The short answer
UK electricity suppliers offer two broad kinds of tariff that suit heat pumps: heat-pump-specific tariffs and time-of-use (off-peak) tariffs. Heat-pump tariffs are designed for households with a heat pump and offer a reduced unit rate for electricity, narrowing or closing the running-cost gap with gas. Time-of-use tariffs (such as those with cheap overnight or dynamic half-hourly pricing) let a well-controlled heat pump heat the home and hot water when electricity is at its lowest. Several major suppliers run heat-pump or smart tariffs — for example Octopus Cosy and Octopus agile are well-known time-of-use options. Eligibility usually requires a smart meter and sometimes a heat pump on the property. The right tariff is one of the biggest levers for cutting heat pump running costs.
The tariff you choose can change a heat pump's running cost as much as the system's efficiency does. Here are the main tariff types and how they help.
Heat pump tariffs
- Heat-pump-specific tariffsReduced unit rate for heat pump homes
- Time-of-use tariffsCheaper electricity at off-peak times
- Well-known examplesOctopus Cosy, Octopus agile
- Usual requirementSmart meter
- Why they matterBig lever on running cost
The two main tariff types
Tariffs that benefit heat pump owners fall into two groups:
- Heat-pump-specific tariffs: aimed at households that have a heat pump, these offer a lower unit rate (sometimes across all hours, sometimes during heating hours) to reflect the heat pump's role in electrifying heating. They directly reduce the cost of every unit the heat pump uses.
- Time-of-use tariffs: these vary the price of electricity by time of day. Off-peak tariffs offer cheap overnight rates; dynamic tariffs change the price every half hour based on wholesale costs. A heat pump with good controls can shift much of its heating and hot water demand into the lowest-priced windows.
Some households combine a heat pump with home battery storage or solar to shift even more usage into cheap periods, though that is an additional investment.
| Tariff type | How it cuts cost | Typical requirement |
|---|---|---|
| Heat-pump-specific tariff | Lower unit rate for heat pump electricity | Heat pump on property, smart meter |
| Off-peak time-of-use (e.g. Octopus Cosy) | Cheap rates in set off-peak windows | Smart meter |
| Dynamic half-hourly (e.g. Octopus agile) | Price tracks wholesale, lowest at low-demand times | Smart meter, suits flexible use |
| Standard variable tariff | No time benefit | None |
Indicative overview of UK tariff types for guidance. Sources: Energy Saving Trust; Ofgem. Specific tariffs, rates and eligibility change — check directly with suppliers.
How tariffs change the running-cost comparison with gas
On a standard tariff, a heat pump's running cost versus gas is close because electricity costs several times more per unit than gas. A favourable tariff narrows that gap:
- A lower unit rate on a heat-pump tariff reduces the effective cost of every unit of heat the pump delivers.
- Cheap off-peak windows on a time-of-use tariff let the system pre-heat the home and heat the hot water cylinder when electricity prices are lowest, so a large share of the heat costs less.
Combined with a high SCOP, the right tariff is usually what makes a heat pump clearly cheaper to run than a gas boiler rather than merely level with it.
How to get the most from a time-of-use tariff
A time-of-use tariff only saves money if you can actually shift heating demand into the cheap windows. A heat pump is well suited to this because heat can be stored and released:
- Pre-heat the hot water cylinder: a cylinder stores hot water, so heating it during a cheap off-peak window means the household draws on low-cost hot water through the day. The cylinder acts as a heat battery.
- Use the building's thermal mass: a well-insulated home holds heat. Gently raising the temperature during cheaper periods and coasting through expensive ones can shift some heating demand without losing comfort, especially in homes with good insulation and underfloor heating.
- Schedule with the controls: modern heat pump controls and smart thermostats can be set to favour cheaper windows. Some suppliers also offer smart control that responds automatically to the tariff.
- Combine with solar or a battery (optional): households with solar panels or a home battery can store cheap or self-generated electricity and use it to run the heat pump, increasing the share of low-cost energy. This is an additional investment rather than a requirement.
The more of the heat pump's demand you can move into cheap periods, the more a time-of-use tariff outperforms a standard one. A heat-pump-specific flat tariff needs less active management because the lower rate applies more broadly.
What to check before switching
Before moving to a heat-pump or time-of-use tariff, it is worth checking:
- Smart meter: most of these tariffs require a working smart meter to record half-hourly usage.
- Eligibility: some heat-pump tariffs require proof of a heat pump on the property.
- Your usage pattern: time-of-use tariffs reward shifting demand to cheap windows. If your heat pump and controls can pre-heat the home and water at off-peak times, you benefit more.
- Standing charge and peak rates: a low off-peak rate may come with a higher peak rate, so the saving depends on how much usage you can shift.
- Whole-home impact: a time-of-use tariff affects all your electricity, not just the heat pump, so consider the effect on appliances and EV charging too.
It also helps to compare tariffs on your own expected usage rather than on the headline off-peak rate. A tariff advertising a very low overnight price can still cost more overall if its peak rate is high and your home cannot shift much heating into the cheap window — for example a poorly insulated house that loses heat quickly and has to top up during expensive periods. Conversely, a well-insulated home with a hot water cylinder and controls that pre-heat overnight can move a large share of demand into the cheap window and gain the full benefit. Because the tariff applies to all your electricity, an electric vehicle charged overnight or a battery storing cheap energy strengthens the case further, while a household with little flexibility may do better on a simpler heat-pump flat rate. The sensible approach is to estimate roughly how much of your heating, hot water and other electricity you could realistically shift, then compare the candidate tariffs on that pattern. Suppliers and the major comparison resources publish current rates, and because these tariffs and their eligibility rules change frequently, a check at the point of switching is always worth doing rather than relying on figures that may be out of date.
Frequently asked questions
Do I need a smart meter for a heat pump tariff?
Almost always, yes. Heat-pump and time-of-use tariffs rely on half-hourly metering to apply the right rates at the right times, which requires a working smart meter. If you do not have one, the supplier will usually need to install one before you can move onto the tariff.
Is a heat pump tariff always cheaper than a standard tariff?
Not automatically. A time-of-use tariff with a cheap off-peak rate often comes with a higher peak rate, so the saving depends on how much of your heat pump's usage you can shift into the cheap windows. A heat-pump-specific tariff with a lower flat rate is more straightforward. It is worth comparing your expected usage pattern against each tariff's rates.
Can I use a heat pump on Octopus Cosy or agile?
Yes — these are time-of-use tariffs that many heat pump owners use to heat the home and hot water during cheaper periods. Cosy offers set cheaper windows; agile prices change every half hour with the wholesale market. Both require a smart meter, and the benefit depends on shifting heating demand into the cheaper times. Check current rates and terms with the supplier.
Sources & further reading
- Energy Saving Trust — air source heat pumps (running costs and tariffs)
- Ofgem — energy price cap and tariffs
- Nesta — the future of home heating
Figures on this page are typical UK ranges drawn from published sources and depend on your specific home. They are guidance, not a quotation or guaranteed saving.