Octopus heat pump sales 2026 figures confirm a record July, with heat pump sales growth UK 2026 running at 71% year on year, and its Boiler Beater dashboard now shows 94% of heat pump customers paying less than an equivalent gas boiler bill.
The surge lands alongside two market shifts: forecast Q4 2026 price cap heat pump unit rates, and a 0% VAT electricity rate from 1 October, while gas keeps its 5% rate. Both favour anyone pairing a heat pump with the Octopus Cosy tariff 2026 rate card. Ofgem confirmed the actual Q4 cap on 26 August; this piece models against the forecast range published by Cornwall Insight, EDF and E.ON Next.
We track the wider heat pump grant landscape in our Boiler Upgrade Scheme guide; this piece works through the running-cost comparison at the forecast Q4 cap.
How SwitchInsights analysed this: we combined Octopus Energy's July 2026 sales and Boiler Beater figures with Cornwall Insight's Q4 2026 cap forecast unit rates (Ofgem confirmed the cap on 26 August) and current Cosy Octopus tariff rates, then modelled a typical three-bedroom semi at 10,000 kWh of annual heat demand, using a seasonal coefficient of performance of 3.2, in line with Energy Saving Trust field-trial data for retrofit air source heat pumps.
This article covers the forecast Q4 2026 price cap, modelled before Ofgem confirmed the level on 26 August 2026. For the latest figures, see Ofgem price cap Q4 2026 confirmed at £1,723 →
Heat pump vs gas boiler 2026: the Cosy Octopus vs gas boiler worked comparison
The Octopus Cosy off-peak rate runs at around 13p per kWh across three daily windows, against a 26p per kWh peak rate the rest of the day. Octopus does not publish a flat rate card for Cosy: it prices by postcode, and the published shape is three cheap windows at 04:00-07:00, 13:00-16:00 and 22:00-00:00 set 51 per cent below the regional day rate, with a peak window at 16:00-19:00 set 50 per cent above it, so check your own postcode before relying on the figures below. Figures checked 2 October 2026. Most heat pump controllers shift the bulk of their runtime into the cheap windows, so the figures below assume an 80/20 split between the two rates.
The heat pump annual running cost three bed semi example below assumes 10,000 kWh of heat demand. At a coefficient of performance of 3.2, the heat pump draws 3,125 kWh of electricity, while a comparable gas boiler at 92% efficiency burns 10,870 kWh of gas at Cornwall Insight's forecast Q4 cap gas unit rate.
| Heating system | Annual energy use | Unit rate | Annual cost |
|---|---|---|---|
| Gas boiler, Q4 forecast | 10,870 kWh gas | 6.33p/kWh (Cornwall Insight) | £688 |
| Heat pump, Cosy Octopus | 2,500 kWh at 13p, 625 kWh at 26p | 13p off-peak / 26p peak | £488 |
Figures exclude standing charges, which apply on both fuels regardless of heating system. Actual savings vary with insulation, radiator sizing and how much heat pump runtime lands in the off-peak windows.
SwitchInsights' take
Pairing a heat pump with Cosy Octopus is a clear win for most households: the worked comparison above saves around £200 a year against a gas boiler on the forecast Q4 cap, before the October VAT cut is even factored in. Is a heat pump cheaper than gas 2026? On this evidence, for most Cosy-eligible homes, yes.
0% VAT electricity: the October cut widens the gap
From 1 October, VAT on domestic electricity falls from 5% to 0%, while gas remains taxed at 5%. Because a heat pump runs entirely on electricity and a gas boiler runs on gas, the cut lowers only the heat pump side of this comparison, applying automatically with no switching or paperwork required.
VAT cut heat pump savings apply automatically from 1 October, with no switching or paperwork required, and they stack on top of every other saving above. We covered the wider mechanics of the change, including why Northern Ireland is treated differently, in our VAT cut explainer.
