Commercial Heat Pumps: Will They Actually Cost Less?

The case for a commercial heat pump is usually made on a single number: it is three to four times more efficient than a gas boiler, turning one unit of electricity into three or four units of heat. That number is real. It is also only half of the equation, and the half that gets left out is the one that decides whether the running cost actually falls. Because if a unit of electricity costs four times what a unit of gas costs, a heat pump three times more efficient than a boiler delivers heat at roughly the same running cost, or slightly more. The efficiency is genuine and the running-cost saving can still be zero. Any analysis that quotes the first number without the second is selling something.

The number that gets left out is the spark gap — the ratio between the price of a unit of electricity and a unit of gas. In the UK this ratio is unusually and persistently high, driven by the fact that most of the environmental and social levies on energy have historically been loaded onto electricity bills rather than gas. For non-domestic customers the gap currently sits somewhere between roughly four to one and six to one depending on the contract, and the trade body Energy UK estimates that heat pumps only become comfortably cheaper than gas, on a whole-life basis, when that ratio falls to around two and a half to one. The UK is a long way above that. The practical consequence, at today's prices, is that a commercial heat pump running at a real-world coefficient of performance of somewhere between two and three — which is what UK conditions and higher commercial flow temperatures typically deliver, rather than the headline figures — often produces heat at a running cost line-ball with, or above, the gas boiler it replaced.

None of this is an argument against heat pumps — it is an argument against pretending the decision is a simple payback, because on running cost alone, at the current spark gap, it frequently is not. The honest capital picture makes the same point. A commercial heat pump installation is not a like-for-like boiler swap. It usually requires larger or additional heat emitters, because a heat pump delivers heat at a lower flow temperature and the existing radiators or coils were sized for hot boiler water. It often requires an upgraded electrical supply and additional plant space. 

Grant support exists but is bounded: the Boiler Upgrade Scheme offers £7,500 toward a heat pump for homes and small-to-medium non-domestic buildings in England and Wales, but only up to a system capacity of 45kWth — which covers a small commercial unit but not the larger plant rooms the 2031 standard is really aimed at. Above that threshold, private commercial buildings face a patchier and more competitive support landscape, weighted toward the public sector through the Public Sector Decarbonisation Scheme. The larger the building, the more likely it is meeting the higher capital cost without a headline grant.

So why is this decision arriving on so many desks regardless? Because running cost is no longer the only driver, and for many buildings it is no longer the deciding one. The confirmed trajectory of commercial energy standards is the forcing function: EPC B from 2031 for privately rented non-domestic buildings over 1,000 square metres, where cost-effective, and continued pressure below that threshold. Corporate net-zero commitments, tenant expectations and the carbon content of the two fuels — a heat pump on the current grid emits a small fraction of the carbon of a gas boiler for the same heat — all push the same way. The question for most commercial operators is therefore not whether the heat pump saves money next year, because often it will not, but whether the building's compliance and carbon obligations make electrification a matter of when rather than if, and how to time and design it so the cost lands as favourably as possible.

That timing question is where the genuinely useful analysis sits, because two things are moving. The spark gap is under active political pressure: the 2025 Budget shifted some policy costs off electricity, and the domestic price-cap ratio — the most visible benchmark — fell from around four point seven to one toward the high three-to-one range through 2026 as gas prices also rose. Commercial ratios, which start higher, are subject to the same policy direction. Various estimates put the ratio at which heat pumps become clearly cheaper to run somewhere between about two and a half and three and a half to one, well below where commercial users sit today. Nobody can promise where the ratio lands, but the direction of travel in policy is toward narrowing it, and the direction of travel in the grid is toward cleaner and, eventually, cheaper electricity. At the same time the capital cost falls hardest when electrification is aligned with a plant replacement that was coming anyway — fitting a heat pump when the boiler has failed and the emitters are being replaced regardless is a fundamentally different cost from ripping out a working gas system early.

For FM directors, asset managers and building owners, the honest framework is this. On today's running costs, a commercial heat pump is usually a lateral move or a modest increase, not a saving — and anyone claiming otherwise is quoting the efficiency and hiding the spark gap. On carbon and compliance, the direction is one way, and EPC B 2031 gives the larger buildings a real deadline. The right question is not "will it save money," to which the current answer is often no, but "when is our plant due for replacement, what will the standard require of this building by 2031, and how do we sequence the electrification so it coincides with work we would have done anyway." The buildings that will electrify well are the ones that plan the timing now. The ones that will electrify expensively are the ones that wait for a boiler to fail in a building that has already passed a compliance deadline, and do it all at once, in a hurry, at the worst price.

Pleasant Plumbers' commercial team advises on heating electrification strategy and plant replacement sequencing for commercial buildings across London — modelling the real running-cost and capital picture for your building rather than the headline efficiency figure. To discuss your building's heating strategy, call or WhatsApp 0800 046 1000, or email [email protected].

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