Wood Pellets Hit 7.2p/kWh: The Cheapest Heat Option Right Now

Wood pellets are winning the price war. At just 7.2p/kWh, they undercut mains gas by 16% and electricity by 71%. For homeowners burning through heating oil at 89.4p/litre, the savings are even starker. But before you rush to install a biomass boiler, understand what the numbers really mean—and whether a switch is practical for your property.

The Price Breakdown

Here's how today's heating fuels stack up:

• Wood pellets: 7.2p/kWh ✓ Cheapest
• Mains gas: 6.04p/kWh — Second-cheapest, but most homes already use it
• Electricity: 24.5p/kWh — Three times pricier than wood
• Heating oil: 89.4p/litre — Works out to roughly 26p/kWh equivalent

For a typical detached house needing 12,000 kWh annually, switching from gas to wood pellets could save £480–£600 per year. For oil users, savings could exceed £2,200.

The Catch: Upfront Costs

Pellet boilers aren't cheap. Installation typically costs £8,000–£15,000, and you'll need proper storage facilities (a weatherproof shed or purpose-built hopper). The government's Boiler Upgrade Scheme currently offers £5,000 grants for biomass systems, but this scheme may change as turbines turn toward sustainable product innovation across the sector.

Payback periods usually run 10–15 years, making pellets most attractive if you're:

• Already planning a boiler replacement
• In a rural area without mains gas
• Committed to staying in your home long-term
• Wanting to reduce carbon emissions

Storage and Maintenance Matter

Unlike gas (delivered through pipes) or electricity (from the grid), pellets require space and planning:

• Bulk delivery is cheaper than smaller orders
• You'll need dry storage to maintain fuel quality
• Annual servicing is recommended
• Ash removal is a regular chore

What Should You Do Now?

If you heat with oil: Compare the £5,000 grant against your remaining boiler lifespan. If replacement is due within two years, biomass could be worthwhile.

If you're on mains gas: The savings margin is narrower. Unless you value environmental benefits highly or expect gas prices to spike, gas remains reliable and convenient.

Get quotes: Contact installers accredited by the Microgeneration Certification Scheme (MCS) to understand true installed costs for your property.

You can also compare current offerings across fuels at /compare/wood, /compare/mains-gas, /compare/heating-oil, and /compare/electricity to see live supplier rates.

The Bigger Picture

Wood pellet costs have stabilized after volatility in 2024–2025, making long-term budgeting more reliable. As the UK shifts toward heat pumps and renewable heating, pellets remain a proven interim option—especially for homes unsuitable for electric heat sources.

Bottom line: Wood pellets offer genuine savings, but they're a commitment. Run the numbers for your property before deciding.