumbled across new multi fuel burners from Bulgaria. Settled on a 8.4Kw multi-fuel (true multi-fuel with fire brick lining) unit with oven for £325 plus VAT and import duties (around £450 in the end) so with flue attachments and a home made heat protection panel I kept within my budget.

What I received has been nicknamed ‘The Beast from the East’. It arrived within a week and was better than I expected. Within a few hours it was in position and working, but it took us two weeks to fine tune the control as the heat output was so high the kitchen became almost too hot to work in. We still have not got the hang over control of the oven but with the electric prices coming this year we will be making an effort to do this, but the house soon became nice and warm even on the coldest days, and after we had the heat pump repaired in Feb we noticed that the central heating was only occasionally coming on on very cold days.

OK, ‘The Beast from the East’ is hardly DEFRA approved and we don’t have young kids to keep away from the very hot surfaces, but the running costs are far lower than almost any other heating sources. As a multi-fuel we use a combination of hardwood logs and smokeless fuel, the smokeless fuel mainly being for banking up before bed. This year we have already ordered 2 ton of kiln dried hardwood logs (£260 from our local sawmill) and might need a further 1 ton, and will expect to spend around £300 on smokeless fuel.

In a few weeks I am adding a steel hot air heat box to the back of the ‘Beast’ between the unit and the wall with a hot air duct up into an insulated plenum in the loft and ducts into the extreme bedrooms that don’t get quite enough ambient heat from ‘Beast’ in the Kitchen. This will have heat sensing fans so will only operate when the plenum gets to the correct temperature.

For when the heat pump central heating is operating I have converted the old radiators into fan assisted to improve efficiency by using a thermostat plug with remote sensor connected to two USB fans. Because the radiators operate at a fairly low temperature this means I can set the fans to start as soon as the radiator temperature reaches 20 degrees C. Most commercial (and very expensive) radiator fans only start operating at 28 degrees C. The thermostat with remote sensor (you need one with ability to be set to cool the radiator) a USB plug and two 75 mm USB fans cost about £18.

We are seriously considering leaving the heat pump (which I don’t really trust anymore) on Domestic hot water only for most of the winter. OK, feeding the ‘Beast’ every hour or so is a bore but I just think of the savings. Damn, I am beginning to sound like my dad now who never came out of his wartime ‘make do and mend’ mentality.

monique bayles
monique bayles
Reply to  HMK
1 year ago

Wow, i’m impressed and would love to know more about how to set up the steel heat box and ducting. I tied a basic system a few years ago where I ducted warm air from my woodburner using an extractor fan and hose it was basic as I have no engineering skills.

1 year ago

How does running a bivalent system effect your RHI payments?

Mike Trenery
Mike Trenery
1 year ago

Interesting article, thanks for doing it. I have been looking at ASHP but won’t do it after reading this. We have oil but are reluctant to turn the heating on as that’s expensive too. Just about to install a log burner so we hope that will keep some of our 400 square M house warm.

Richard Howell
Richard Howell
11 months ago


I have just had an ASHP installed (3x Samsung) this year in a large old farm house 400 sqm with average insulation and single glazing in most part.

It’s been a nightmare from start to finish, our bill this month will be in excess of £1,750 based off an electricity use of .34 kWh, and we have not set any of the thermostats above 17 degrees!

Any thoughts on what we can do?


Mick R
Mick R
10 months ago

Hello Mars, just discovered your website and found this article really interesting. We’re in SW Ireland in a rural detached two storey dormer style house. Insulated cavity walls with external rough stone cladding. It’s relatively small in comparison to your own, however heating it was quite challenging up to a couple of years ago.

We were using a mixture of a bottled gas Rayburn heating the kitchen and room rads, supported by stand-alone electric oil filled rads as needed. Even then it was quite expensive over the winter months, dread to think what it would cost now.

What we changed: structure first – all single glazed windows and doors downstairs replaced with double glazed units, new insulation in the loft when new roof installed, and new triple glazed Velux windows upstairs.

Heating: we removed the Rayburn and replaced it with a 12kw multifuel wrap-around boiler stove connected into the existing hot water tank and rads. The stove is adjacent to a two flue chimney stack so we used a direct air model drawing cold area down the 2nd flue piped straight into the stove, with the hot output going up the other flue. This avoided the need for a wall vent with the stove drawing cold air from outside across the room. Not sure if many others have done that, but we discussed it with the (approved) installer first. Happily it’s working fine.

We now use the stove exclusively for room and water heating during autumn, winter, and early spring. It’s been in use almost every day from 1st October, and weather dependent will probably stay the same until end March or into April. Given the nature of the beast the internal temperatures do fluctuate, typically between 18c and 21c, but overall we find it pleasingly comfortable. The old oil-filled rads are gathering dust in the shed 🙂

We have trees on the property so I might harvest some ash next year, but up to now we’ve been buying in both seasoned hard wood and turf briquettes. I bulk buy in summer and get it all delivered early September. Not so green maybe, but the bank account won the argument. Basically it costs us approx (in sterling) between £950 and £1150 for heating during that 6-7 month period.

Our electricity usage has dropped dramatically, mainly as a result of not using the oil-filled stand-alone rads and much less use of the immersion heater, and also possibly due to replacing the hot plate ceramic hob with an induction variant and gradual switch-over to LED lighting. Our electricity bill is consistently around £80-£90 per month at around 38p per unit over the same period. Ironically it will probably increase in the summer as we’ll need to heat the water without the use of the stove. At the moment the Irish government is crediting every electricity account with £88 per month for six months, so we’ve not actually had to pay anything and even have a small credit.

My next challenge is planning for the summer months! Do we stick with the immersion for hot water, go for a PV array with an immersion switch/controller and sell any excess back to the grid, or possibly opt for a single panel evacuated tube approach (cheaper and simpler).

I think my general instinct these days is to minimise dependence on oil, gas and supplied electricity as much as possible. There’s more work involved in keeping a multi-fuel stove going but less worry about external influences on cost and availability etc. My days of living in suburban London where the flick of a switch was all that was needed to fire up the CH are becoming a distant memory!

Anyway that was more words than I intended (sorry), but enjoying your articles and videos and will be delving in a bit more to see what else you’ve been up to 🙂

David Brown
David Brown
10 months ago

Likewise, shut down the lounge and moved into the kitchen/snug apart from over Christmas.
I have noted you like it warm! I have turned down my ambient temp from 18c down to 17.5c which now feels comfortable.

1 month ago

Domestic dwelling to date: Oil used £792. Heat Pump estimated £936. A great government offer of £7500 towards installation but I need to pay £3360.

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