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Home & garden.

Updated: 1 Jul 2021

Oil central heating

We explain what heating oil is, how it heats your home, the pros and cons of an oil heating system, and how to get the best price for heating oil.
Sarah Ingrams
Domestic oil tank 451079

Homes that have oil central heating aren't connected to the main gas grid. If you live in one of the 1.1 million households in the UK that have oil heating, then read on to find out about costs and how to save money, plus alternatives to heating oil.

Oil central heating systems

Heating oil is normally used in a ‘wet’ heating system, where an oil-fired boiler heats water, then provides central heating via radiators and hot water to the taps in your home.

The main difference between mains gas and heating oil is that heating oil is delivered by road and stored in a tank, which you may have to buy or rent from your supplier. You can find out more in our full guide to heating oil

Heat-only and combination condensing oil-fired boiler types are both available. Most oil-fired combination boilers have an internal hot water store to supply domestic hot water, rather than the instantaneous heating more common in gas combi boilers.

Is your oil boiler from a reliable brand? We reveal the best oil boiler brands.

Annual cost of heating oil

The average annual cost is £830* for both heating and hot water using heating oil in the UK, when consuming around 17,000 kWh's worth per year. 

However, this cost is just a rough guide, as there are a number of factors that affect energy bills. These include the size and age of your home, what insulation you have installed, the efficiency of your hot water and heating system, and where you live in the UK.

Also, heating oil prices can change. For example, the cost per litre of kerosene heating oil was:

  • 43p in January 2017
  • 48p in January 2018
  • 52p in January 2019
  • 51p in January 2020

To find out more about price fluctuations throughout the year, see getting the best price for heating oil.

*(Calculated using the average price of kerosene across the UK in January 2020. Note that oil prices tend to be a higher in winter months. Sourced from Sutherland Tables, which collects domestic fuel price data. The cost per kWh in pence (4.88) was multiplied by the kWh a high user consumes on average in a year [17,000 kWh] for hot water and heating, as calculated by Ofgem.)

Want to cut your energy bills? Use our free, independent switching service, Which Switch?, to find the cheapest electricity deal.

Pros of oil central heating

Oil is a highly efficient fuel, so you get a good return on every unit of energy. But modern condensing boilers, which use hot flue gases that are wasted in a standard boiler, are now 90% or more efficient. Replacing a standard oil boiler with a highly efficient modern condensing boiler is relatively straightforward. 

When the price of heating oil is lower you can stock up in advance, unlike piped gas.

Cons of oil central heating

The price of heating oil can fluctuate, with sudden spikes caused by surges in demand, weather conditions and political unrest. 

As oil is delivered by road, there is a possibility you could run out while you wait for your next delivery, especially in bad winter weather conditions. However, systems that monitor the amount of oil in your tank and automatically notify your supplier can help you to avoid this problem, if you opt for this service. There are other things you can do to get the best heating oil price. 

Installing an oil central-heating system from scratch can be expensive and disruptive. The heating oil tank can also be unsightly (although this can be resolved by going for an underground tank) and needs servicing annually.

Most condensing oil-fired boilers are floor-standing, so you may have problems trying to find a wall-mounted model. They also need to be plumbed in to allow acidic condensate liquid to drain away.

Oil boilers generally limit the hot-water flow rate to ensure the water is as hot as it should be. This means the hot-water flow rate is lower than it would be with a gas combi or hot-water cylinder system, and the temperature will decline as more water is used.

Oil is a fossil fuel and produces carbon dioxide when it’s burned, and therefore can’t be considered a clean source of energy. The government plans to phase out high-carbon fossil fuel heating systems, such as oil boilers, during the 2020s. Find out more below.

Is the government phasing-out oil central heating?

The government’s 2018 Clean Growth Strategy stated that it plans to ‘phase out the installation of high carbon fossil fuel heating in new and existing homes currently off the gas grid’.

New homes will have to be built with low-carbon heating by 2025, but homes with existing oil heating can continue to use it. The government hasn’t published specific plans about existing homes yet.

The Federation of Petroleum Suppliers, the trade body for the heating oil distribution industry, thinks that a renewable, low-carbon liquid fuel or bio-fuel could be introduced as a solution for off-grid homes. It says that current oil heating systems would work with this fuel and help decarbonise off-grid heating.

Heating oil alternatives

To reduce your home's carbon footprint, you could consider installing a renewable heating system, such as water-heating solar thermal panels or a heat pump

Not only will you be able to generate your own heat, but a scheme called the Renewable Heat Incentive will pay you for doing so.