Energy renovation of an electrically heated house – how to cut your electricity bill for good

Do you live in, say, a detached house built in the 1970s–90s, where the heat comes from electric radiators or electric underfloor heating and there is no water-circulated heating (that is, the heat does not travel through water pipes to radiators or the floor)? Then your renovation options are different from those of an oil- or district-heated house. In this article we go through which solutions suit the energy renovation of an electrically heated house when there is no water circulation, what is known about them in euros – and where no official price data exists. For an overview of the order and prices of energy renovations, see the article energy renovation.

Why does direct electric heating get expensive?

In the 2026 example of Motiva (the Finnish state-owned energy efficiency company), a 120 m² electrically heated small house with four residents consumes 19,200 kWh per year (excluding electric car charging). Of this, space heating accounts for 9,500 kWh and domestic hot water heating for 3,670 kWh – according to Motiva, about a fifth of the electricity in an electrically heated small house goes into hot water. According to Statistics Finland (Tilastokeskus), electricity in the size class of electrically heated houses (over 15,000 kWh per year) cost about 14–19 cents/kWh including transmission and taxes in the first half of 2026. Our own example calculation: at this price, 19,200 kWh costs about €2,700–3,600 per year.

According to Motiva, room-by-room electric heating is the cheapest to acquire but weak in energy efficiency: every kilowatt-hour of heat is bought as electricity, and the hot water is heated separately. A heat pump, by contrast, takes part of the heat from the outdoor air or the ground, and it is precisely that share that drops off the electricity bill.

Which options suit a house without water circulation?

The lack of water circulation is the most important constraint of a direct-electric house. A ground source heat pump and an air-to-water heat pump need a water-circulated heat distribution system to work, and according to Motiva, room-by-room electric heating also rules out district heating as well as wood, wood chip and pellet boilers – for as long as the heat distribution is not changed. This is how the options compare:

Option	Suitable without water circulation?	What it requires	What is known about the savings	Price
Air source heat pump	Yes – according to Motiva, the primary heater of a direct-electric house	The electric heating remains alongside; a house with partition walls or a complex layout may need several indoor units	Heating costs as much as 30–40 % lower	No official price – ask for a quote
Heat-storing fireplace	Yes	A fireplace of a suitable size and regular small-scale wood burning	Can produce as much as a third of a small house's heating demand, and households with electric heating in particular benefit from regular wood burning; replaces electricity during cold spells, when spot-price electricity is often more expensive than usual	No official price – ask for a quote
Exhaust air heat pump	Rarely	Mechanical exhaust or supply-and-exhaust ventilation; alongside electric heating without water circulation, only special models in which the heat for the heating water comes from an electric heating element	No official savings figure	No official price – ask for a quote
Water-circulated heat distribution + ground source heat, air-to-water heat pump or district heating	Only once the heat distribution has been built	A radiator or underfloor heating network; underfloor heating may require taking up the floors	In Motiva's example house, a broad package raised the class from D to B (see below)	No official price – ask for a quote

An exhaust air heat pump requires mechanical exhaust ventilation, and according to Motiva, older small houses usually have natural ventilation – mechanical supply-and-exhaust ventilation became common in small houses in the 1990s. According to Motiva, an exhaust air heat pump is best suited to new houses or houses with energy-efficient structures; in a 1970s property, for example, the heat may come mainly from the electric heating element. It is mainly worth considering when the ventilation unit and the hot water tank have to be replaced at the same time anyway.

How much does an air source heat pump really save?

Motiva advises heating a direct-electric house primarily with an air source heat pump and setting the electric heating thermostats 2–4 degrees below the pump’s setting. In this way, heating costs can drop by as much as 30–40 per cent. One pump typically produces 30–60 per cent of the space heating energy. In Motiva’s example house (75 m², built in 1959), an air source heat pump would cut electricity consumption by about 1,900 kWh per year by calculation.

The limitations are worth knowing before you buy:

At around −20 °C the pump delivers about half as much output as at +7 °C, and it produces only about half as much heat from the same amount of electricity. In the hardest frosts, the electric heating alongside it still pushes consumption peaks high.
The pump does not heat domestic hot water and cannot be the house’s only form of heating.
Partition walls and a complex house layout limit how the heat spreads, so several indoor units may be justified.
If the pump replaces electric underfloor heating, the floor may feel cold. In that case the floor is heated moderately with electricity, or rugs help.

