The Cheapest Way to Heat a UK Home in 2026: Gas, Oil, Electric and Heat Pumps Compared

Every winter, the same question does the rounds in UK homes: is it cheaper to run a gas boiler, an oil boiler, an LPG boiler, a heat pump, or plain electric heating? The honest answer is that it depends on the price of gas relative to electricity where you live, the tariff you’re on, and how efficient your heating system actually is at turning fuel into warmth. Get those three things right and the comparison is straightforward. Skip any one of them - as most quick online comparisons do - and you’ll draw the wrong conclusion, sometimes by a wide margin.

This guide walks through the real, current figures for 2026 - Ofgem’s energy price cap, Energy Saving Trust efficiency data, and the heat-pump-specific tariffs that are changing the maths for anyone with, or considering, an air source heat pump. Every figure below is sourced and dated, with honest ranges rather than a single flattering number, because the true answer to “what’s cheapest” genuinely varies by property, tariff and time of year.

Why cost-per-kWh-of-fuel is the wrong comparison

The single biggest mistake in any “gas vs electric vs heat pump” comparison is comparing the price of the fuel rather than the price of the heat it actually delivers. A unit of mains gas is much cheaper than a unit of electricity - but a gas boiler wastes some of that gas as heat that goes straight up the flue, while a heat pump multiplies each unit of electricity into several units of usable warmth. Compare the wrong numbers and gas looks unbeatable. Compare the right ones and the picture changes considerably.

Two figures matter for every heating system:

Divide the fuel price by the efficiency and you get the number that actually matters: cost per kWh of heat delivered. That’s the only fair way to compare a gas boiler against a heat pump, because the two technologies convert fuel into heat in completely different ways. A boiler burns fuel and loses a slice of it; a heat pump moves ambient heat using electricity as the “lever,” and can move more energy than it consumes. Comparing raw fuel prices alone ignores that entirely.

The 2026 price cap: gas, electricity and the ratio between them

Ofgem’s energy price cap for the period 1 July to 30 September 2026 sets the unit rates that most UK households on a standard variable direct debit tariff pay:

That puts electricity at roughly 3.6 times the price of gas, per unit bought, for the average household on a standard tariff. This ratio is the single most important number in the entire heat-pump-vs-gas debate, because it’s the exact multiple a heat pump’s efficiency has to beat before it becomes cheaper to run than gas. Standing charges matter too - they’re a fixed daily cost regardless of how much you use, so a home that keeps a gas connection purely for cooking while heating with electricity is paying two standing charges rather than one, which is worth factoring into any switch.

A modern condensing gas boiler converts roughly 90% of the gas it burns into usable heat, according to Energy Saving Trust. So the real cost of gas-delivered heat works out at approximately:

7.33p ÷ 0.90 = around 8.1p per kWh of heat delivered

For a heat pump to match or beat that, its efficiency (measured as Coefficient of Performance, or CoP, and averaged over a year as Seasonal Performance Factor, SPF) needs to be high enough to offset the 3.6x price gap between electricity and gas. That’s the crux of the whole comparison, and it’s exactly why Energy Saving Trust’s own guidance is refreshingly cautious rather than promotional: it notes that “if you have a newer gas or oil boiler, heat pumps are likely to be slightly more expensive to run” on a standard electricity tariff, purely because of how the current unit prices sit relative to each other. It’s an honest point, and one worth taking seriously before assuming a heat pump is automatically the cheaper choice.

Oil and LPG: the off-grid picture, and why it’s more volatile

Around 1.5 million UK homes, mostly rural and off the mains gas grid, heat with oil or LPG instead of mains gas. Both fuels are delivered and stored on-site rather than piped in, and both come with running costs that move more sharply, and more unpredictably, than the Ofgem-capped price of mains gas, since there’s no regulatory cap on what a delivery of heating oil or LPG can cost on any given week.

