At current prices, a heat pump should be a cheaper option than oil, LPG (propane & butane), or direct electric heating (e.g. storage heaters). It will only be more cost effective than a modern gas boiler if the system can achieve COP4 or higher.
Heat pumps are still a relatively rare option for central heating, so installation prices will vary – the best thing to do is to compare quotes from a few installers.
As a rule of thumb, a ground-source system is likely to cost about £1000 per installed kilowatt (kW). The heat pump itself will be £400 to £600 per kW, with trenches £300 per kW or boreholes £500 per kW. Installation costs for air-source heat pumps can vary from £5,000 to £9,000.
Putting in underfloor heating will cost about £2000. Existing homes will need insulation levels improved. Without these measures the cost of a heat pump will be much higher.
Running costs (the electricity used) will depend on your heat demand, on the system’s efficiency and on electricity prices. For example, if you need 12,000 kWh of heat per year then an ASHP with a COP of 3 will use 4,000 units of electricity at a cost of £520 (if electricity costs 13p per unit).