Levelised cost of heat LCOH

"Levelised cost of heat (LCOH) is a metric which describes the discounted lifetime cost of the purchase, installation, maintenance, and operation of a heating appliance expressed in pence per kilowatt hour (p/kWh) of heat. Sensitivity analysis has been conducted to understand how the LCOH results vary based on factors including system efficiency, energy price, load shifting, and installation year."

"To illustrate how heating costs vary across different building types, three housing archetypes have been defined for cost analysis: a smaller mid-terrace on gas house, a larger detached on gas house, and a larger detached off gas house. This analysis is based on the best technical evidence the Department currently has available."

"However, as the picture on these technologies is regularly evolving and given the modelling simplifications involved in assessing the costs of these technologies, the results should be considered illustrative. The cost analysis of all low carbon heating systems has been carried out using the Department’s National Buildings Model (NBM), which simulates building energy use, costs, and emissions under different policy incentives."

"LCOH results for heating systems under scope of this analysis illustrate that low temperature air source heat pumps (LTASHP) – across all three defined housing archetypes – have the lowest LCOH based on the central modelling assumptions, mainly driven by their high efficiency. In comparison, direct electric (DE) heating systems including electric boilers, infrared panel heaters, and convective panel heaters, have the highest LCOH across the three housing archetypes. This is a result of assumed lower efficiencies compared to heat pump technologies and lack of thermal storage capability, meaning these systems are unable to take advantage of cheaper off-peak electricity prices. While the LCOH results are specific to the illustrative archetypes defined in this document, this should not be interpreted as reflecting the wider housing stock"

UK Government Publication "Analytical Note on Alternative Low Carbon Heating Technology Costs" November 2025

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