Many people in England, Wales, and the Northeastern United States still use oil for heating their homes, mostly due to the lack of infrastructure in those regions.

But the fuels required for boilers to run can be expensive and vulnerable to fluctuating prices. Switching to an electric heat pump can reduce bills in the long term, but the upfront costs can be high. 

For homeowners living in the U.K., a policy change that took effect on July 21, 2026, could shift that calculation. Eligible off-grid households can get £9,000 ($12,000) toward a heat pump through the Boiler Upgrade Scheme, as The Independent observed.

What's happening?

Because most of the roughly 1.7 million homes in England and Wales heated by oil or LPG are in rural areas away from the gas grid, they are exposed to market volatility when it comes time to refill their tanks. Heating oil has climbed from about 48p to £1.30 per liter, or roughly $1.82 to $4.92 per gallon.

Replacing an oil boiler with another oil boiler generally costs about £2,500 to £5,500, and that route does not come with grant funding. By contrast, air source heat pumps usually cost around £8,000 to £14,000 before incentives. 

However, for eligible off-grid homes, the new £9,000 grant and zero VAT through March 2027 can reduce a typical three- or four-bedroom installation to about £500 to £5,000.

Heat pumps are significantly more energy-efficient than traditional HVAC systems because they move heat rather than generate it, and they can provide both heating and cooling. In the United States, homeowners can compare options through EnergySage's Heat Pump Marketplace.

For households not ready for a whole-home system, Merino offers single-room, ultra-efficient HVAC systems at a lower price point as a targeted heating and cooling option that can be installed in under an hour.

Why does it matter?

For an off-grid home needing about 17,700 kilowatt-hours of heat each year, estimated annual costs for heating and hot water were about £1,520 when oil was roughly 80p per liter (£3.03 per gallon), about £1,843 at roughly 97p per liter (£3.67 per gallon), and about £2,508 when prices hit the spring 2026 high of roughly 132p per litee (£5.00 per gallon). The comparable estimate for a heat pump was around £1,320.

That means a heat pump can still be the cheaper option even when oil prices are low, and the advantage only grows if oil prices climb again. In the U.K., it may also provide more predictable costs, since electricity prices operate within Ofgem's capped system while oil prices do not.

A home's insulation and the size of its radiators can strongly affect performance. As Phil Steele, future technologies evangelist at Octopus Energy, explained, "If you've got single-panel radiators, putting in double-panel ones instead means aesthetically nothing looks very different, but you've increased the heat output of that radiator."

What can I do?

Before moving ahead, an MCS-certified installer can assess heat loss, insulation, and whether radiator upgrades are necessary. The £9,000 increase applies only to new applications submitted from July 21, 2026, is scheduled to last only until 31 March 2027, and is subject to a fixed annual voucher budget.

Householders in the U.S. can use EnergySage's Heat Pump Marketplace to compare heat pump options, and homeowners interested in cutting electric bills further can use EnergySage, which offers a free quotes comparison tool for solar panels. With EnergySage's help, the average person can get nearly $10,000 in incentives for solar purchases and installations.

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