Heating oil (kerosene) is priced per litre and bought in bulk deliveries, so the household bears the full brunt of wholesale price swings. Industry price-tracking shows just how much that price can move within a single year: UK heating oil averaged around 132p per litre at its April 2026 peak, fell to roughly 83p per litre in June, and opened July 2026 at around 77p per litre - a swing of more than 40% in under three months. Kerosene contains around 10.35 kWh of energy per litre, so at July’s price that’s roughly 7.4p per kWh of fuel; at April’s peak it was closer to 12.75p per kWh of fuel. Run that through a modern oil condensing boiler’s efficiency (broadly comparable to gas, at around 90%) and you get a cost of heat delivered that ranges from about 8.2p per kWh at July’s price to around 14.2p per kWh at April’s peak - all within the same calendar year. That volatility, not the average price, is the real story with oil, and it’s the reason oil-heated homes often feel like their bills are a lottery in a way gas-heated homes simply don’t.

LPG is generally the most expensive of the fossil fuel options. Industry pricing guides put bulk domestic LPG at roughly 57p to 90p per litre, which works out at approximately 9p to 13p per kWh of fuel given its energy content - noticeably above both mains gas and heating oil. Fed through a boiler at similar efficiency to gas or oil, that puts LPG heat delivered at roughly 10p to 14.4p per kWh - broadly on par with oil at its more expensive moments, but consistently above mains gas.

The practical takeaway for off-grid homes: oil and LPG boilers aren’t inherently inefficient (a well-maintained modern condensing model performs similarly to a gas boiler), but the fuel price itself is the wildcard, and it’s worth checking current local pricing and shopping around between suppliers rather than relying on a single average figure, given how much oil in particular moved during 2026 alone. A tank top-up bought at the wrong moment in the price cycle can cost nearly double one bought a few months earlier or later.

There’s also a specific reason off-grid homeowners should look closely at heat pumps right now. The Boiler Upgrade Scheme’s usual £7,500 heat pump grant is being topped up to £9,000 specifically for off-gas-grid homes in England and Wales currently heating with oil or LPG, for voucher applications submitted between 21 July 2026 and 31 March 2027. The uplift is aimed at the roughly 200,000 rural households still on oil or LPG, and it directly narrows the up-front cost gap that usually makes switching to a heat pump feel like the bigger financial step for these homes - on top of removing exposure to exactly the kind of oil price volatility described above.

Direct electric heating: almost always the most expensive per unit of heat

Direct or resistive electric heating - plug-in panel heaters, electric radiators, and most storage heaters - converts electricity into heat at close to 100% efficiency. Every unit of electricity you buy becomes a unit of heat in the room, with virtually no losses. That sounds efficient, and technically it is, but it’s largely irrelevant to the cost comparison, because there’s no multiplication effect: one unit of electricity in gives you one unit of heat out, at whatever price that electricity was bought.

At the standard variable rate of 26.11p per kWh, that means direct electric heating costs roughly 26.11p per kWh of heat delivered - more than three times the cost of heat from a gas boiler, and around double even the more expensive end of oil or LPG. Some homes on storage heaters use an Economy 7-style tariff with a cheaper overnight rate, which softens this somewhat if the heat can be stored overnight and released through the day, but daytime top-up heating on the standard rate still carries the full 26.11p/kWh cost, and older storage heaters lose a fair amount of that stored heat before it’s needed anyway. Of every heating technology covered here, direct electric resistive heating is consistently the most expensive to run per unit of warmth delivered, which is exactly why homes relying on it are usually the best candidates for a switch to either a heat pump or a mains gas connection where one is available.

Heat pumps: where efficiency and tariff both do the work

A heat pump doesn’t generate heat by burning fuel - it moves heat from the outside air (or ground, for ground source systems) into the home, using electricity to run a compressor. That’s why it can deliver more energy as heat than it consumes as electricity: Energy Saving Trust describes this as getting “three to four times as much heat” out for every unit of electricity in, expressed as a Coefficient of Performance (CoP) of roughly 3.0 to 4.0, or 300-400% efficiency. The Seasonal Performance Factor (SPF) is the same idea averaged across a full year, including colder days when a heat pump works harder and its efficiency dips.

Run the numbers on a standard variable electricity tariff at 26.11p per kWh:

Compare that with the roughly 8.1p per kWh for gas heat and you can see why the answer is genuinely close, and tariff- and system-dependent, rather than a clear win either way. A well-installed heat pump running at a solid SCOP of 3.5-4 in a well-insulated home can beat mains gas on cost per kWh of heat. A poorly-sized or poorly-installed heat pump limping along at a CoP closer to 2.5 in a leaky, under-insulated home will lose to gas every time. Installation quality and the fabric of the building it’s heating matter every bit as much as the technology itself - a heat pump has to work harder, and less efficiently, to push heat into a home that’s losing it quickly through old walls, thin loft insulation or single glazing. That’s a big part of why insulation and glazing upgrades are usually recommended alongside, or before, a heat pump installation rather than as an afterthought.

