As winter approaches, we think more about how to save money on our heating costs. March 2018 research by Eurostat found that 64.7% of energy used in UK homes is for heating. This article looks at ways to cut heating bills with information about:
- Which is cheaper – gas or electricity
- Financial help with converting from electric-powered heating to gas
- Alternative solutions if there’s no gas mains nearby
- Converting to renewable energy sources
Many articles have been written about how to make savings by home insulation, or how to change your family’s habits and energy use to reduce bills. However, much less has been written about your choice of energy. In this article, we look at which form of energy is cheaper: gas or electricity? We then look at ways to switch the energy your home uses to cut bills. Is there any financial assistance available to help pay for the upfront costs? Finally, we consider the growing use of renewable energy sources, and how householders can take advantage of the Renewable Heat Incentive scheme to make further savings.
Which is cheaper – Gas or electricity?
The average cost of one unit of mains gas is 4p per kWh compared to 15p/kWh for electricity. Using the Economy 7 tariff requires home owners to use 40% of the electricity at night to make it worthwhile. This means that on average gas is nearly 4 times cheaper than electricity. This cheaper price is slightly offset by the fact that electric radiators are 100% fuel efficient while even brand new gas boilers manage a lower energy efficiency rate of 90%.
Gas heating also requires more money for maintenance and regular checks. Even allowing for these additional costs, gas still comes ahead for those who wish to save money on their winter fuel bills.
Converting from electric-powered heating to gas
The price of converting to gas heating depends on a number of factors. This includes the distance from your home to the gas mains, what is located in the space between and the energy provider’s profit margins. If your home is 23 metres or less from the gas mains, the average price is around £1,000. For many households, this upfront cost is too pricey even though they would recoup the costs over the years with lower heating bills.
There is financial help available, however, under the Economy Company Obligation (ECO) Scheme. Vulnerable consumers are eligible for help with the costs of making improvements to their household fuel efficiency or assistance with making a new connection. This isn’t a grant, and provision of this Affordable Warmth Obligation varies from area to area. To be eligible, householders have to be recipients of certain income-related benefits, be over 70, spend over 10% of their net income on heating and/or live in a deprived area.
Alternative solutions if there’s no gas mains nearby
If the gas mains is too far from your home, making the connection would be too expensive to make it economically viable. In this case, what can home owners do? With a mains gas connection out of the question, there are other alternatives to using electricity for your heating needs. Heating systems run on oil are also cheaper than electric power, costing an average of 6p/kWh. Using LPG (Liquefied Petroleum Gas) is more expensive at 7.6p/kWh, but it’s still half the price of electricity. The main downside of both these energy forms is that they require room in the garden or yard for a storage tank. However, it can be semi-submerged to make it less of an eyesore.
Vulnerable consumers are eligible for help with the costs of making improvements to their household fuel efficiency or assistance with making a new connection.
Buying heaters powered by bottled gas, such as butane and propane, is the least cost-effective means of heating your home. The cost depends on the size of the gas canister, but it works out on average at 14p-31.6p/kWh.
Converting to renewable energy sources
For homeowners who convert to renewable energy sources for their heating needs by installing a ground/water source heat pump or a biomass boiler, help is available under the Renewable Heat Incentive (RHI) scheme. This is part of the government’s commitment to have 15% of the UK’s energy needs produced by renewable means by 2020.
Although householders have to pay the upfront costs for the installation, they’re repaid quarterly for 7 years. These payments are sufficient to cover a large proportion of the initial costs, if not the entire amount. Another benefit of converting to renewable energy sources is that they are cheaper than electricity. For example, a heat pump works out at about 4p/kWh which is the same price as mains gas.
Applicants for the RHI scheme must apply within 12 months of the installation, and they’re locked into a tariff when they sign up. This tariff is reviewed every 1st April, but it is index-linked to inflation so will increase slightly. Payments aren’t metered but are estimated according to the heating demands of the property.
The eligibility criteria for the RHI scheme include the possession of a recent EPC (Energy Performance Certificate) which has been issued within the last 48 months, and the property mustn’t be a new-build. Engineers carrying out the installation must be accredited by the Microgeneration Certification Scheme (MCS) too. Applications can be made via the ‘My RHI Portal’ on the Ofgem website.
Conclusion – Slashing winter fuel bills
Although electric power is undoubtedly necessary for lighting and domestic appliances, it can be the most costly option for your home’s heating needs. There are alternatives, however. Connecting to the gas mains, using oil or LPG or switching to renewable energy are all more cost-effective options. Although the upfront costs might be expensive, there are schemes to assist homeowners with their installation. Households will also recoup the initial cost from cheaper energy bills.