Wood Pellets Hit 7.2p/kWh: Is It Time to Switch From Gas?

Wood pellets have just undercut mains gas for the first time in recent memory, sitting at 7.2p/kWh against the Ofgem-capped gas rate of 6.04p/kWh. Before you dismiss this as a narrow margin, consider what's happening beneath the surface: the gap is tightening fast, and for certain homeowners, the switch could mean serious savings.

The Numbers That Matter

At face value, mains gas still wins. But the story changes dramatically when you factor in:

• Boiler efficiency: Modern biomass boilers operate at 85-90% efficiency, versus 90-95% for condensing gas boilers—a small but real difference

• Installation costs: A biomass system costs £8,000–£15,000 versus £2,500–£4,000 for a gas boiler

• Government support: The Boiler Upgrade Scheme still offers £5,000 grants for biomass installations

• Long-term trends: Gas prices are volatile; biomass pricing has stabilized

For a household burning 10,000 kWh annually, switching to wood pellets at current rates would cost roughly £720/year versus £604 for gas. Over 15 years, the gas advantage erodes as installation costs are amortized.

Who Should Actually Consider This?

Biomass makes sense if:

• You're off the mains gas grid (heating oil users especially should look here)
• You have space for a large pellet store (1.5–3 cubic metres)
• You're planning to stay in your home 10+ years
• You can secure a reliable local pellet supplier

It doesn't if:

• You rent (landlord approval needed)
• Your home is terraced or semi-detached (flue placement issues)
• You prefer "set and forget" heating

The Real Winner Right Now

Honestly? Wood pellets are the standout option for off-grid homes. If you're currently on heating oil, you're paying 103.1p/litre—equivalent to roughly 10.3p/kWh. A biomass switch could cut your bills by 30% immediately, grant included.

For those on mains gas, the case is weaker unless prices shift further. But with geopolitical pressure on Russian gas supplies and growing biomass production across Europe, the economics could flip by 2027.

What You Should Do Now

Get three quotes from MCS-certified installers, not one. Costs vary wildly by region and property type. Ask each installer to model your payback period using current pellet prices—don't rely on old assumptions.

If you're committed to gas for now, lock in a competitive rate while the cap holds. Electricity at 24.5p/kWh remains the expensive option for heating, so heat pump economics are improving but still marginal.

The energy market is shifting. Wood pellets at 7.2p/kWh is the first real signal that alternatives are becoming viable—not just green, but genuinely cheaper.