This is also where the tariff you’re on changes the entire equation. Several suppliers now offer tariffs designed specifically around heat pumps and other electric heating, with time-of-use pricing that’s structured to reward exactly the hours a heat pump would ideally run in. Octopus Energy’s Cosy Octopus tariff, for example, is available to anyone with a heat pump, electric boiler or electric radiators, and splits the day into three “super cheap” windows - currently around 4-7am, 1-4pm and 10pm-midnight - priced at roughly 50% below the standard day rate, alongside a single evening peak window (around 4-7pm) priced at roughly 50% above it. Other suppliers, including British Gas and EDF, run similar heat-pump-specific or smart time-of-use tariffs with their own cheap and peak windows, so it’s worth comparing more than one before assuming the standard variable rate is what a heat pump owner would actually pay.

The effect of a tariff like this is straightforward: a heat pump (or a smart heating controller) that can shift some of its running hours into those cheaper windows - pre-heating a well-insulated home during the cheap afternoon slot before the evening peak, for instance - pulls its effective electricity price down well below the 26.11p standard rate, and with it the effective cost per kWh of heat. It won’t shift every kWh of demand into the cheap windows, since heating need doesn’t perfectly line up with tariff timing, but even partial alignment moves a heat pump’s real-world running cost meaningfully closer to, or below, gas. This is the detail that most back-of-envelope “heat pumps cost more than gas” comparisons miss entirely: they’re usually built on a standard variable tariff, not the tariffs actually designed for heat pump owners.

It’s also worth remembering that a heat pump is a bigger upfront investment than swapping like-for-like boilers - Energy Saving Trust puts a typical air source heat pump installation at around £11,000, and ground source systems from roughly £29,000 up to £57,000 where a borehole is needed. That’s precisely why heat pump installations are usually assessed alongside the available grant funding and the specific tariff a household plans to move onto, rather than on running costs in isolation.

So what’s actually cheapest in 2026?

Pulling all of the above together, here’s roughly where each system sits on cost per kWh of heat delivered, using the current 2026 Ofgem price cap and Energy Saving Trust efficiency figures:

A few honest conclusions follow from that. Mains gas remains a genuinely low-cost way to heat a home on a like-for-like fuel basis, and homes on it shouldn’t assume switching automatically saves money - Energy Saving Trust’s own caution about heat pumps being “slightly more expensive to run” than a newer gas or oil boiler, on a standard tariff, is a fair one. Direct electric heating is close to always the most expensive option covered here, and homes relying on panel heaters or old storage heaters are usually the clearest candidates for change. Oil and LPG sit in a volatile middle ground - not fixed like the Ofgem cap, and worth checking against current local prices before assuming either is the lower-cost option for an off-grid home at any given moment. And heat pumps are genuinely competitive with gas on a good installation and a well-insulated home, with the right electricity tariff often being the deciding factor between “roughly the same as gas” and “noticeably cheaper.”

None of this is a fixed answer, because gas, electricity, oil and LPG prices all move, tariffs change, and a heat pump’s real-world efficiency depends heavily on the specific home it’s heating. What doesn’t change is the method: work out the fuel price, divide by the system’s efficiency, and compare cost per kWh of heat - not cost per kWh of fuel. If you want to check where your own home would land, start with your current fuel’s unit price from a recent bill, divide by your system’s efficiency (or a heat pump quote’s quoted CoP/SCOP), and you’ll have a genuinely comparable figure rather than a guess.

If you’re weighing up whether a heat pump makes sense for your own home, the starting point is understanding how your specific property currently performs - its insulation, glazing and existing heating all affect the real-world efficiency you’d actually get, and therefore which side of the gas-vs-heat-pump comparison your particular home would fall on. From there, the funding available - including the Boiler Upgrade Scheme grant covered above - and the right electricity tariff both change the sums considerably.

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