Replacing storage heaters with an air-to-air heat pump: costs, savings, and the £2,500 grant

If you are replacing storage heaters, an air-to-air heat pump is the only option that cuts your heating bill by more than half rather than nudging it. At the current Ofgem cap (26.11p/kWh, 1 July to 30 September 2026), a unit running at a seasonal efficiency of 4 delivers each kilowatt-hour of heat for about 6.5p. Old storage heaters on Economy 7 cost roughly 18p per kilowatt-hour of heat once you count the daytime top-ups. Electric radiators and infrared panels cost the full 26p.

For a typical 2-bed flat that works out at around £900 a year with old storage heaters, £1,300 with electric radiators, and £330 with an air-to-air heat pump. The catch is the up-front cost (£3,500 to £7,000 or more for a two or three room system), the paperwork if you are in a flat, and a £2,500 government grant that exists in law but, as of September 2026, has barely been paid out. This guide covers all of it, with the maths shown so you can redo it for your own home. It sits within our air-to-air heat pumps guide and the heating hub.

Why storage heaters cost what they do

A night storage heater is a stack of clay or ceramic bricks in a metal case. It draws electricity for around seven hours overnight on a cheap Economy 7 rate, stores the heat in the bricks, and lets it out through the following day. Older units have two dials, input and output, so you are forecasting tomorrow's weather every evening. Three things make them expensive.

The tariff. Economy 7 gives you a cheap night rate and a dear day rate. British Gas's average capped rates from 1 July 2026 are 14.53p/kWh at night and 31.61p/kWh in the day, against 26.11p on a single-rate tariff. British Gas says the tariff only pays if at least 40% of your electricity is used overnight.

Heat leaks. The Centre for Sustainable Energy puts it plainly: traditional models "often have poor insulation, which means they slowly release heat even when set to 'nil'". Your flat is warmest at 8am when you leave and coldest at 9pm when you want it, so you switch on a panel heater or the boost, at day rate.

No control. A storage heater cannot respond to a cold snap at 4pm. Modern high heat retention models add thermostats and programmers, but they are still bricks in a box.

According to the English Housing Survey, around 1 million dwellings in England (5%) still use storage heaters as their main heating, and a further 761,000 rely on portable heaters. Estimates for Great Britain as a whole run to around 1.7 million homes on direct electric heating.

The alternatives to storage heaters, compared

Every resistive heater (storage, panel, oil-filled, infrared) turns one unit of electricity into one unit of heat, a coefficient of performance (COP) of 1.0. A heat pump moves heat from the outside air into the room, so it delivers three to five units of heat per unit of electricity. That ratio, the SCOP (seasonal coefficient of performance), is the whole story.

Dimplex claims its Quantum range is "27% cheaper to run" than traditional storage heaters; that is the manufacturer's figure, and it comes from better insulation and smarter charging, not from any change in the physics. Electric radiator retailers say their products are cheaper to run than old storage heaters. Per kilowatt-hour they are not: heat in daytime and you pay the day rate or the single rate, and the CSE rates panel heaters "the most expensive option for regular whole-home heating". The air-to-water route only makes sense if you already have wet radiators.

Storage heaters vs heat pump: the annual running cost

Rates used: Ofgem cap for 1 July to 30 September 2026, 26.11p/kWh single rate; British Gas Economy 7 averages for the same period, 31.61p day and 14.53p night. Heat demand is an assumption: we take a 1-bed flat as needing about 3,000kWh of heat a year and a 2-bed flat about 5,000kWh. Substitute your own figure from your bills.

How the figures are built: old storage heaters are modelled as 80% of heat charged at 14.53p and 20% topped up at 31.61p, so 0.8 × 14.53 + 0.2 × 31.61 = 17.95p. The heat pump line is simply 26.11p ÷ 4 = 6.53p. October's price cap moves the single rate to 26.32p, which changes the 1-bed heat pump figure from £196 to £197; see October's price cap.

Swapping storage heaters for electric radiators can raise your heating bill. Swapping them for an air-to-air heat pump cuts it by roughly 60%.

The saving against old storage heaters is about £340 a year in the 1-bed and £570 in the 2-bed. Set that against £3,500 to £7,000 for a two or three room system and the simple payback is eight to fifteen years without the grant, or three to eight years with the £2,500 taken off, with 0% VAT on fixed installations until 31 March 2027. That is before you put any value on summer cooling, which no storage heater or radiator can offer.

Prices and rates correct as of September 2026. The energy price cap changes quarterly, so check current rates before budgeting.

Should you stay on Economy 7?

Usually not, once the storage heaters go. A heat pump runs mostly in the day and evening, so on Economy 7 you would pay 31.61p rather than 26.11p for most of it. The exception is a flat with an immersion-heated cylinder that still charges overnight; then compare a single-rate tariff against a heat pump tariff.

