With the July 2026 price cap, the cost of running a well-installed heat pump finally dipped below gas. At first glance, it looks like a turning point for heat pumps, but the reality is a bit more complicated. The gap only closed because gas prices went up, not because electricity got any cheaper. Plus, you’ll really only see those savings if your setup is optimised and you’re on the right energy tariff.
Gas jumped, electricity barely moved
The Ofgem price cap for 1 July to 30 September 2026 put gas at 7.33 pence per kilowatt-hour and electricity at 26.11 pence. Gas rose by about a quarter from the previous cap. Electricity rose by only a few percent. The typical household bill went up around 13 percent overall.
So nobody’s bills fell. This is a story about gas getting worse, not electricity getting better. If you heat with gas today, this quarter cost you more, full stop.
The number that actually moved
The figure that decides whether a heat pump beats gas on running cost is the ratio between the two unit prices. A heat pump is roughly three times more efficient than a boiler, so once electricity costs less than about three to four times what gas costs, the efficiency starts to win.
That ratio fell from about 4.3 to about 3.6 in a single quarter, the biggest move in two years of Ofgem caps. The UK is still a long way from where Nesta argues it should sit, around 2.5, and still well above France and most of mainland Europe. But 3.6 is the point where the maths quietly flips for a good install.
Where the win is real, and where it isn’t
Running cost a year · July 2026 cap
A well-designed heat pump now lands about £120 a year below gas. A standard one still runs above it.
- Well-designed heat pump
- £960below gas
- Mains gas
- £1,080today's cap
- Standard heat pump
- £1,250above gas
On a standard UK home, a well-designed heat pump (a seasonal efficiency of 3.5, on a heat-pump tariff like Octopus Cosy used with some scheduling discipline) now comes in around £960 a year. Mains gas on the new cap is about £1,080. So the heat pump edges below gas, by roughly a tenth.
The catch is in the words “well-designed” and “heat-pump tariff”. A heat pump on the standard Ofgem cap at a typical efficiency of 3.0 still costs around £1,250 a year, which is above gas, not below it. Basically, the standard setup is still playing catch-up. You only see the savings if your system is properly set up.
That is the part worth being honest about. The win is real, but it is conditional. You need an install designed for a low flow temperature, a tariff built for heat pumps, and the willingness to shift some heating into the cheap windows. Miss any of those and you are back to roughly level with gas, or a little above.
And it can reverse next quarter
The price cap resets every three months. The same mechanism that tipped the ratio this quarter can tip it back at the next announcement. Treat the current numbers as a snapshot, not a settled fact. The structural reasons UK heat pumps don’t dramatically undercut gas have not gone away. The levies loaded onto electricity bills are still there, and reforming them is the lever that would make the win durable rather than quarterly.
What this means if you’re deciding
If you already run a gas boiler, this quarter is not a reason to panic-switch. The right time to move is when your boiler is near the end of its life anyway, and you’ll only see real financial benefits if the new system is optimised for your home.
If you’re on the fence about a heat pump, the financial side makes more sense now than it did before. Just remember that a careful, well-planned installation beats a quick swap every time. For the full breakdown comparing different fuels, check out our running-costs guide. It explains exactly why the price ratio is the metric you need to care about, and what causes it to shift.
And if you want the figure for your specific home rather than a standard one, a HeatPass check does the same maths against your property in about two minutes.
To summarise, gas prices rose enough to let a high-quality heat pump setup pull narrowly ahead. While that is absolutely a real shift, those savings are still entirely dependent on your installation quality and your tariff. It’s progress, but it’s not the same thing as heat pumps suddenly getting cheaper to run.