For most off-grid homes with reasonable insulation, an air source heat pump vs oil boiler comparison favours the heat pump. It is usually cheaper to run, far lower in carbon and now supported by a £9,000 government grant for homes replacing oil. The right choice still depends on your property, so this guide covers cost, efficiency, maintenance and suitability to help you decide.
Quick answer
A heat pump is the better long-term choice for most oil-heated homes, while an oil boiler can still make sense for a short-term or very poorly insulated property.
| Feature | Oil boiler | Air source heat pump |
|---|---|---|
| How it works | Burns heating oil | Moves heat from outside air |
| Typical efficiency | 70% to 90% | 300% to 400% |
| Annual running cost | About £1,600 to £2,300 | About £900 to £1,000 |
| Grant | None | Up to £9,000 (BUS rate for oil/LPG replacement) |
| Carbon per year | About 3,426 kg CO₂ | About 566 kg CO₂ |
| Fuel supply | Tank and deliveries | Electricity |
Figures are typical UK estimates from EDF, Good Energy and Aira, and vary by property.
How an oil boiler works
An oil boiler burns heating oil from a storage tank to heat your radiators and hot water. The oil is mixed with air and ignited in a combustion chamber. An older boiler wastes roughly 30% of that energy, while a modern condensing model is about 90% efficient.
Oil heating systems need regular deliveries, tank checks and an annual service from an OFTEC-registered engineer. This is why many homeowners ask whether oil-fired central heating is expensive, and why the answer often depends on the price of oil that month.
How an air source heat pump works
An air source heat pump takes warmth from the outside air and uses a compressor to raise it to a useful temperature for heating and hot water. A fan draws air across a refrigerant-filled coil, and the heat is passed to your heating system.
Because it moves heat rather than burning fuel, it delivers around three to four units of heat for every one unit of electricity. That ratio is called the coefficient of performance, or COP. The seasonal version across a whole year is the SCOP.
Do heat pumps work in cold UK winters?
Yes. A modern air source heat pump keeps working in temperatures far below anything a typical UK winter produces, with most models operating down to roughly −15°C to −20°C. If you would like the detail, see our guide on how a heat pump works in winter.
Running costs: which is cheaper to heat your home?
An air source heat pump is usually cheaper to run than an oil boiler, with typical savings of around £650 a year for oil households.
Oil-fired central heating now sits at roughly £1,600 to £2,300 a year according to Aira, although EDF quotes a wider range from £960 to £2,000 or more. A well-designed heat pump typically costs about £900 to £1,000 a year to run.
Here is a simple worked example you can check against your own bills. Take a home needing 11,500 kWh of heat a year, the figure Good Energy uses for a medium household.
- Oil boiler at 90% efficiency: about 12,800 kWh of oil energy, or roughly 1,280 litres. At 80p a litre that is around £1,020; at 132p a litre, around £1,690.
- Heat pump at a SCOP of 3.5: about 3,300 kWh of electricity, which works out near £860 a year at current price cap rates.
These are illustrative figures, not a quote. For your own estimate, our team can confirm the numbers during a survey.
Why oil prices make bills unpredictable
Heating oil is not covered by the Ofgem price cap, so your bill can change sharply between deliveries. In 2026 oil has ranged from about 80p a litre in summer to 132p a litre in spring — a 65% swing. Electricity is capped and more stable, which gives heat pump owners far more certainty.
A dedicated heat pump tariff can lower running costs further. These tariffs offer cheaper electricity at set times, and a heat pump that runs steadily at low temperatures benefits from them.
Upfront costs and the £9,000 Boiler Upgrade Scheme
A heat pump costs more to install than an oil boiler, but the Boiler Upgrade Scheme grant closes most of that gap. From 21 July 2026, eligible off-gas-grid homes in England and Wales replacing oil or LPG can claim £9,000 towards an air source or ground source heat pump, for applications up to 31 March 2027. Scotland has its own scheme, so Scottish readers should check locally.
At Rawlings Renewables we handle the grant application for you and deduct it directly from your quote, so you do not need to find the money first. You can read the official rules on GOV.UK and Ofgem.
