Heat Networks vs Heat Pumps and Gas Boilers: Costs

Heat networks are not automatically cheaper than individual heat pumps or gas boilers: the answer depends on local tariffs, equipment costs, building efficiency and how long you stay. This calculator compares estimated annual heating costs from the energy each system uses and its unit price; enter your annual heat demand, efficiency and prices to see the estimates side by side.

Formula

Annual running cost is the energy purchased in a year multiplied by its unit price. For a heat network, cost = Q × Pn. For a heat pump, cost = Q ÷ COP × Pe. For a gas boiler, cost = Q ÷ η × Pg.

• Q is useful heat required each year, in kilowatt-hours (kWh).
• Pn is the heat-network price per kWh of heat; Pe is the electricity price per kWh; and Pg is the gas price per kWh of fuel. The example uses a generic currency unit.
• COP is the heat pump’s seasonal coefficient of performance: useful heat output divided by electricity input over the period.
• η is the boiler’s seasonal efficiency as a decimal, such as 0.90 for 90%.

The calculator estimates energy charges only. It does not include standing charges, connection costs, maintenance, replacement, financing, hot-water or cooling differences, or variations in tariffs. Compare tariffs in the same currency and on the same basis.

Worked Example

Using the default values—12,000 kWh of useful heat a year, network heat at 0.12 per kWh, heat pump COP 3 and electricity at 0.25 per kWh, and gas at 0.07 per kWh with a 0.90-efficient boiler:

• Heat network: 12,000 × 0.12 = 1,440.00 currency units/year.
• Heat pump: 12,000 ÷ 3 × 0.25 = 1,000.00 currency units/year.
• Gas boiler: 12,000 ÷ 0.90 × 0.07 = 933.33 currency units/year.

Under these assumptions, the network has the highest estimated energy cost. It is not a general price ranking: changing the heat tariff, electricity price, seasonal COP, gas price or boiler efficiency changes the result.

How Heat Networks Work

A heat network supplies heat from a central plant or a collection of sources through insulated pipes to multiple buildings. In each connected home, a heat interface unit transfers heat from the network water into the property’s heating and hot-water system, usually without mixing the network water with the home’s water. A heat meter records the heat delivered for billing.

Networks can use sources such as large heat pumps, recovered heat from industry or other buildings, geothermal heat, or boilers. Their performance and emissions depend on the sources, operating temperatures, pipe losses and electricity or fuel used. A network is therefore not one fixed technology, and a low-carbon source does not by itself guarantee a low bill.

What Determines Which System Costs Less?

For operating costs, compare the effective cost of delivering one kWh of useful heat. A heat pump’s electricity use is reduced by its seasonal COP. A boiler needs more fuel energy than the useful heat it provides because some heat is lost; its fuel use is heat demand divided by efficiency. Network customers pay the network’s heat tariff, which may have both a per-unit charge and a standing charge.

• Tariff structure: include fixed daily or monthly charges, metering fees and any separate hot-water charge. A low unit price can be offset by a high fixed charge.
• Actual performance: use a seasonal COP, not a best-case laboratory rating. Heat pump performance varies with outdoor temperature, flow temperature, controls and installation.
• Building demand: insulation, drafts, heating habits and hot-water use affect all systems’ bills. Lower demand can make fixed charges a larger share of total cost.
• Upfront and lifetime costs: equipment, connection, electrical upgrades, maintenance and replacements matter alongside annual energy bills. Compare over the same time horizon and account for financing if relevant.
• Local conditions: available tariffs, network design, climate, building layout and the need to replace existing radiators or pipework can change the most practical option.

Running Costs Are Not the Whole Comparison

“Cheaper” can mean cheaper to run this year, cheaper to install, or lower total cost over a system’s life. Those answers can differ. A heat network may avoid buying and maintaining a boiler or outdoor heat pump, but connection charges and the network tariff matter. An individual heat pump may have higher installation costs, while its running cost can be attractive when its seasonal performance is good and electricity pricing is favourable. A gas boiler can have relatively low equipment costs in some situations, but gas consumption, standing charges and future replacement must be counted.

Compare like with like: the same annual heat demand, equivalent comfort and hot-water service, all fixed and variable charges, and realistic maintenance and replacement assumptions. If one system also provides cooling, or a network tariff includes services the alternatives bill separately, make that explicit rather than comparing only the headline unit rate.

Common Misconceptions and Practical Checks

A common mistake is to compare the price of one kWh of electricity directly with one kWh of gas. A heat pump can deliver more than one kWh of heat per kWh of electricity, so the relevant comparison includes its seasonal COP. Similarly, comparing a network’s heat price with a gas price alone ignores boiler efficiency and gas standing charges.

Before deciding, ask the network operator for its current unit rate, fixed charges, metering basis, expected annual bill and how prices can change. Check whether a quoted rate is for heat delivered or fuel bought by a central plant. For a heat pump, seek an estimate based on the property’s heat loss and intended flow temperatures. For a boiler, use seasonal rather than peak efficiency where available. If the calculator’s annual demand is unknown, use a bill or a reliable property assessment, and keep units consistent.

Frequently Asked Questions

Are heat networks cheaper to run than heat pumps?
Not in every case. Compare the network’s complete tariff with the heat pump’s electricity use after accounting for seasonal COP, plus fixed charges and maintenance.

Are heat networks cheaper than gas boilers?
They can be, but it depends on the network tariff, gas price and boiler efficiency, as well as each system’s standing and service charges. A unit-price comparison alone is not enough.

Why can a heat pump use less energy than a boiler?
A heat pump moves heat rather than producing all of it by burning fuel. Its seasonal COP expresses how much useful heat it provides per unit of electricity, though real performance varies by system and conditions.

Do heat network bills include a standing charge?
Some tariffs include fixed charges and others may structure bills differently. Check the supplier’s current tariff and meter arrangements; do not assume the quoted per-kWh price is the entire bill.

Are heat networks always low carbon?
No. Carbon impact depends on the heat sources, their fuels or electricity, network losses and operation. A network can change its sources over time, so assess the specific scheme rather than relying on the name alone.

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in demand | Annual heat demand | kWh | 12000 | 0
in network | Heat network price | currency/kWh | 0.12 | 0
in cop | Heat pump seasonal COP | - | 3 | 0
in electricity | Electricity price | currency/kWh | 0.25 | 0
in gas | Gas price | currency/kWh | 0.07 | 0
in boiler | Boiler efficiency | - | 0.9 | 0
out network_cost | Heat network annual cost | currency | demand * network | 2
out pump_cost | Heat pump annual cost | currency | demand / cop * electricity | 2
out boiler_cost | Gas boiler annual cost | currency | demand / boiler * gas | 2