Heat pumps and Octopus

Heat pumps and Octopus Energy are a natural pairing. If you’ve got a heat pump or you’re thinking about getting one, your choice of energy supplier matters more than it does for a typical gas-heated home. The reason is straightforward: heat pumps run on electricity, so your electricity tariff directly determines your heating costs.

Why the tariff matters so much

A gas boiler burns gas. The price of gas is the price of gas, and there’s not much variation between suppliers. Heat pumps are different. They use electricity, and electricity prices can vary dramatically depending on your tariff and when you use it.

On a standard flat-rate tariff, a heat pump will cost roughly the same to run as a gas boiler. That might sound disappointing given the installation cost, but it misses the bigger picture. On a smart tariff like Cosy, which was specifically designed for heat pump owners, your heating costs can drop well below what you’d pay for gas.

The efficiency advantage

Heat pumps don’t generate heat the way a boiler does. Instead they move heat from outside to inside, using a refrigerant cycle (the same principle as a fridge, just in reverse). This means for every unit of electricity they consume, they deliver roughly 3 to 4 units of heat.

This ratio is called the coefficient of performance, or COP. A COP of 3 means you get 3 kWh of heat for every 1 kWh of electricity. A gas boiler, by comparison, converts about 0.9 kWh of heat for every 1 kWh of gas. Even though electricity costs more per unit than gas, the efficiency multiplier closes the gap. On a cheap tariff, it more than closes it.

Air source vs ground source

The vast majority of domestic heat pumps in the UK are air source (ASHP). They look like a large outdoor fan unit, usually mounted on a wall bracket or sat on a concrete pad outside. They extract heat from the outside air, even in cold weather.

Ground source heat pumps (GSHP) extract heat from the ground via buried loops of pipe. They’re more efficient because ground temperature stays relatively stable year-round, but installation is significantly more expensive and requires either trenches or boreholes in your garden. For most homes, air source is the practical choice.

Both types work well in the UK climate. Air source units do lose some efficiency when temperatures drop below freezing, but modern units still operate comfortably at -15°C or lower. British winters rarely test them.

How Cosy fits in

Octopus designed the Cosy tariff specifically for heat pump households. It offers three rate bands throughout the day, with cheap windows at 4-7am, 1-4pm and 10pm-midnight. That gives you eight hours of off-peak electricity per day. The idea is that you run your heat pump hard during these windows, heating your home to a comfortable temperature, then let it coast through the more expensive periods.

This works because of thermal mass. Brick walls, concrete floors and the general fabric of a building hold onto heat for hours. If you push your home to 21-22°C during a cheap window, it might only drop a degree or so over the next few hours. Lighter timber-frame homes cool faster, so results vary, but the principle works for most UK housing stock.

The peak rate on Cosy (4-7pm) is expensive. The strategy is simple: avoid running the heat pump during that window entirely if you can. A well-heated home will coast through it without issue.

Typical running costs

A 3-bed semi-detached home with an 8kW air source heat pump uses roughly 4,000 to 6,000 kWh of electricity per year for space heating and hot water. The exact figure depends on insulation, local climate, how warm you keep the house and how well the system is set up.

On Cosy with good scheduling, you might achieve an average effective rate of around 17-20p per kWh across your heating consumption. That puts annual heating costs somewhere between £700 and £1,100. A gas boiler in the same house would typically cost £700 to £1,000 per year at current gas prices, though you also save on the gas standing charge if you go fully electric.

The savings get more compelling over time. Gas prices are subject to wholesale volatility. Electricity prices are gradually decoupling from gas as more renewables come online. The direction of travel favours heat pumps.

Getting started

If you already have a heat pump and you’re with another supplier, switching to Octopus to access Cosy is one of the easiest ways to cut your heating bill. There are no exit fees on most tariffs and the switch itself takes about two weeks.

If you’re considering a heat pump installation, check the BUS grant guide for details on the £7,500 government grant. The running costs on Cosy page goes deeper into the numbers.