The Boiler Upgrade Scheme heat pump grant, and the compliance risk that voids it
Most new heat pump installations, including the Octopus fleet driving July's sales record, are still supported by the Boiler Upgrade Scheme. The BUS grant heat pump award is worth £7,500 for an air or ground source heat pump, rising to £9,000 for homes currently on oil or LPG, deducted directly from the installation invoice with no income cap.
MCS compliance risk: the grant is only paid on an MCS certified installer heat pump installation, confirmed at the point of work by Microgeneration Certification Scheme accreditation. An otherwise compliant heat pump installed by an uncertified installer forfeits the full £7,500 or £9,000, with no partial payment and no appeal route through Ofgem. Our Boiler Upgrade Scheme guide sets out the full eligibility and grant mechanics.
Octopus Cosy eligibility
Cosy Octopus is not open to every household. Three requirements apply before a customer can move onto it, starting with the Octopus Cosy smart meter requirement below.
| Requirement | Detail |
|---|---|
| Smart meter | A working SMETS2 smart meter sending half-hourly readings is required for the time-of-use rates to bill correctly. |
| Compatible heating | A heat pump or other electric heating system Octopus recognises, covering most major manufacturers. |
| Octopus app | Used to manage the account, monitor the three daily off-peak windows and track usage against the Boiler Beater comparison. |
What the Boiler Beater dashboard measures
Boiler Beater is the source of the most widely quoted heat pump running cost UK 2026 figure: it takes each Octopus heat pump customer's real half-hourly electricity usage and models what the same heating output would have cost as gas, at current cap rates. Octopus reports an average saving of £227 a year at current cap rates, close to the £200 figure in the worked three-bed example once smaller and larger homes are averaged together.
The dashboard reflects a fleet-wide average, not a personal guarantee. Poor insulation, a heat pump running mostly at the 26p peak rate, or a low coefficient of performance can all pull an individual result below the average, which is why 6% of customers still show above a gas-equivalent bill.
Households running an EV alongside a heat pump may find vehicle-to-grid discharging overnight stacks further savings on a Cosy off-peak window, and EDF FreePhase's free electricity hours offer similar shifted-load logic from a different supplier.
Octopus Cosy heat pump tariff: FAQ
Is the Octopus Cosy tariff cheaper than a gas boiler?
For most homes, yes, and by a meaningful margin. Boiler Beater puts 94% of Octopus heat pump customers below an equivalent gas boiler bill, and a three-bed semi at 10,000 kWh heat demand on Cosy comes out around £200 a year cheaper than the same home on the forecast Q4 cap running gas.
What is the Octopus Cosy tariff?
Cosy Octopus is a time-of-use electricity tariff built around heat pump usage patterns, charging a discounted rate across three daily windows and a standard peak rate the rest of the day, so a heat pump controller can shift most of its runtime into the cheap periods.
Am I eligible for the Octopus Cosy tariff?
Cosy Octopus requires a working SMETS2 smart meter, a compatible heat pump or electric heating system, and the Octopus Energy app to manage the account. Cover extends to heat pumps from most major manufacturers, not only Octopus-installed units.
How does the October VAT cut affect heat pump running costs?
From 1 October, VAT on domestic electricity drops from 5% to 0%, while gas stays at 5%. The cut lowers the heat pump side of the comparison and leaves the gas side untouched, widening the running-cost gap in the heat pump's favour.
Do I need an MCS-certified installer for a heat pump grant?
Yes. The Boiler Upgrade Scheme grant of £7,500, or £9,000 for oil and LPG homes, is only paid when the installer holds Microgeneration Certification Scheme accreditation. Using an uncertified installer forfeits the grant entirely.
What is the Octopus Boiler Beater dashboard?
Boiler Beater is Octopus Energy's live comparison tool that models what each heat pump customer's actual electricity usage would have cost as a gas boiler bill at current cap rates. Octopus reports an average saving of £227 a year at current cap rates.