Households that rely on heating oil or liquefied petroleum gas will receive increased financial support as the government raises grants designed to help replace fossil fuel boilers with electric heat pumps.
Under changes to the Boiler Upgrade Scheme, households in England and Wales that use heating oil or LPG will now be able to access up to £9,000 towards installation costs, up from the previous £7,500. The higher level of support will help accelerate the shift to low-carbon heating, particularly in rural areas where oil boilers are more common and alternatives have been slower to adopt.
The decision comes amid sharp rises in heating oil prices, which doubled between February and March following global market disruption linked to the Iran war. Unlike gas, heating oil is not covered by the Ofgem price cap, leaving around three million households more exposed to price volatility.
The government has already allocated £53 million in targeted assistance for heating oil users identified as most vulnerable to price shocks.
Ofgem regulates the energy price cap that protects most gas-heated homes, but campaigners say those relying on oil and LPG remain at a structural disadvantage.
End Fuel Poverty Coalition co-ordinator Simon Francis says support for upgrading systems is welcome, though many households may still struggle with remaining installation costs:
“Heating oil and LPG customers have been among the hardest hit by the current crisis. The three million households relying on these fuels sit outside the energy price cap and have no equivalent protection when global prices spike. These households are disproportionately in rural areas, have lower incomes, and live in older, harder-to-upgrade properties.
“Therefore, the expansion of this scheme must be accompanied by specialist local advice for households, stronger consumer protections during the works, and targeted additional support for those who cannot meet the shortfall.”
An air source heat pump typically costs around £11,000 to install, depending on property type and required upgrades such as radiators or insulation improvements, meaning even with the increased grant a financial gap can remain.
Alongside the heating support changes, wider reforms to the UK energy market are being developed. Energy Secretary Ed Miliband has set out plans to reduce the influence of volatile gas prices on electricity bills, aiming to make costs more stable over time.
Heat Pump Association UK chief executive Charlotte Lee:
“The Boiler Upgrade Scheme plays a vital role in supporting households and small businesses to adopt heat pumps. Many who rely on heating oil have faced significant price uncertainty in recent months and lack the protection of the energy price cap. The £1,500 uplift for oil users will make the transition to heat pumps more affordable, helping to shield families and small businesses from volatile fossil fuel costs in the years ahead.”
Sachin Vibhute, technical consultant at LG, comments:
“Ed Miliband is putting the spotlight on renewables. This is more than a knee jerk reaction to geopolitics – this is a bold commitment to accelerating the decarbonisation of British homes.Renewable energy sources have been growing consistently over the last three years, but recent events have highlighted British homeowner’s willingness to adopt them. Pricing instability has been a huge motivator for this and the government opening the conversation on delinking gas and electricity prices is a significant step towards more stable, affordable and independent electricity.
“To drive momentum forward however, it’s important to remember the critical infrastructure needed – including the expansion of skills such as industry-led academies and upskilling programs. Only with the people and skills in place to roll out these technologies, can we deliver on the government’s ambitions.”