Radiator sizing, hot water cylinder space, insulation levels and system size are the main factors affecting installation cost. A survey identifies these early, so there are no surprises on the day.
Efficiency and energy use
A heat pump is three to five times more efficient than an oil boiler because it moves heat instead of creating it. Even the best oil boiler turns 90p of every £1 of fuel into heat, whereas a heat pump with a SCOP of 3.6 turns each unit of electricity into 3.6 units of heat. That gap is the main reason running costs fall.
Carbon emissions and environmental impact
Replacing an oil boiler with a heat pump cuts heating emissions by up to 80%. Good Energy estimates an oil boiler produces about 3,426 kg of CO₂ a year, against about 566 kg for a heat pump on grid electricity, and Carbon Brief reaches a similar conclusion. As the grid keeps decarbonising, that gap widens every year.
Where HVO fits in. HVO is a cleaner liquid fuel for oil boilers you plan to keep, but it is not a replacement for a heat pump. Hydrotreated vegetable oil produces lower carbon emissions than kerosene and suits some existing oil systems, but it is still a combustion fuel, so you keep the tank, the deliveries and the servicing. Compatibility depends on your boiler, so always check with the manufacturer or an installer first. As both an HVO supplier and a heat pump installer, we can advise on both honestly.
Maintenance, servicing and lifespan
A heat pump needs less maintenance than an oil boiler and generally lasts 20 years or more with servicing. An oil system needs an annual service, nozzle and flue checks, and tank inspections. A heat pump has fewer moving parts and needs a yearly health check. Our servicing and maintenance team looks after both.
A heat pump also delivers steadier, gentler heat than the short, hot bursts of an oil boiler, so rooms stay at an even temperature. The outdoor unit is quiet when correctly sited, and you free up the space an oil tank occupies.
Is your home suitable for a heat pump?
Most homes are suitable — Octopus Energy reports that around nine in ten already have the insulation and electrical capacity to switch without major work. The factors that matter are insulation, radiator sizing, space for a hot water cylinder and your electrical supply. Our MCS-certified engineers assess all four during a free survey and design the system around your property.
What about a hybrid system? A hybrid keeps your oil boiler alongside a smaller heat pump, but it is a compromise. You still pay for oil deliveries, maintain a tank and produce emissions, and the £9,000 grant is designed around full replacement rather than hybrid installations.
Which should you choose?
Choose a heat pump if you want lower, more predictable bills and lower carbon. A heat pump suits you if:
- Your home is off the gas grid
- You spend heavily on oil
- You want grant support
- You want steadier running costs
An oil boiler may still suit you if:
- Your insulation is very poor and you have no plans to improve it
- Your current boiler is only a few years old and working well
- You expect to sell the property soon
Frequently asked questions
Is an air source heat pump cheaper to run than an oil boiler? Usually, yes. Typical oil households save around £650 a year, though results depend on your property, tariff and oil price.
How much is the grant for replacing an oil boiler? Up to £9,000 through the Boiler Upgrade Scheme for eligible homes in England and Wales, for applications between 21 July 2026 and 31 March 2027.
Can I keep my oil tank if I install a heat pump? You can, but it is no longer needed for heating. Many homeowners have it safely removed to free up space.
Will a heat pump keep my home warm in winter? Yes. A correctly sized system works well in UK winters and keeps temperatures steady.
How long does a heat pump last compared with an oil boiler? A heat pump generally lasts 20 years or more with regular servicing, which is typically longer than a boiler.
Can I get the grant for a hybrid system? No. The grant is designed for full replacement of the fossil fuel system.
Is HVO a good alternative to a heat pump? HVO lowers emissions from an existing oil boiler, but a heat pump removes the fuel dependency altogether.
Making the right heating choice
When you compare an air source heat pump against an oil boiler, the heat pump wins for most off-grid homes on running cost, carbon and long-term reliability. With the £9,000 grant in place, the upfront gap has narrowed considerably. To see the figures for your own home, get in touch for a free quote or call us on 01256 268500.