The price of heating oil has fallen 12% since last winter, but it still costs the average off-grid household £1,400 a year, double what a gas-heated home pays on the price cap. That gap is the reason the government just raised heat pump grants for oil-heated homes to £9,000.
As reported by Fuel Oil News, the Boiler Upgrade Scheme now offers £9,000 to households replacing oil boilers with heat pumps, a £1,500 increase on the standard £7,500 grant. The move targets the 1.5 million UK homes not connected to the gas grid, where heating costs are highest and installation is most complex.
Why off-grid homes get a bigger grant
Heat pump installation for an oil-heated property typically costs between £12,000 and £18,000, according to the Energy Saving Trust. That is £3,000–£5,000 more than a gas-to-heat-pump swap, because oil systems often need larger radiators, bigger hot water cylinders, and more insulation work. The old £7,500 grant covered less than half the cost. At £9,000, it covers half to three-quarters, still a stretch, but far more realistic.
Ofgem figures show that fewer than 5,000 oil-to-heat-pump conversions happened under the original scheme. The increase is built to change that. The catch: the grant is a fixed sum, not a percentage. If your installation comes in at £18,000, you still pay £9,000. Households should get three quotes and check whether their property needs a heat-loss survey before applying.
What it means for your EPC rating and bills
An oil-heated home with single glazing and no cavity insulation typically scores an EPC band F or E. Installing a heat pump almost always requires upgrading the building fabric, loft insulation to 270mm, double or triple glazing, draught-proofing. Those upgrades alone can lift a home to band D or C. Add the heat pump itself, and band C becomes achievable, with band B possible for well-insulated properties.
The bill impact is clearer each year. A typical 3-bed semi using 20,000 kWh of oil will pay around £1,400 at current prices. The same home with a heat pump running at a seasonal coefficient of performance (SCOP) of 3.0 will use about 6,700 kWh of electricity. At the current electricity price cap of 24.5p/kWh, that is £1,640, slightly more. But the gap narrows as heat pump efficiency improves (SCOP of 3.5 cuts electricity use to 5,700 kWh, or £1,396) and as electricity prices fall relative to oil. The key: pair the heat pump with a time-of-use tariff like Economy 7 or Octopus Agile to shift consumption to cheaper overnight rates.
Who qualifies, and who doesn’t
Eligibility is straightforward but has hard edges. You must own your home (or have landlord permission). Your property must have a valid Energy Performance Certificate (EPC) with no outstanding recommendations for loft or cavity wall insulation, unless you can prove exemption. The existing oil boiler must be removed and cannot be used as a backup. The installer must be MCS-certified and registered with Ofgem.
The grant is available from 1 November 2024 until 31 March 2027, or until the £1.5 billion fund runs out, whichever comes first. The government has not confirmed a cap on applications per household, so early action is wise. Households in Scotland, Wales, and Northern Ireland should check their own schemes: Scotland’s Home Energy Scotland offers up to £7,500 plus an extra £1,500 for oil-to-heat-pump conversions.
What this misses: the grant does not cover the cost of insulation or radiator upgrades, which are often necessary for a heat pump to work efficiently. The Energy Company Obligation (ECO4) can help low-income households with those costs, but for most people, the £9,000 is only part of the total spend. Budget another £2,000–£5,000 for fabric improvements.
What to do next
Book a heat-loss survey with an MCS-certified installer now, before the November rush. Get at least three quotes and ask each for a breakdown of the heat pump cost, installation, and any fabric upgrades. Check if your property qualifies for ECO4 or local authority grants to cover insulation. Then apply for the Boiler Upgrade Scheme through Ofgem’s portal from 1 November. Do not wait until your oil tank runs dry in January, the best time to plan is before winter.
Frequently Asked Questions
The Boiler Upgrade Scheme now offers £9,000 for households replacing oil boilers with heat pumps, up from £7,500. This increased grant specifically targets the 1.5 million UK homes off the gas grid.
Installation typically costs between £12,000 and £18,000, according to the Energy Saving Trust. The £9,000 grant covers half to three-quarters of the cost, but you still need to pay the remaining balance.
A typical 3-bed semi using oil pays around £1,400 per year, while a heat pump with a SCOP of 3.0 costs about £1,640 at current electricity rates. However, pairing it with a time-of-use tariff like Economy 7 can reduce running costs, and higher efficiency (SCOP of 3.5) brings costs to £1,396.
Your property must have a valid Energy Performance Certificate (EPC) with no outstanding recommendations for loft or cavity wall insulation, unless you can prove exemption. Installing a heat pump typically requires upgrades like loft insulation to 270mm and double glazing, which can lift your EPC from F/E to band C or B.
You must own your home or have landlord permission, have a valid EPC, and remove your existing oil boiler (it cannot be used as backup). The installer must be MCS-certified and registered with Ofgem. The grant is available from 1 N.
