If you’re not on the mains gas supply, you’re almost certainly worried about managing the spiralling costs of heating oil (almost 400% since 2002!). Here we explain the alternatives to heating your home when you’re off mains. Includes advice on electricity, LPG, biomass, solar thermal and natural gas.


  • Typical Capital Cost: £4,000
  • Typical Unit Price (kWh): 6.4p
  • Typical Annual Running Cost: £960

For those building or renovating in a rural location, where mains gas is not available, heating oil is virtually the default option. Prices are rising; will the day come when we can no longer afford to buy heating oil? The current average price is about 62p per litre. In 2002 the average price was 18p per litre and that was considered an almost unaffordable increase from the 2000 price of 14p per litre. It is entirely conceivable that by 2022 the price will be over £2 per litre. Ridiculous? The UK is now a net importer of oil, worldwide oil production is lower than it was 10 years ago and prices are rising on a steeper curve. Far from ridiculous, it could be an under-estimate.

To put those figures in context, the owner of a 200m2 house built in 2002 to (then) Building Regulations standard would have spent around £270 per year on heating oil. That same house built today will spend around £960. By 2022, they could be spending £2,990 each year on heating oil for that same house.

The average unit price of heating oil is 6.4p per kWh. Typically you’ll get 10kWh per litre of oil.


  • Typical Capital Cost: £2,000
  • Typical Unit Price (kWh): 7.4p
  • Typical Annual Running Cost: £1,110

There is no obvious reason to use LPG (liquid petroleum gas) over heating oil. Capital and maintenance costs are broadly the same but running costs are significantly higher. In addition, LPG has a lower calorific value, only 7.4kWh per litre compared to 10.7kWh for oil and 11.0kWh for natural gas.


  • Typical Capital Cost (direct): £850
  • Typical Unit Price (kWh): 13.7p/7.5p (Economy 7)
  • Typical Annual Running Cost: £2,055/1,125
  • Typical Capital Cost (ground-source heat pump): £8,000
  • Typical Unit Price (kWh): 4.2p (based on 3.2 COP)
  • Typical Annual Running Cost: £630

Direct electric heating, i.e. electric underfloor, storage heater, infra-red, etc., is very, very expensive to run and offers only a small capital cost advantage. If you can run your system on Economy 7 tariffs, the unit price reduces to around 7.5p per kWh.

ndirect electric heating, i.e. heat pumps, are a different question. Many words have been written about the efficacy of heat pumps and used in the right way in the right property they offer one of the best alternatives to oil. With a COP of, say, 3.5 they offer an effective unit price of 3.9p per kWh. The danger lies where the property or the use of the system drive the COP below 2.8 and the effective unit price rises to over 4.9p per kWh — higher than natural gas.


  • Typical Capital Cost (wood pellet boiler): £12,000
  • Typical Unit Price (kWh): 4p
  • Typical Annual Running Cost: £600

In situations where a lot of heat is needed – namely in older or larger properties – biomass is a highly cost-effective option, particularly when taking the long view. Capital cost tends to be high but running costs are low. Boilers tend last two to three times as long as gas or oil boilers, off-setting the higher capital cost, and the fuel is carbon neutral.

Solar Thermal

  • Typical Capital Cost (boiler/panels): £6,000
  • Typical Unit Price (kWh): free
  • Typical Annual Running Cost: £624 (13,000kWh gas)

Solar energy can be used in four forms: solar thermal for hot water, photovoltaic for electricity, photovoltaic thermal for both and passive solar which is the sun warming the house itself. It is entirely possible to use only solar energy to heat the home and it is principally a matter of design — essentially deciding at the outset to use solar energy and finding a designer capable of doing it, although in most cases some additional heating will still be required. Capital cost will be high, probably four to five times the cost of an oil-fired system.

Natural Gas

  • Typical Capital Cost (boiler): £1,000 + gas connection fee of approximately £500
  • Typical Unit Price (kWh): 4.8p
  • Typical Annual Running Cost: £720

If there is a gas supply pipe in the street outside it is difficult to justify using anything else when you’re considering running costs alone. Running costs will be lower than oil and price rises have tended to be more steady — only 9.6% last year (figure from ONS). The capital cost of installation will be lower than an oil-fired system, or any other technology come to that, and gas boilers tend to be clean, convenient and easy to use. But if there is not a gas pipe in street outside the connection charge can make this option not viable.

There is no map of the low-pressure gas supply grid available to the public. The only way to find out if a plot or house can be connected to the gas grid is to make an application to the local supply company. The National Grid (nationalgrid.com) will tell you who the grid operator is and how to get a quote for a connection.

It is a good idea to make getting a quote for a gas connection part of your pre-purchase checks.

Renewable Heat Incentive

The Government is still to announce the details of the Renewable Heat Incentive (RHI) scheme, whereby the homeowner is paid a sum for each kWh of heat produced from a renewable energy source. It will, however, radically alter the way we view the financial implications of moving off oil.

The scheme will cover solar energy, heat pumps and biomass boilers and seems likely to launch in summer 2013. From the information currently available the rates paid for each technology seem likely to repay the capital cost of the equipment over five to seven years. The current proposals (likely to change) are:

  • Biomass: 5.2-8.7p per KWh
  • Air-source heat pump: 6.9-11.5p per KWh
  • Ground-source heat pump: 12.5-17.3p per KWh
  • Solar thermal: 17.3p per KWh

How Do the Options Compare?

We compare the total cost of the options over two different periods:

Fuel Type 2-Year Cost* Fuel Type 10-Year Cost*
Natural Gas £3,026 Natural Gas £14,130
Electricity £4,220 Solar £16,945
LPG £4,353 Heat Pump £19,052
Oil £6,035 Wood/Biomass £19,198
Solar £7,322 Oil £20,842
Heat Pump £9,335 LPG £21,475
Wood/Biomass £13,224 Electricity £28,747

* Including capital cost and running costs for the period, based on the same 200m2 house built to current Building Regulations (required 15,000kwh per year) and assuming 12% annual change in fossil energy prices, 4% annual rise in wood pellets. Excludes RHI income.

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