The Most Cost Effective Heating System in UK

Living here in the United Kingdom, we depend heavily on our central heating systems. They have become vital for comfort and quality of life with our chilly weather and cold nights. Heating bills are inevitable, but it pays to have a heating system that brings the most warmth for your money.

As we begin to explore different fuel sources and systems available, we will start with the two most common choices- electricity and gas.

We can compare “like for like” using the cost of an equivalent unit of energy. See below the current rates for each as monitored by UK Power:

Electric 9.9p / KWh

Mains Gas 2.4p / KWh

It’s clear to see gas price per unit is four times cheaper than electric. This is significant but many other factors come into play for choosing the most economical system.
Electricity vs. Gas Efficiency

The first complication is the fact electric radiators are 100% efficient when transferring electrical energy to heat. Gas boilers are only 90% efficient.

So the most efficient heating system is electric. Yet, mains gas provides the most cost effective heating. But what if you don’t have access to the mains gas network?

Heating a House Off the Gas Grid

You may be amongst the 15% of the UK that does not have access to mains gas. Thankfully, you can still use a conventional gas heating system and then use LPG as a fuel source.

This mixture of butane and propane is compressed into liquid form and stored in tanks or bottles. This allows for large amounts of fuel to be stored between refills. Then you will have to arrange for an LPG tanker to come and refill your tank as needed.

LPG is safe to use, provides similar heating characteristics to mains gas and is a reliable source so long as you receive deliveries in time.

Heating oil is another choice that is considered instead of LPG. The cost for this fuel is slightly cheaper but the installation process is more specialised and expensive. The system also requires far more maintenance to continue operating efficiently.

Now let’s compare the price per unit of energy for these two against electricity:

Heating oil 6p / kWh

LPG 7.6p / kWh

Electricity 9.9p / kWh

Both heating oil and LPG show lower costs than flat rate electricity. But if you’re looking for the cheapest heating system you should consider Economy 7.

This electricity tariff sets a low night rate at 6p / kWh then an increased day rate at 16p / kHh. If you use an electric storage heater system you can make great use of this window to save electricity costs. It’s enough to match both LPG and heating oil without the need to schedule fuel deliveries.

But Economy 7 may not be suitable for everyone. You will only make decent savings by shifting 40%+ of your electricity usage to night hours. Plus any appliances run during the day will cost you dearly.

Is Bottled Gas An Option?

Butane and propane are the most common choices for bottled gas, usually for small portable stoves. They come in a variety of sizes, even larger 47Kg bottles. So could it be better to run your heating with bottled gas instead of electricity?

Our calculations take 1 kWh as equal to 3.6 megajoules. Then energy released from propane combustion as 46.44 megajoules per Kg.

It’s £25 to refill a 6kg gas cylinder that equates to 77 kWh
It’s £33 to refill a 13kg gas cylinder that equates to 168 kWh
It’s £85 to refill a 47kg gas cylinder that equates to 606 kWh

All in all, you can expect to pay 14-32p / kWh

So bottled gas is not a cost effective way to heat your home, that’s before a 10% reduction in efficiency over electricity. Larger refills are available and may allow you to approach similar costs to electricity, but it’s still cumbersome and not advised.
Can I Use Renewable Energy Sources?

As we increasingly seek out sustainable ways to live, renewable energy is gaining more support. The renewable heat incentive offers subsidy payments for using specific economical heating systems.

Biomass fuelled systems will receive subsidy payments for each unit of water boiled. The cost of installation is large, around £14k-£19k, but you can expect to make this back and more over the years.

Heat pump heating systems are also supported by the renewable heat incentive. They use electricity but will turn a single unit of energy into 3.5 units worth of heat! This brings the fuel costs back down to match mains gas. Installation costs for these systems are high at £11k-£15k, but again it will more than pay itself off with subsidies.
Final Breakdown of Heating Costs

Now here are some estimated annual running costs for different heating systems using the UK gathered averages:

Fuel Source Cost per /kWh Average Annual Costs*

Electric 9.9p £2,053 **

Mains Gas 2.4p £609

Heating oil 6p £538

LPG 7.6p £1,125

*Average annual costs for heating and hot water for a medium house, based on 13,500kWh usage.

The use of Economy 7 could save £500+ on annual electricity costs.
So What’s the Best Way of Heating a Home?

For most of us, the cheapest heating system is going to be mains gas fuelled.

If you’re living off the grid, LPG is the most cost effective heating option.

If you take full advantage of Economy 7 electricity tariffs, you may be able to match LPG systems in running costs.

If you’re willing to swallow large installation costs, then reclaim it slowly through subsidies, heat pumps are a great choice. But make sure you home is very well insulated to make the best savings. You could save £475-£2,000 over a conventional electric heating.

Whichever heating system you choose to install, always ensure you employ a qualified professional, both for the installation and for maintenance. Quotatis will find a suitable tradesman for you, if you don’t know anybody local to you.