Heat pump tariffs: how to compare electricity tariffs

The default: the Ofgem cap

If you have not chosen a tariff, you are probably on a default one. Ofgem’s price cap sets the maximum suppliers can charge people on default tariffs for each unit of energy and the daily standing charge. It is reviewed every three months. For 1 October to 31 December 2026 the Great Britain average, Direct Debit figures are 26.32p per kWh and 54.83p a day for electricity, and 7.97p per kWh and 29.68p a day for gas. We re-read the Ofgem page on 8 October 2026 and those are the figures. The page also states there is no VAT on electricity from 1 October 2026 to 31 March 2027; gas carries 5%.

Two points that are easy to miss. The cap is a ceiling for default tariffs, not a recommended price, and regional rates differ from the national average. And the zero-VAT period is temporary, so any comparison made now will look slightly better for electricity than one made after 31 March 2027. Our running cost page uses these figures; at the cap, a heat pump at SCOP 3 makes heat at about 8.8p per kWh.

Types of electricity tariff

Because electricity costs several times as much as gas per kWh at the cap, a heat pump on a flat default tariff ends up level with a gas boiler rather than far below it, as the running cost comparison shows. A tariff that lowers the average price you pay is the main way to change that, which is why it is worth understanding before you switch.

The arithmetic that decides

A tariff helps a heat pump owner by lowering the average price per kWh across everything the heat pump uses in a year. Not the cheapest advertised rate, but the average, weighted by when you actually use power. In our labelled model a home needs 12,000 kWh of heat a year; a heat pump at SCOP 3 then uses about 4,000 kWh of electricity. That gives a rule of thumb you can use with any quote:

Because the whole heating bill in the model is only about £1,053, even a large unit-rate cut saves a few hundred pounds, not thousands. And a tariff that charges a higher standing charge can eat that. At the cap the electricity standing charge is about £200 a year, paid whatever the tariff. Always compare the annual total at your expected usage: units multiplied by the blended rate, plus the standing charge.

Remember too that a heat pump’s electricity use is only part of your bill. A household also has appliances, lighting and perhaps an electric vehicle, and a tariff has to suit all of it.

How a time-of-use product is built (one example)

As one example of how these products are structured, Octopus Energy’s Cosy Octopus page (read 8 October 2026) describes three kinds of period each day: cheap bands of 04:00-07:00, 13:00-16:00 and 22:00-00:00, a peak band of 16:00-19:00, and a day rate for the rest. It describes the cheap rate as 51% cheaper than the day rate and the peak as 50% above it, shows no pence rates on the page (you enter a postcode to see them), and says you need a heat pump, electric radiator or electric boiler to be eligible; many time-of-use products also need a smart meter. We are not recommending it and give no rate, because rates change; it is simply a real example of the structure.

Using only those relative differences, you can see how a blended average works. The shares of electricity in each window below are our assumptions, not measurements.

The lesson is in the first row: with a lot of load in the peak band the discount shrinks. Whether a time-of-use deal beats a flat default depends on the day rate it is built on as well, not only on the discount, which is why you compare the final annual total rather than the percentage.

A tariff is one of four common reasons a bill runs high; the others are covered in why is my heat pump electricity bill high.

Checklist for comparing tariffs

1. Get the electricity use your quote assumes. Ask the installer for the expected annual kWh of the heat pump, and the design SCOP behind it.
2. Check eligibility. Many time-of-use products ask for a heat pump or other electric heating and a smart meter. Check you qualify before counting the saving.
3. Compute the blended rate from the supplier’s own rates for your region and your likely pattern of use, and add the standing charge for the year.
4. Compare to the default. At the cap that is 26.32p per kWh and 54.83p a day for 1 October to 31 December 2026, a national average that your region may differ from.
5. Read the term and exit fees. Fixed deals can carry fees if you leave early.
6. Think about batteries and solar. If you have or plan either, the best tariff may be a different one.
7. Re-check annually. Rates and products change, and the zero-VAT period on electricity ends on 31 March 2027 unless it is extended.

When to switch

The sensible order is: get the grant and quote right first (the £7,500 grant, or £9,000 for qualifying oil and LPG homes, comes off the installer’s price); install; then look at tariffs once the system is commissioned and you know its real electricity use. Choosing a tariff before the heat pump is installed means estimating a number you will soon be able to measure. The one exception is when you are already due to renew a deal: avoid locking into a long fixed term with exit fees that you may want to leave.

If you also want to understand why your installer’s efficiency figure is the biggest lever of all, see sizing and radiators, and for the bigger decision see whether a heat pump is worth it.