Cheaper heating oil deals blow to Government rural heat pump rollout

The recent 20% drop in heating oil prices has brought welcome relief to rural UK households, but it has also further heightened the debate on the economic viability of swapping oil boilers for heat pumps.

The government's rural heat pump rollout cools down due to cheap oil deals.

Figures published this week by the Energy and Utilities Alliance (EUA) suggest households making that decision now will be as much as 70% (nearly £500 a year) worse off with a heat pump than with their oil boiler.

Annual heating cost comparison

According to the EUA, an average household using a heat pump at the efficiency level used in government trials and paying the Energy Price Guarantee for electricity will spend £1202 on heating. In contrast, the same property that relies on an oil boiler and pays the current market rate for heating oil will spend just £707, an annual saving of £495.

These alarming numbers raise doubts about the government’s proposal to ban households from installing new oil boilers for home heating after 2026, with heat pumps the preferred alternative. As per government estimates, the average installation cost of a heat pump is £13,000, which is a significant burden for many homeowners already struggling to make ends meet.

Financial penalty

Mike Foster, CEO of the EUA, said: “Households currently using oil to heat their homes will be shocked to find out that being forced to fit a heat pump will cost them £13,000 up front and then an extra £500 a year for the privilege. It’s an appalling situation that faces those living in rural areas from 2026.

“Coming in the middle of a cost of living crisis, cheaper heating oil is welcome relief. But it just reinforces how much more expensive a heat pump would be. I’m not sure the Government have thought this through properly. The penalty for being forced off oil simply cannot be afforded.

“Decision day is looming. The government have said from 2026, if your oil boiler breaks down, it cannot be replaced by a new oil boiler. We know many Conservative politicians share our concerns, but their Ministers just aren’t listening. They may need voters in the upcoming local elections to give their judgement on the policy. It might be way they avoid the huge cash penalty coming their way soon.”