Heating Costs Compared: Gas, Oil, Pellets, and Heat Pumps Under Review

The decision for a heating system is one of the biggest financial and ecological choices homeowners make. With rising energy prices and growing awareness of sustainability, choosing the right system becomes increasingly important. The question of which technology delivers the necessary heat most efficiently and cost-effectively is on many minds. Below, we illuminate the cost factors and show when each solution pays off.

The Kilowatt-Hour of Heat in a Cost Check

The most direct comparison of heating systems is based on the cost per kilowatt-hour (kWh) of usable heat. Current analyses and forecasts for 2026 paint a clear picture: the heat pump is the cheapest option. It delivers heat for approximately 6.9 cents per kWh. Pellets are the second cheapest choice, with prices ranging from 7.3 to 8.7 cents per kWh. It gets significantly more expensive with fossil fuels: gas costs between 11.2 and 14.8 cents per kWh, while heating oil at 13.9 to 16.8 cents per kWh is the most expensive variant.

To make these figures more tangible: a typical single-family home with 150 m² of living space and an annual energy requirement of 20,000 kWh incurs running heating costs of around 1,571 Euros per year using a heat pump. Through the use of intelligent energy management systems, which for example optimize electricity purchase times or prioritize solar power, these costs can be further reduced. In such a scenario, savings down to approximately 1,540 Euros per year are possible. For comparison: a gas heating system would already incur higher costs at an assumed price of 13 cents/kWh, and an oil heating system at 15 cents/kWh would incur even higher costs per year.

The Seasonal Performance Factor (SPF) as the Key to Efficiency

For heat pumps, the cost per kWh depends not only on the electricity price but crucially on their efficiency, measured by the Seasonal Performance Factor (SPF). The SPF indicates how many kilowatt-hours of heat a heat pump generates from one kilowatt-hour of electricity. An SPF of 3, for example, means that 3 kWh of heat are obtained from 1 kWh of electricity. The higher the SPF, the more efficiently the heat pump operates and the lower the operating costs. Modern air-to-water heat pumps often achieve SPFs of 3 to 4, while brine-to-water heat pumps (geothermal) can achieve SPFs of 4 to 5 and more. A higher SPF therefore means not only lower electricity costs but also a better environmental footprint, as less energy is required for heat generation.

The efficiency of other heating systems is usually described by their efficiency rating and calorific value. For gas and oil boilers, the efficiency of modern condensing boilers is often in a high range, meaning they convert a large part of the energy from the fuel into heat. Pellet heating systems also have very high efficiency, often over 90%. However, the crucial difference compared to heat pumps is that these systems draw heat from an external medium (air, earth, water) and raise it to a higher temperature level using electrical energy, rather than directly burning the fuel.

Break-even Points: When Each Technology Pays Off

The purely calculated cost per kWh only tells part of the story. Actual cost-effectiveness depends on many factors, including purchase costs, government subsidies, building insulation, and local energy prices. For a well-insulated house with low flow temperatures, a heat pump is often a very good choice. In older buildings with poor insulation and high flow temperatures, a gas or pellet heating system might be a cheaper investment in the short term, especially if the initial costs for a heat pump and its associated adaptations (e.g., radiator replacement) are high.

The development of energy prices plays a crucial role. If gas and oil prices continue to rise sharply while electricity prices remain stable or increase only moderately, the “break-even points” will shift further in favor of the heat pump. The availability and cost of CO2 certificates for fossil fuels will also play a greater role in the future, potentially increasing the operating costs of gas and oil heating systems.

Tags: heating costs, heat pump, gas heating, oil heating, pellet heating, energy efficiency, heating, cost comparison

Try it yourself: Heating Cost Comparison (Gas, Oil, Pellets, Heat Pump)

The Kilowatt-Hour of Heat in a Cost Check

The Seasonal Performance Factor (SPF) as the Key to Efficiency

Break-even Points: When Each Technology Pays Off

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