The UK government has today announced a package of policies to protect households from energy price crises. Alongside structural changes aiming to reduce the price of electricity by weakening the link between prices of renewable and gas-generated power, the UK government has committed to “double down” on electrification and clean energy.

Amongst the measures to "help cut bills for families and deliver more clean, homegrown power", the UK government announced an uplift to the Boiler Upgrade Scheme (BUS) grant for households on heating oil and liquefied petroleum gas (LPG). The grant will rise from £7,500 to £9,000 for these homes in England and Wales (rural homes in Scotland can already get a £9,000 subsidy). Why have they targeted this group? What potential running cost savings are on offer? And which parts of the country stand to benefit most?

Heating oil and LPG users have been among the hardest hit by the energy crisis, driven by conflict in the Middle East and impacts to global oil and gas supplies in the Strait of Hormuz. Unlike households connected to the mains gas grid, off-grid households have little protection from price volatility: they cannot benefit from the energy price cap and are exposed directly to global commodity markets through periodic deliveries.

Supporting this group to install heat pumps would give greater long-term certainty over their energy bills and would reduce household energy bills based on today’s heating oil prices. This would also potentially reduce bills in the future depending on how oil prices fluctuate. It would accelerate electrification of heating and reduce England and Wales’ fossil fuel demand.

The financial case for switching is compelling. Our analysis shows that based on the current energy price cap and current heating oil prices, a medium-sized home using heating oil which switches to a heat pump now could save over £650 per year on their energy bills.

It is worth acknowledging that today’s oil and LPG prices are likely to ease once geopolitical pressures subside - and the savings illustrated above may narrow. But volatility is a defining feature of oil pricing, not an aberration. Supply shocks - whether driven by conflict, sanctions, or production decisions by major exporters - produce sharp, unpredictable price spikes and unlike gas or electricity, oil and LPG users face that volatility directly and immediately without the buffer of a regulated market.

Risks are not purely financial either. When supply is disrupted, delivery lead times lengthen and households whose tanks have run low can find themselves without heating during cold snaps.

While heat pumps carry higher upfront costs than typical boilers, the BUS grant substantially closes that gap. While no two installations are the same and vary based on housing and insulation specifics, our analysis also shows that with the higher £9,000 BUS grant, a typical detached house might expect to pay around £3,600 in upfront installation costs, whilst bungalows, semi-detached and terraced housing can expect to pay about £2,500 in upfront costs. This is comparable to replacing an oil boiler, which typically costs between £3,500 and £5,500 for a full installation.

For off-grid households which are currently paying a premium for oil or LPG deliveries, the payback period is considerably reduced, and comparable to replacing an oil boiler.

Rural areas will benefit disproportionately. Off-grid households - concentrated in areas from Cornwall to Lincolnshire - are more likely to rely on heating oil or LPG and are already leading the way on heat pump uptake precisely because the economics make more sense for them.

The underlying logic is straightforward: mains gas is generally a cheaper, cleaner and more convenient heating fuel than oil, LPG, or solid fuel. That means the opportunity cost of switching is often higher for on-grid households. For off-grid homes, this logic is reversed – electrifying heating systems often makes clear financial sense.

Oil, the most prevalent fuel in off-grid areas, has historically been more expensive than gas. Although this gap narrowed during the acute phase of the previous energy crisis - when gas and electricity prices surged more sharply than oil - the long-run trend favours heat pumps for oil-heated households. LPG users face similar or worse economics. The uplifted grant recognises this structural disadvantage.

Beyond cost, oil and LPG carry practical drawbacks that make the case for switching even stronger: large storage tanks; infrequent but logistically inconvenient deliveries; vulnerability to running out; security risks; odour; and higher carbon emissions than mains gas.

A common concern is whether heat pumps can be effective in some rural housing stock, particularly older properties or those in more exposed locations. The evidence does not support this. In our survey of 1,376 heat pump users, those who switched from oil heating reported high satisfaction rates (83%) and are more satisfied than those who switched from mains gas – a finding that cuts against the narrative that rural homes are a poor fit for the technology.

For those interested in seeing heat pumps in action before committing, Nesta's Visit a Heat Pump programme connects prospective switchers with households that have already made the change – in both rural and urban settings.

Today’s announcement is a welcome step. Energy price shocks are not going away, so encouraging consumers - such as those on heating oil - to electrify is the only durable way to protect households, strengthen the public finances and improve economic resilience.

The near-term window matters: the UK government should use the summer months to accelerate deployment of heat pumps, solar and batteries. Uptake of electric technologies should be treated as a core economic priority, not just a climate one.

Beyond grants for electric technologies, the UK government should get creative on energy efficiency. Working with community groups and local networks they should deliver a major push on the low- and zero-cost measures households can take to reduce their exposure. This is not about restricting energy use; it is about equipping people with the information to make evidence-based decisions.

Heat pumps only make financial sense if electricity is competitively priced against gas. The UK government should rebalance levies and policy costs so that electricity is structurally cheaper to use than gas – reinforcing the economics of switching for the millions of households not yet on the grid.