Heat pumps convert one unit of electricity into roughly four units of heat. UK electricity is roughly 4.7 times the price of gas (Nesta, 2025). You can see the problem.
If you’ve read anything I’ve written before, you’ll know I’m a member of the heat pump fan club. They are, to my mind, magic. But magic only gets you so far when the numbers don’t move. A homeowner spending £12,000 on a heat pump (after the Boiler Upgrade Scheme grant), being told they’ll save roughly nothing on their monthly bills, is entitled to ask where the payback is. An architect specifying one is entitled to the same question from their client. And an investor weighing renewables is entitled to an answer that doesn’t depend on hope.
The good news: there is an answer. The less good news: government isn’t offering it.
The spark gap, and why you can’t wait for it to close
The spark gap – the ratio of electricity to gas prices per kWh – is 4.7:1 in the UK right now. That’s the highest it’s been in three years, and the highest in Europe (Energy UK, 2026). For comparison, France and the US sit around 2, the Netherlands below 1.5. Energy UK reckon we need at least 2.5:1 for electrification to make any financial sense.
The Autumn 2025 Budget did move the needle a touch. From April 2026, 75% of the Renewables Obligation shifts from electricity bills into general taxation, and the ECO scheme ends. Expected spark gap after all that: around 4.3 (Electric Insights, 2026). Better, but not anywhere near enough to make a heat pump cheaper to run than a gas boiler on a standard tariff. And the Renewables Obligation subsidy has a sunset clause, ending in 2029-30.
The government is making incremental moves in the right direction, but nothing that’s sufficient, and timeline uncertain. You can either wait for someone in Westminster to solve the problem, or you can take matters into your own hands. I’d pick the second one.
Time of Use tariffs
Time of Use (ToU) tariffs charge different rates at different times of day. They exist because the grid is changing where it gets its power from as we transition to a decarbonised grid. The peak (roughly 4–7pm) and troughs (overnight) of demand create different underlying costs, and shifting consumption saves real money on generation and infrastructure. Renewables are intermittent, so rewarding households for consuming when wind and solar are producing helps the grid absorb clean power. And it’s cheaper to pay people to shift usage than to build new substations.
These aren’t gimmicks. They’re how the grid of the future, coming at us quickly, will work.
In practice, UK householders now have a menu. For example, Cosy Octopus offers three cheap windows a day (4–7am, 1–4pm, 10pm–midnight) at around 51% off the day rate, plus a punishing 4–7pm peak at 50% above (Octopus Energy). Agile Octopus tracks wholesale prices in half-hourly slots and can go negative when the grid is awash with renewables. EDF, E.ON and others have their own options.
Heat pumps meet ToU
You can do a lot with a heat pump and a ToU tariff, even without storage. You can schedule your hot water cylinder to reheat in a cheap window. You can pre-heat the building before the 4–7pm peak, using thermal mass to coast through the evening. A well-insulated building is its own thermal battery, and for new builds with underfloor heating in a concrete screed floor, this gets you a long way.
But there’s a limit. The 4–7pm peak is a peak for a reason. It is exactly when people come home, the building starts losing heat faster as the outside temperature drops, and the heat pump needs to work. You can pre-heat, but pre-heating usually means running at a higher flow temperature than you’d otherwise want, impacting efficiency. You’re saving on the unit rate and paying for it in efficiency.
And thermal mass only works for heat. It does nothing for your EV, your cooking, your lighting, your appliances. A building-as-battery gets you partway. For the rest, you need an actual battery.
The real move: decoupling purchase from use
Here’s the big ides. Batteries do store electricity, but their power comes from decoupling when you buy electricity from when you use it.
Everything else about batteries is a function of this. Solar self-consumption? Decoupling summer midday generation from evening use. Backup power? Decoupling purchase (earlier) from use (during an outage). ToU arbitrage? Decoupling cheap purchase from expensive-use periods.
And once you’ve decoupled purchase from use, the spark gap conversation changes completely. If you can buy electricity at 8p/kWh overnight on a ToU tariff and run your heat pump off that stored electricity during the expensive evening, your effective spark gap is closer to 1.4:1 than 4.7:1. That’s the gap at which running a heat pump is meaningfully cheaper than running a gas boiler, and at which a clean heat investment pays back.
The spark gap is a function of when you buy, not just that you buy.
The holy grail? Negative prices
In 2021, UK wholesale electricity prices were negative for 7 hours across the entire year. In 2023, that was 176 hours. In 2024, 155 hours. In May 2025 alone, there was a single stretch of 17 consecutive hours of negative pricing (Future Change, 2025).
This happens when there’s more renewable generation than the grid can absorb. Constraint payments – money paid to wind farms to switch off because the grid can’t physically move their electricity from Scotland to where it’s needed – now cost the system over £1.5 billion a year. That cost flows through to everyone’s bills.
For households on a dynamic tariff like Agile, these periods are visible. You get paid to use electricity. A battery can charge during these windows, store the energy, and discharge it when the grid is expensive.
I want to be careful not to oversell this. 155 hours is under 2% of the year, and the direct cash savings from negative-price events are modest. If grid flexibility scales as planned negative price hours will decrease over time.
But the size of the payment isn’t really the point. The point is the signal. Negative prices are the loudest possible indicator that the old pricing model is breaking down.
Where this argument runs out of road
I should spend a few lines doing the opposite of all the above, because to not do so would be disingenuous.
Battery payback periods are long. A decent 10kWh system sits around £5,000–£8,000 installed in 2026. Even with aggressive ToU optimisation, annual savings for a typical household land in the £400–£600 range. For a standalone retrofit on a home with modest consumption, the maths is genuinely tight. That said, the more electricity you use, the faster the payback.
Tariffs change. OVO withdrew their Heat Pump Plus tariff in February 2025. Agile’s formula is set by Octopus unilaterally. The physics of flexibility having value to the grid isn’t going anywhere – but the specific vehicles for capturing that value will evolve. This makes concrete payback calculations impossible.
The case is strongest for engaged homeowners with heat pumps already installed or planned, reasonable electricity consumption, and install economics that stack up (new build, or retrofit alongside other works). If you don’t fit that profile, it’s worth sizing carefully before committing.
The direction of travel
Batteries are hard to size and impact hard to quantify to the nearest £. But, they will benefit you from day one and serve as springs to de-risk you as you move to a clean, comfortable and decarbonised future.
ToU tariffs are becoming more common and more sophisticated. The spark gap has some downward pressure on it. Grid services markets are being built out, which will eventually pay households for services their batteries are already providing.
Every one of these trends makes the battery-and-heat-pump combination more valuable over its 15-year life, not less. The CAPEX decision shouldn’t be judged against today’s tariffs – it should be judged against the weighted average of the next 15 years of tariffs, which will look nothing like today’s.
Heat pumps are magic. UK electricity is expensive. The way you resolve that contradiction isn’t by waiting for Westminster – it’s by decoupling the moment you buy electricity from the moment you use it, and positioning yourself to benefit from a grid that’s rapidly changing shape.
At Better Planet we’ve been installing batteries for ten years, specifically because we think this argument is going to look obvious in hindsight. If you want to walk through the numbers for a specific project, get in touch.