The purchase price including installation is in the range of a few thousand euros (our own estimate – there are no official price statistics). In summer the same unit can also cool, see cooling your home.

Is it worth switching to water-circulated heating?

Ground source heat and an air-to-water heat pump are efficient, but in a direct-electric house they require water-circulated heat distribution, and Motiva calls building it an expensive renovation. According to Motiva, it is often more economical to make the existing electric heating more efficient with air source heat pumps, by replacing thermostats and radiators in poor condition, and by improving the controls. In Motiva’s example (a 150 m² direct-electric house from 2001), changing the heat distribution would have been profitable only if the house had been thoroughly renovated anyway.

For most houses, water-circulated radiators are an easier solution than underfloor heating, which may require removing the floor surfaces – that is why underfloor heating is of interest when the floors are being renewed anyway. Sometimes it can be laid on top of the old structure, and solutions are available that raise the floor by only about 15 mm. Low-temperature radiators with a large heat transfer surface suit heat pumps. We tell you more about the air-to-water heat pump in the article air-to-water heat pump.

Another Motiva example, a renovation roadmap, concerns a 160 m² two-storey house from 2001: the ground floor has electric underfloor heating, the upper floor electric radiators. It shows what the whole path can achieve on paper.

Motiva's roadmap example (starting point D, E-value 222 – a lower E-value is better)	Energy class and E-value	Energy consumption
Air source heat pumps upstairs and downstairs	D, 190	−14 %
Broad package + ground source heat	B, 94	−53 %
Broad package + air-to-water heat pump	B, 111	−46 %
Broad package + district heating	B, 121	−15 %

In the E-value, energy carriers are weighted with different factors, so the change in consumption and the change in the E-value can differ – see how a house’s energy class is calculated.

The broad package includes new floor surfaces and water-circulated underfloor heating, wet rooms included, a new ventilation unit whose supply air is heated by the water circulation, and a new heating method. The result comes from all of these together and cannot be credited to the change of heating method alone. The roadmaps contain no costs.

Permits in plain language: under the Building Act (rakentamislaki), the energy well of a ground source heat system always requires a building permit, and a permit is also required for repair and alteration work that can significantly affect the building’s energy efficiency – a change of heating system may be such work. Confirm the permit requirement with your municipal building control before starting work. The current act is available on Finlex.

What would building the heat distribution cost in your particular house? There is no official price estimate, and the price depends on the house’s structures and on other upcoming repairs, so we do not present a payback time for this path. An energy report calculates the options for your house – submit a request for a quote.

Which small measures pay off in any case?

According to Motiva, adjusting the electric heating and room temperatures alone can cut heating costs by as much as 30–40 per cent without major renovations – this figure cannot, however, be added on top of the air source heat pump’s savings. We have collected more low-cost measures in the article energy saving.

Measure	Price	Effect according to Motiva
Replacing electric radiators and thermostats	Radiator replacement about €150–250 each	Total consumption as much as −10 % and heating energy −20 %
Programmable floor thermostats for washrooms and the sauna	About €150–200 each in total	Annual savings in washroom heating energy of as much as 50 % at best, about 1,000–2,000 kWh
Lowering the room temperature	Free	Lowering it by one degree cuts energy consumption by 5 %
Limiting partially storing underfloor heating when an air source heat pump or a fireplace runs alongside	Free adjustment	No official figure
Timing the hot water tank and heating to cheap hours	No official price	No official figure; a benefit with spot-price electricity or if the network company charges a power-based fee
Renewing window and door seals	No official price	No official figure; first make sure that replacement air (fresh air that enters, for example, through vents) is supplied in a controlled way
Additional attic insulation	No official price	No official figure; usually worthwhile if the insulation is poor and adding more is easy

Control devices are worth renewing if they do not work properly or are over 20 years old; radiators older than 30 years are worth replacing for the energy savings alone. Motiva’s recommended temperatures are 20–21 °C in living areas, 18–20 °C in bedrooms, 22–23 °C in bathrooms and 15–18 °C in entrance porches. With spot-price electricity, the hot water tank can be heated at night during the cheapest hours for the whole day’s needs, which cuts costs even though heat losses increase consumption slightly; with a fixed-price contract, continuous heating is the cheapest. The price of electricity varies in 15-minute periods, and timing pays off the more electricity you use. According to Motiva, reducing heat losses through the building envelope and taking care of ventilation can together save as much as several tens of per cent in heating; there is no separate figure for draught-proofing or for attic insulation.

