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Gas vs Electric Heating Cost Analysis

You’re choosing how to heat premises and want costs you can plan around. This guide uses broad, illustrative running-cost ideas only—every building and tariff differs, so treat figures as a sanity check, not a promise.

Next step: If you use under about 50,000 kWh a year, you can get a quote in under 90 secs online — fast, no obligation. Bigger supply, half-hourly metering, or prefer chat? Use the contact page.

The Basics: Fuel Costs

Gas: unit prices and standing charges move with the market; gas often looks cheaper per kWh of fuel than grid electricity, but you still pay for servicing and wear—get live quotes rather than relying on round numbers.

Electric: straight resistance heating is usually expensive per useful kWh; heat pumps can deliver several units of heat per unit of electricity in ideal conditions—real ratios depend on flow temperatures and weather. Use our HVAC guide, equipment upgrades and contract strategy before committing capital.

Real Example: Small Office (15,000 kWh Heating Demand)

Gas boiler (90% efficient):

• Gas needed: 16,667 kWh (15,000 / 0.9)
• Cost: 16,667 × 10p = £1,667/year
• Plus boiler service: £200/year
• Total: £1,867/year

Air source heat pump (COP 3.5):

• Electricity needed: 4,286 kWh (15,000 / 3.5)
• Cost: 4,286 × 24p = £1,029/year
• Minimal maintenance: £100/year
• Total: £1,129/year

Annual saving with heat pump: £738

Capital Costs & Payback

Gas boiler replacement: £2,000-4,000 installed

Air source heat pump: £8,000-14,000 installed (minus £5,000 BUS grant = £3,000-9,000 net)

Payback period: With grant, 12-37 years. Without grant, 25-50 years. Heat pumps are NOT a quick ROI investment for most small businesses.

When to Choose What

Stick with gas if:

• You have high heating demand (over 20,000 kWh/year)
• Existing gas connection and working boiler
• Under 50k kWh total consumption (keeps you simple)
• Need fast payback (under 10 years)

Consider electric heat pump if:

• No gas connection (new build or rural)
• Planning solar panels (use your own electricity)
• BUS grant available (£5,000)
• Long-term ownership (15+ years)
• Net zero target or sustainability requirements

Related Guides

Your next step: When you are ready to compare business tariffs, get a business energy quote online (typically under a minute, no obligation). Larger supply, half-hourly metering, or you prefer messaging? See the contact page.