Wood Pellets vs Gas: Why Efficiency Now Beats Price
With oil above 102p/litre and gas at 6p/kWh, switching heating method could save hundreds. Here's how to choose.
The maths has shifted. Oil is tracking at 102.2p per litre, and while mains gas sits at 6.04p/kWh under the current Ofgem cap, the long-term outlook is uncertain. For homeowners still burning heating oil or relying solely on gas, the question isn't just about today's bills—it's about locking in efficiency before energy costs rise again.
Why Efficiency Matters More Than Ever
With electricity at 24.5p/kWh, direct electric heating is expensive. But wood pellets at 7.2p/kWh represent a genuinely competitive alternative, especially when paired with a modern pellet boiler or stove. The key is understanding efficiency ratings:
- Oil boilers: typically 85-90% efficient (older models worse)
- Gas boilers: typically 90-95% efficient
- Pellet boilers: typically 85-95% efficient, carbon-neutral
The gap is narrower than many assume. But pellets offer something oil and gas don't: stability against volatile global markets. Oil prices are forecast to remain above $100 for the rest of 2026, and international supply chains will keep affecting both oil and gas costs.
Who Should Switch?
Oil users should act first. If you're on heating oil, you're vulnerable to crude price swings and face potential supply challenges. A pellet system costs £5,000–£8,000 installed but pays back over 8–10 years for high-consumption households.
Gas users have breathing room. Mains gas remains cheaper per kWh than oil and more convenient than pellets. The recent electricity shakeup suggests regulators may eventually shift costs, but gas remains the sensible middle ground for most UK homes.
Electricity-dependent homes need urgent action. At 24.5p/kWh, direct electric heating is unsustainable. If you can't install gas (off-grid properties), pellets or air-source heat pumps are your only economical routes.
Your First Step
Get a heating audit done now. Your boiler's efficiency rating is in your EPC (Energy Performance Certificate). If it's below 88%, you're losing money. Compare upgrade costs against projected fuel savings using your current usage and these 2026 prices:
Multiply your annual kWh by the price per kWh, then model the same volume at a more efficient system's typical consumption (-15% to -25%).
The Regulation Wild Card
Planned shakeups to energy pricing could reshape bills within months. Homeowners who've already upgraded to efficient systems—whether gas, pellets, or hybrid—will weather changes better than those locked into old boilers and volatile fuels.
Action this week: Compare heating oil and wood pellets costs for your postcode. Run the numbers against your current bill. If your boiler is over 12 years old, a replacement typically pays for itself before your next rate shock arrives.