Heat Pumps for Businesses, Lower Carbon and Predictable Heating Bills
An independent guide for UK businesses replacing a gas or oil boiler: which heat pump type fits, what it costs, whether it is cheaper to run, and what funding and tax relief really apply.
What a commercial heat pump does
A heat pump moves heat from a source (outside air, the ground, water, waste heat) into a building’s heating and hot-water system, using electricity to run the compressor. The ratio of heat delivered to electricity used over a heating season is the seasonal coefficient of performance, SCOP. A higher SCOP means more heat per unit of electricity and a lower running cost. Because a heat pump does not burn fuel on site, it also removes on-site combustion emissions, and its carbon intensity follows the electricity grid’s.
For commercial buildings the practical questions are about scale and fit: how much heat the building needs at its coldest, how hot the existing radiators or air handlers need the water to be, where the plant can go, what the electrical supply can carry and how the numbers compare with the current gas or oil bill.
Choose a route
Will it cost less to run?
Not necessarily. Cost per kWh of heat is the energy price divided by efficiency. DESNZ’s Quarterly Energy Prices for Q1 2026 give medium-sized businesses 25.0p per kWh for electricity and 4.55p per kWh for gas (provisional, excluding VAT, including the Climate Change Levy). With an 88% efficient gas boiler, a heat pump would need a SCOP of about 4.8 to match gas on energy cost alone at those averages. A cheaper electricity tariff, on-site generation, higher gas prices or cooling benefits can tip the balance, and one published installer guide reports gas-boiler heat at 7-8p per kWh and finds the two close. The running-cost guide and the calculator let you test your own prices.
Funding and tax relief in brief
- Boiler Upgrade Scheme: GOV.UK says the grant can replace a heating system in a building used for a business. In England and Wales, small non-domestic buildings with a heat pump of 45 kW thermal or less for a single heat pump (70 kW thermal for a multi-unit system) may qualify for £7,500 (£9,000 for oil or LPG replacement off the gas grid, 21 July 2026 to 31 March 2027).
- Capital allowances: a heating system is an integral feature, which is special-rate, so full expensing does not apply. The Annual Investment Allowance gives 100% relief up to £1m a year, with a 50% first-year allowance for companies above that.
- Closed schemes: the Public Sector Decarbonisation Scheme closed to new applications in November 2024 and the Industrial Energy Transformation Fund closed in July 2025 with no successor. Older web pages that call them open are out of date.
Details and sources are in the grants and funding guide.
Getting from idea to quotes
- Gather your data: twelve months of gas or oil use, the boiler’s age and output, the heating system type and the supply capacity of your electricity connection.
- Test the economics with the calculator.
- Decide the route: air-source, ground-source or hybrid, using the guides above.
- Request quotes. Use the form on this page or contact installers directly. Check each installer’s MCS and other credentials on the public registers and compare written quotes against the same specification.