Example calculation: how much can you save in a 120 m² house?

Our own example calculation is based on Motiva’s example house (120 m², four residents, space heating 9,500 kWh per year), Motiva’s savings percentages and Statistics Finland’s electricity price for electrically heated houses of 14–19 cents/kWh.

Path	Motiva's figure	Savings kWh/yr (our calculation)	Savings €/yr (our calculation)
Air source heat pump, electric heating 2–4 degrees lower	Heating costs as much as −30–40 %	about 2,850–3,800	about 400–720 (upper limit)
Replacing electric radiators and thermostats	Heating energy as much as −20 %	about 1,900	about 270–360
Broad package: water-circulated heat distribution, ventilation unit and ground source heat or air-to-water heat pump	In the roadmap example D → B (E-value 222 → 94 or 111)	not calculated	not calculated

The figures are “as much as” figures, i.e. upper limits, not promises. The rows cannot be added together, because according to Motiva the savings from the first efficiency measure eat into the savings of later measures. The 3,670 kWh of domestic hot water does not decrease with an air source heat pump or with radiator replacement. We do not calculate euros for the water circulation path, because the roadmap example concerns a different house and there is no official data on the price of the heat distribution.

Can you get support for the energy renovation of an electrically heated house?

For a detached house owner, the support is the household expenses credit (kotitalousvähennys): 35 per cent of the itemised labour share of the invoice, at most €1,600 per person per year, with a €150 deductible. Equipment and materials do not qualify. According to the work table of the Finnish Tax Administration (Verohallinto), the credit covers the installation and servicing of an air source heat pump in a detached house, as well as renewing the heating system and installing a new one, provided that no energy grant has been awarded for the change of heating method. The guidance does not mention the installation of an exhaust air heat pump or the building of water-circulated heat distribution by name: as heating system installation work they are probably eligible, but confirm this with the Tax Administration. In a new house, installing an air source heat pump, a fireplace or a stove within two years of the final inspection counts as new construction, and no credit is available for it.

The Government has proposed raising the credit to 40 per cent and €2,100 retroactively from the start of 2026, but according to the Tax Administration’s pages, at the time of writing this is still only a proposal. You can find calculation examples, including the credits of spouses, in the article energy grants for a detached house.

A detached house owner cannot apply for the state energy grant 2026–2027, which is administered by Varke (the Housing Construction Centre of the Finnish State). If your house belongs to a housing company made up of several small houses, the company can apply for the grant – although switching from electric heating to ground source heat, an air-to-water heat pump or district heating is not an eligible cost (a change of heating method is eligible only when giving up oil or gas heating), and the project must improve the E-value by at least 28 per cent. See Varke’s energy grant and housing company energy renovation.

How does the renovation show in the energy certificate?

The E-value of the energy certificate is calculated with standardised use, and purchased energy is weighted by the energy carrier factor: the factor for electricity is 1.20. The energy a heat pump takes from the outdoor air or the ground gets no factor but reduces the electricity that has to be bought, so the pump lowers the E-value. The energy class still does not necessarily change: in Motiva’s example above, the air source heat pumps lowered the E-value from 222 to 190, but the class stayed at D.

Not all savings show in the certificate: timing heating to cheaper hours does not affect the E-value, and draught-proofing does not affect it without an airtightness measurement. We explain why in the article how a house’s energy class is calculated; read more about the factors in the article energy carrier emission factors and about the means in the article how to get a good E-value.

How to get started

Look up your house’s certificate with our energy certificate check tool and compare the starting point. For data protection reasons, certificates of detached houses do not appear in the public search, so choose “Add your own energy certificate” in the tool and enter the key data of your certificate. If there is no certificate or it has expired, we will prepare a new one – see energy certificate for a detached house. When you want to know which heating renovation pays off in your particular house and what switching to water circulation would cost you, order an energy report: submit a request for a quote or first take a look at our services.

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