Energy price cap increase: Are heat pumps now cheaper than gas boilers?

Key takeaways

• Ofgem’s July 2026 energy price cap rise is being driven largely by higher wholesale gas prices, with gas bills increasing faster than electricity bills.
• As the UK generates more renewable electricity and reduces reliance on gas, the “spark gap” between gas and electricity prices is slowly narrowing.
• Modern heat pumps, like the Aira Heat Pump, can help homeowners reduce exposure to volatile fossil fuel markets

Ofgem has announced that the UK energy price cap will rise by 13% from July 2026, with gas prices increasing significantly faster than electricity prices.

For many homeowners, it’s another reminder of how exposed UK heating costs remain to volatile global gas markets.

And while millions of households are still reliant on gas boilers, rising energy prices are pushing more people to ask an important question:

Are heat pumps now becoming a cheaper and more stable alternative?

Why Is the Energy Price Cap Rising Again?

The latest price cap increase has been driven largely by higher wholesale gas prices, according to Ofgem. Ongoing geopolitical instability and continued volatility in global gas markets are once again feeding directly into UK household bills.

From July:

• gas bills are expected to rise by around 24%
• electricity bills are increasing by closer to 5%
• the average dual-fuel household will see annual costs rise again

While electricity prices are still increasing, the gap between gas and electricity costs is beginning to shift.

That matters because for years, one of the biggest criticisms of heat pumps has been the so-called “spark gap” – where electricity costs significantly more than gas.

But the market is changing.

The spark gap is slowly narrowing

For years, one of the biggest advantages gas boilers had over heat pumps was simple: gas was cheaper than electricity.

Even though heat pumps are significantly more efficient than boilers, electricity prices in the UK have traditionally been high relative to gas. That’s given boilers an advantage over heat pumps when it comes to running costs (even though a heat pump still comes out on top).

But the underlying energy market is beginning to change.

One reason is that electricity prices in the UK have historically been closely linked to gas prices – even when much of the country’s electricity comes from renewable sources like wind and solar. Under the current pricing system, gas often sets the market price for electricity, which means households can still feel the impact of global gas price spikes even when using cleaner electricity.

We explored this in more detail in our article on why electricity prices are linked to gas in the UK.

However, policymakers are now actively looking at ways to reduce that dependency and make electricity pricing less exposed to volatile international gas markets over time.

At the same time, the UK is generating more renewable electricity than ever before. As more low-cost renewable power enters the grid – and less electricity relies on gas generation – the long-term direction becomes clearer.

Gas remains globally volatile, while electricity is gradually becoming cleaner, more stable, and increasingly driven by domestic renewable energy. And that matters for homeowners considering a heat pump.

Because while gas boilers remain tied directly to fossil fuel prices, heat pumps benefit from an electricity system that is slowly becoming less dependent on gas altogether.

The change won’t happen overnight. But as the gap between gas and electricity prices narrows, the long-term economics of heat pumps are likely to become increasingly attractive.

Are heat pumps actually cheaper to run?

Short answer: yes. But the savings often depend on the quality of the installation, the property itself, how much hot water is used, the temperatures homeowners choose to heat their home to, and the energy tariff they’re on. And increasingly, the economics are becoming even more attractive.

Unlike a gas boiler, a heat pump doesn’t generate heat by burning fuel. Instead, it transfers heat extremely efficiently using thermal energy in the outside air and electricity.

That means:

• Modern air source heat pumps can produce 4 units of heat for every unit of electricity used (we promise the Aira Heat Pump will perform at least 4X more efficiently than a boiler over the course of the year as part of our 15-Year Aira Guarantee)
• Households can take advantage of smart tariffs and off-peak electricity
• Homes with solar panels and a battery can offset running costs even further

As electricity becomes greener and less reliant on gas, heat pumps become less exposed to the price shocks that repeatedly affect fossil fuel heating.

A heat pump won’t make a home immune to rising energy prices, but it can reduce dependence on the global gas market that continues to drive energy bill volatility in the UK.

Thinking about a heat pump?

We help homeowners understand whether a heat pump is suitable for their property, expected running costs, and available grants.

Get in touch for honest advice and a free home energy assessment.

Heat pumps give homeowners more control

One of the biggest shifts happening in UK home energy is flexibility and control.

Traditional gas boilers offer very little control over how and when energy is used. They simply burn fuel whenever heat is needed, regardless of wider energy prices or what’s happening on the grid.

Because heat pumps run on electricity, they can take advantage of smart tariffs, lower off-peak electricity rates, battery storage, and solar generation in ways gas boilers simply cannot.

That means homeowners can increasingly shift energy usage toward cheaper periods of the day – helping reduce running costs without sacrificing comfort.

At Aira, this is powered by Aira Intelligence.

The Aira Heat Pump is designed to intelligently optimise heating around the home’s energy usage and electricity tariff. If electricity prices vary throughout the day, Aira Intelligence can adapt how and when the system works to make better use of lower-cost periods while still maintaining a cosy indoor temperature.

Over time, this kind of intelligent optimisation becomes increasingly valuable as more flexible energy tariffs enter the market.

The system is also designed to work as part of the wider Aira Home Energy System, including solar panels and the Aira Power Store home battery. Together, these clean-energy technologies are designed to work seamlessly to help homeowners generate, store, and even sell more of their own energy.

The result? Greater visibility, greater flexibility, and ultimately more control over long-term energy costs.

As the UK energy system continues shifting toward electrification and smart energy usage, homes powered by integrated electric systems are likely to benefit from far more flexibility than homes still reliant on fossil fuel heating.

The long-term direction is becoming clearer

The latest energy price cap increase highlights a broader issue facing UK households: The country is still heavily exposed to gas price volatility.

At the same time, the UK energy system is steadily moving toward electrification, renewable generation, and lower carbon heating.

That doesn’t mean heat pumps are automatically the right solution for every property today. That’s why we do free home energy assessments to help our customers find out.

But it does mean more homeowners are now viewing heat pumps not just as a low-carbon upgrade, but as a way to gain more long-term stability and control over their energy costs.

And with gas prices rising again, that conversation is only getting louder.