Households off the gas-grid and prices for alternative fuels

Most households in the UK use gas and electricity as their main domestic energy sources. These are discussed in the following House of Commons Library papers:

• Domestic energy prices
• Gas and electricity prices under the Energy Price Guarantee and beyond
• Introduction to the domestic energy market

This paper is about households that use alternative sources of domestic energy, including heating oil, liquefied petroleum gas (LPG), coal, biomass, and renewables.

Who is using alternative sources of domestic energy?

The number and location of households that use alternative sources of domestic energy can be identified using 2021 census data on central heating and Department for Energy and Net Zero (DESNZ) data on households that are off the gas grid.  

Estimates of household’s domestic energy sources by constituency, region and country can be found in the following House of Commons Library dashboards:

• Constituency data: Central heating, 2021 census
• Constituency data: Households off the gas grid

Central heating: Census data

Central heating is a system to heat multiple rooms in a building by circulating heated air or water through pipes to radiators or vents. Single or multiple fuel sources can fuel these systems.

Census 2021 found that 73.8% of households in England and Wales used mains gas, 9.1% used two or more types of central heating, 8.5% used electric heating, 3.5% used oil, 2.5% used other central heating (including renewable, solid fuel, wood and district or communal heat networks), 1.5% had no central heating and 1.0% used tank or bottled gas.

Estimates of households off the gas grid

An estimated 4.4 million households across Great Britain were not connected to the gas grid in 2021. This was 15.1% of domestic properties. Households that do not have access to mains gas, which is the most common way to heat a home in Great Britain, must rely on alternative sources of fuel.

Properties off the gas grid include those in remote rural areas that have no gas grid in the area and some properties in urban areas that are close to the gas grid but not connected, particularly high-rise flats where gas connections present a potential fire risk.

The proportion of households off the gas grid in 2021 was highest in Inner London and the South West (both 24%), East of England (20%), Scotland and Wales (both 19%). It was lowest in the North East (7%) and North West (9%).

Prices of alternative fuels

Average UK heating oil prices jumped after Russia launched its full-scale invasion of Ukraine on 24 February 2022. One daily price series showed prices peaking at almost 160p per litre on 10 March 2022. Mid-month prices peaked at 99p per litre in June 2022, have fallen for much of the time since then and were 62p per litre in December 2023.

Domestic prices for coal increased rapidly for most of 2022. The annual increase to November 2022 at 36% was the largest annual increase on this series which goes back to 1988. Coal prices have since stabilised.

Prices of Liquefied Petroleum Gas (LPG) and wood pellets have increased between September 2021 and December 2023 by 36% and 59% respectively. These increases, and those for domestic coal, were all smaller than those for gas which increased by 85% over the same period.

Prices for alternative fuels are not regulated in the same way as gas and electricity prices. This means they can therefore vary day-to-day and between different local areas to a much greater extent.

In September 2022 the Government calculated that households using heating oil would need a £100 one-off payment in order that on average they would see the same percentage increase in heating costs as customers on gas. It was later doubled to £200, despite falls in the price of oil. This payment was also made to households using other alternative fuels.

At December 2023 prices, heating oil was estimated to be the cheapest way to heat a standard three-bed semi in the UK, followed by mains gas, then  Liquefied Petroleum Gas (LPG). Electric storage heaters were the most expensive. These estimates do not take into account that on average properties which are heated with alternative fuels are larger and less energy efficient than average, so have higher heating needs.

Fuel poverty

Households that use alternative fuels for heating are more likely than other households to be classified as being in fuel poverty. They are also more likely to experience deeper or more extreme levels of fuel poverty. This is the case in the different nations of Great Britain , even though fuel poverty is measured in different England, Scotland and Wales.

One of the main reasons for these higher rate of fuel poverty is the generally lower levels of energy efficiency of properties off the gas grid. The briefing Energy efficiency of UK homes looks at trends and patterns of energy efficiency for the UK housing stock.

Path to Net Zero: Decarbonising off-grid homes

Decarbonisation of heating in homes and other buildings is widely considered as important for achieving the UK’s climate targets of net zero greenhouse gas emissions by 2050.

Households off the gas grid currently use some of the highest-carbon heating fuels, including oil and coal. In 2017, the Government set an ambition in its Clean Growth Strategy to “phase out [during the 2020s] the installation of high carbon forms of fossil fuel heating” in both new and existing businesses and homes that are off the gas grid.

In October 2021 the Government’s Net Zero Strategy: Build Back Greener and Heat and Buildings Strategy set out ambitions to phase out the installation of high-carbon fossil fuel boilers in properties not connected to the gas grid by 2026.

In September 2023 the Prime Minister announced a number of changes to net zero policy including that the phase out date for installing new oil and LPG boilers and new coal heating for off-grid homes would be put back to 2035.