E3G, an independent climate change think tank, published analysis on 28 August 2025 setting out four reforms it says would reduce heat pump running costs relative to gas. The briefing, written by Chris Galpin, states that a typical household with an annual gas bill of £820 could potentially reduce its bills to around £375 by switching to a heat pump, but only if government acts1.
The paper says gas heating bills for UK households remain over a third higher than before the energy crisis, and that replacing imported fossil gas with cheaper electric alternatives is the only credible long-term option for reducing heating bills1. It puts a figure on each of the four reforms as a potential saving on typical annual heat pump running costs.
| Reform proposed by E3G | Potential saving on typical annual heat pump running costs |
|---|---|
| Remove levies from electric heating through an Affordable Electric Heating Tariff | ~£150 |
| Reduce electricity prices further through electricity system reform | ~£90 |
| Drive up performance standards for low-carbon heating | ~£140 |
| Ensure consumers can access cheaper off-peak electricity | ~£175 |
Source: E3G1
On performance standards, E3G says installed heat pump efficiency should be monitored and a target set to increase average performance by 25%, from SCOP 2.8 to SCOP 3.51. On off-peak electricity, it calls for standards ensuring all new electric heating systems are "smart ready", stronger price signals for flexible tariffs and support for automating heat pump load shifting1.
The briefing also addresses households using direct electric heating, which it says include some of the poorest in the country and are twice as likely as other households to experience fuel poverty1. It says the four actions would substantially benefit those households as well as those with heat pumps1.
"With the right policy changes, the average household heating bill could be over £400 lower with a heat pump than with a gas boiler."
Why it matters for households
The gap between gas and electric heating running costs is the practical question behind any decision about a home's heating system, and it is the subject of our guides to heat pump running costs and heat pump vs gas boiler running costs. E3G's figures describe a potential outcome under policies that do not yet exist, not the current cost of running a heat pump. The £375 figure is what the analysis says a typical household could reach, not what households pay now.
For homes already on electric heating, the paper's point is that levy removal and cheaper off-peak power would narrow the gap with gas without any change of appliance. Its £175 estimate for off-peak access sits alongside our guide to time-of-use tariff heat pump savings. The comparison across all fuels is set out in home heating running costs by fuel, and installation costs, which the briefing does not quantify, are covered in how much does a heat pump cost in the UK.
What happens next
E3G calls on government to publish a comprehensive Electricity Bills Strategy by the end of 2026, including plans to continue reforming Contracts for Difference and to reduce uncertainty over future transmission network charges1. It also calls for regulation to ensure gas plants cannot generate unjustified profits1. No government response to the briefing has been reported.