Installing a heat pump in a flat

Most people replacing storage heaters live in flats, and this is where the practical questions bite. Our air conditioning for flats guide goes deeper; the short version is below.

Freeholder consent. The external walls and structure are almost never part of your lease, and most leases restrict alterations, so you need a licence to alter before drilling. Freeholders weigh the precedent for other flats, the look of the pipework, noise for neighbours, and future servicing access. Ask early, take drawings and the installer's noise calculation, and expect a fee.

Where the outdoor unit goes. A balcony, a flat roof, or a bracket on the external wall; ground-floor flats can use a garden wall.

Planning. In England, Class G permitted development (amended from 29 May 2025) covers a heat pump that heats and cools, but not a cooling-only unit. On a flat the allowance is one unit of up to 0.6 cubic metres, and the rules count units per block of flats, not per flat. If a neighbour already has one, or the building is listed, you will most likely need a planning application. Scotland, Wales, and Northern Ireland differ. Always check with your local planning authority; our planning permission guide walks through it.

Noise. The permitted development test is 37dB(A) at the nearest habitable room window of a neighbouring property, calculated using the MCS 020 method. Modern outdoor units are rated around 46 to 49dB(A) at one metre, so position matters. Your installer should produce the calculation; if they cannot, find one who can.

Electrics. A split needs its own circuit from the consumer unit, which is notifiable electrical work. The old off-peak circuits are switched by the meter and are not simply reusable.

What a good multi-room system looks like

A single wall split heats one room well and the hallway a little. For a living room and one or two bedrooms, the answer is a multi-split: one outdoor unit feeding two or three wall-mounted indoor units, each with its own thermostat and remote. Daikin's 3MXM outdoor unit, for example, runs up to three indoor units, all individually controllable, and installers quote heating SCOPs of 4.4 to 4.6 for the MXM-A range. That matters for the grant, because Ofgem requires a funded system to be "sized to meet the full space heating needs of the property", so a single unit in the lounge would not qualify on its own.

Installed price bands, September 2026:

• Single wall split: £1,500 to £3,000; premium designer units £2,500 to £4,500.

• Multi-split, two indoor units: roughly £3,500 to £5,000.

• Multi-split, three indoor units: roughly £4,500 to £7,000, with London and awkward pipe runs pushing past that. Published quotes range from £2,800 to more than £9,000 for the same job, so get three.

The multi-split systems pages review the current Daikin and Mitsubishi Electric ranges, and air-to-air heat pump cost breaks down what moves a quote.

Hot water

An air-to-air heat pump heats air only. It will not replace your immersion heater or hot water cylinder. Keep them, or pair the system with a hot water heat pump cylinder, which Daikin confirms does not affect grant eligibility.

The £2,500 grant: what is true in September 2026

The Boiler Upgrade Scheme has offered £2,500 towards an air-to-air heat pump since 28 April 2026. The rules, as Ofgem sets them out:

• England and Wales, residential properties only.

• The system must replace an existing fossil fuel or electric heating system. Storage heaters and panel heaters qualify; a home that already has a heat pump does not.

• The installer must be MCS certified and the product must be on the MCS Product Directory.

• The installer applies on your behalf and has three months from approval to finish the job.

• One grant per property. Cooling-only systems are excluded.

Now the honest part. On 1 September 2026 Daikin became the first manufacturer with air-to-air products on the MCS directory (65 multi-split and Multi+ combinations). Installer certification bodies were still working towards UKAS accreditation in MCS's last update. The Energy and Climate Intelligence Unit reported in July that around 45 vouchers had been claimed and no installations completed, and Daikin's own funding page says "MCS accreditation for air-to-air systems is still being finalised, so timings for claims may vary".

So the grant is real and the scheme is open, but very few households have received the money yet. Ask any installer which certification body certified them, check the MCS installer and product directories yourself, and if you are not in a hurry, waiting a few months should mean more products and more certified installers. Our air-to-air heat pump grant guide tracks the status.

The separate air-to-water grant is £7,500, or £9,000 for off-gas homes on oil or LPG. Electric-heated homes do not get that uplift, and it does not apply to air-to-air.

Tenants and landlords

If you rent privately, you need the landlord's agreement, but you have a stronger case than you might think. The minimum standard for a rented home is currently EPC E. The government confirmed on 21 January 2026 that all private rented homes in England must reach EPC C or equivalent by 1 October 2030, with a spending cap of £10,000 per property; the regulations are targeted for 2027 and not yet in force. How air-to-air will score under the reformed EPC has not been published, so do not promise your landlord a band.

If you are a landlord with an all-electric flat, the running-cost table is the argument: a tenant paying £900 a year to heat a 2-bed with old storage heaters is a tenant who leaves, and a multi-split that also cools is a genuine letting feature.