What’s the Cheapest Way to Heat Your Home?

The Eco Experts

A gas boiler is the cheapest way to heat your home

But electric combi boilers will take top spot in the next few years

Ground source heat pumps are the most expensive heating system


With energy prices rising to record levels, there’s never been a better time to cut your heating costs.

We’ve analysed the eight main ways of heating your home, and ranked them in order of how much they’ll cost you over the next 10 years.

We’ve explained the cost benefits of each system, to enable you to make the best choice for your home. Check out our methodology for more detail.

woman and child hugging in front of a fireplace

What’s the cheapest way to heat your home?

The cheapest way to heat your home is with a gas boiler, which will cost you £12,880 over 10 years (for a three-bedroom house).

However, with gas becoming increasingly expensive, it’ll soon be worth installing some solar thermal panels on your roof in addition to your gas boiler, to cut your heating bill in half.

Electric combi boilers, air source heat pumps, and infrared panels will become much more cost-effective over the next decade, so by the time new gas boiler installations are banned in 2035, one of these systems will be your best option.

In contrast, the price of installing ground source heat pumps will have to plummet to make them worth it, while biomass boilers and oil boilers are on the edge of obsolescence.

PositionHeating systemCost after 10 years*
1Gas boiler£12,880
2Solar thermal panels£14,240
3Oil boiler£16,176
4Electric combi boiler£20,330
5Air source heat pump£23,120
6Biomass boiler£32,499
7Infrared heating panels£35,543
8Ground source heat pump£37,120

* Based on the average three-bedroom house

1. Gas boiler

Initial cost for a 3-bedroom houseAnnual running costCost after 10 years
£4,000£888£12,880

A gas boiler is still the cheapest way to heat your home – though that’s set to change soon, with the cost of gas rising more than twice as quickly as electricity.

Ofgem’s last energy price cap rise in April saw gas become 75% more expensive for the average household, up from 4p to 7p per kWh.

Electricity also became more expensive, rising from 21p to 28p – but that 33% increase is much less worrying than the sharp jump in gas’s price.

If this trend continues, gas boilers will soon lose their top spot in our rankings – and by 2035, you won’t be legally able to install a new gas boiler anyway.

It’s worth looking instead at the up-and-coming contender that finished second this time.

2. Solar thermal panels

Initial cost for a 3-bedroom houseAnnual running costCost after 10 years
£9,800£444£14,240

With gas and electricity prices hitting new highs all the time, the future is renewable.

Solar thermal panels cost a relatively affordable £4,000 on their own, but like most heating systems, they also require a hot water cylinder, which typically costs £1,800.

And unlike most heating systems, they also need a boiler, increasing the initial cost by another £4,000.

This is because, like solar panels, thermal panels won’t absorb enough sunlight during the colder months to meet all your water heating needs.

However, across the year, they’ll provide around 50% of your heating for free – and if you already have a boiler, this is the cheapest way to heat your home.

solar thermal panels

3. Oil boiler

Initial cost for a 3-bedroom houseAnnual running costCost after 10 years
£5,300£1,088£16,176

You’ll usually need to pay £3,500 for an oil boiler and hot water cylinder. It’s possible to get an oil combi boiler, but they’re less common, and worse at serving a typical three-bedroom house.

However, despite its relatively affordable status at the moment, we don’t recommend getting an oil boiler.

Oil has become three times more expensive over the past 12 months, according to the Office for National Statistics.

We haven’t included price projections for different fuels in this article, as the energy market is difficult to definitively predict – but the price of oil is extremely likely to continue rising rapidly, as the UK moves away from fossil fuels.

Getting an oil boiler is therefore likely to become the most expensive way to heat your home in the next couple of years.

4. Electric combi boiler

Initial cost for a 3-bedroom houseAnnual running costCost after 10 years
£3,350£1,698£20,330

As households move away from gas and oil boilers – both because of government intervention and to avoid expensive bills – electric combi boilers will become increasingly popular.

Just like gas combi boilers, they can supply hot water and heat instantaneously, so you won’t notice a difference in your routine.

You can also save tonnes of CO2 by going electric.

197,000 homes in the UK already have electric boilers – and we expect this figure to rise rapidly in the coming years.

5. Air source heat pump

Initial cost for a 3-bedroom houseAnnual running costCost after 10 years
£11,800£1,132£23,120

Heat pumps are three times more efficient than any other kind of boiler, meaning they require only one third of the fuel that other systems use.

However, the high initial cost and the fact that electricity is still four times more expensive than gas makes it less attractive than other systems – for now.

Fortunately, the Boiler Upgrade Scheme can solve one of those problems by reducing the initial cost by £5,000. That would push this system up a place in our rankings.

And with the price of electricity sure to fall over the next couple of years, an air source heat pump is a better investment than a new gas boiler.

6. Biomass boiler

Initial cost for a 3-bedroom houseAnnual running costCost after 10 years
£17,800£1,470£32,499

Biomass boilers are too expensive, unless you’re willing to find and chop up between two and three tonnes of wood yourself, every year.

Even then, a biomass boiler would cost more over a decade than solar thermal panels or a gas boiler.

You can reduce the initial cost of purchase and installation by using the Boiler Upgrade Scheme to get £6,000 off, but you’re better off using the scheme to get an air source heat pump.

Biomass machines aren’t even climate-friendly. They emit 0.7 tonnes of greenhouse gases per year, while also reducing the number of CO2-capturing trees in the world.

7. Infrared heating panels

Initial cost for a 3-bedroom houseAnnual running costCost after 10 years
£7,800£2,774£35,543

Based on your ceiling or walls, these big, electricity-powered panels use harmless radiation to efficiently heat objects, instead of the air around them.

At just £851 per year, infrared panels’ running costs are the lowest in this list – or they would be, if you didn’t also have to buy a direct hot water cylinder.

Infrared panels don’t heat your water, meaning you’ll need to pay to run this electric water tank, which costs an extra £1,923 per year.

Only 33,000 UK homes are currently heated by infrared panels – a figure which will likely increase as people move away from gas, but which will only truly take off when the cost of the panels and electricity falls.

8. Ground source heat pump

Initial cost for a 3-bedroom houseAnnual running costCost after 10 years
£25,800£1,132£37,120

The initial cost of a ground source heat pump makes it completely unaffordable for most households at the moment.

£25,800 is 81% of the average UK salary – and that’s if your garden has enough space for you to fit looped pipes. If not, you’ll pay £50,800 for a system that includes boreholes.

The Boiler Upgrade Scheme can help you reduce this price by £6,000, but that’s not nearly enough.

The price of ground source heat pumps should fall as heat pumps generally become more popular, but it’s not worth buying one at the moment.

Methodology

To put together this list, our team of four researchers spent around 20 hours researching the costs incurred by these eight heating methods.

We found the average purchase and installation cost of each system – including a hot water cylinder, if necessary – and then worked out each of their annual running costs, factoring in the current prices of electricity, gas, and oil.

We decided to provide the cost of each system after 10 years, because whichever system you choose, it’s a significant investment – and you should know that it’s going to be worth it.

Summary

A gas boiler is still your most cost-effective choice – but that won’t be the case in a few years, as the price of gas increases faster than the cost of electricity.

And with the gas boiler installation ban coming in 2035, it’s worth making the switch to an electric heating system as soon as it makes financial sense to you and your household.

The cost of heat pumps and electric boilers is set to fall quickly over the next couple of years, meaning you should start looking now at which one suits your home best.

josh jackman
Josh Jackman Senior Writer

Josh has written about eco-friendly home improvements and climate change for the past three years. His work has featured on the front page of the Financial Times; he’s been interviewed by BBC One; and he was the resident expert in BT’s smart home tech initiative.

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