Market Watch  ·  Issue 12  ·  Tuesday 13 October 2026

Watts Happening

 

The UK energy newsletter that doesn't work for the industry

The Spark

In the same three months, two fuels went opposite ways.

Between April and June, electricity cost 8.2% less than a year earlier, after inflation. Heating oil cost 90.2% more. Same government release, same quarter.

Electricity has crept back up since July and sits at 26.32p a unit under the October cap. Oil's jump was of a different order. Households cut their demand for oil products by 34% that quarter, which DESNZ links to higher prices and warmer weather.

This Week in Watts

The oil price at which a heat pump becomes cheaper to run

For three years, oil was the cheapest way to heat a standard three-bed semi. Independent cost tables quoted by the House of Commons Library put it there from December 2022 to December 2025.

Then came the strikes on Iran. UK heating oil went from 53p a litre in February to £1.04 in March, a 95% rise in a single month. A household that bought 1,000 litres in mid-February paid around £530. A month later the same delivery cost £500 more.

The latest independent comparison still puts oil ahead: £1,300 to £1,700 a year for that semi, against £2,100 to £2,500 for a heat pump. The Commons Library flags two catches. The figures average prices across January to March, and two of those three months came before the strikes. And they assume an average house, when oil-heated homes tend to be bigger, older and leakier.

So we ran the comparison the other way round. We worked out the oil price above which a heat pump costs less per unit of heat. It turns on one figure: how efficiently the heat pump actually runs.

Where the line sits

Oil price above which a heat pump is cheaper per unit of heat, by how efficiently the heat pump runs (SPF)

2.7  ·  typical, Ofgem data

  91p

3.0

  82p

3.5

  70p

4.0

  62p

5.0

  49p

For reference: 53p UK average, February  ·  77p latest official UK figure, June  ·  107p Northern Ireland, 8 October

Our calculation, heat only. Electricity at the October cap rate of 26.32p/kWh. A new oil boiler at the 91% minimum for a regular boiler under England's building regulations. Heating oil at 10.3 kWh of heat per litre (DESNZ). An older, less efficient boiler moves every line lower.

That figure varies more than most quotes admit. A 2024 study of 1,431 air source systems in Ofgem's payment data found the typical heat pump delivered about 2.7 units of heat for each unit of electricity. Only 8% reached 3.5. For systems fitted in 2022, real-world efficiency ran 1.04 below the figure on the design paperwork. The best air source systems on HeatpumpMonitor.org, a public register of metered homes, run above 5.

In our experience, the install starts at the design. Get the survey and heat loss calculation wrong and the best installers in the world will not rescue it. A system designed to run at 4 moves the line from 91p a litre to about 62p.

The same study found no improvement in air source performance between 2017 and 2022. This year's rewrite of the industry design guides, which we covered in Issue 8, is aimed at exactly that gap.

Oil's price decides where the line sits. The design decides which side of it your house lands.

The Bill Buster

Your last oil invoice is the number that matters

Find the pence per litre on your last delivery and set it against the table above. That tells you which side of the line your house sits today, before any installer is involved.

Check before you reorder. Prices move weekly and Great Britain has no official weekly figure. Northern Ireland's Consumer Council publishes one: a 900-litre fill there cost £887 on 10 September and £1,007 a week later. Ring at least two suppliers.

If you are getting heat pump quotes, ask each installer what efficiency they will design to, and how they worked it out. A figure with no heat loss calculation behind it is a guess.

→ Ask: what efficiency will you design to, and will you put it in writing?

Watts on the Market

Unsold this week  ·  Reader resource

The table gives you the line. Your own number is what staying on your current setup costs over the years ahead. The Cost of Inaction calculator runs your energy forward 25 years on your own bill and property type, across two inflation scenarios. No installer at the end of it.

→ Run your 25-year number

Quick Watts

Switching

Electricity switching was up 15.2% on a year earlier in April to June, with 789,000 households moving supplier. Gas switching rose 6.1%.

(DESNZ Quarterly Energy Prices, 29 September 2026)

Fixing

At the end of June, 38% of standard electricity customers and 39% of gas customers were on fixed tariffs, up 2 and 1 percentage points on a year earlier.

(DESNZ Quarterly Energy Prices, 29 September 2026)

Business power

Non-domestic electricity averaged 24.51p per kWh in April to June including the Climate Change Levy, up 2.0% on a year earlier. The figure varies by business size.

(DESNZ Quarterly Energy Prices, 29 September 2026)

Oil support

The government's £50m fund for low-income households that heat with oil is paid through councils' Crisis and Resilience Funds. Apply through your local council's website.

(House of Commons Library, CBP-9838)

From the archive

How heat pump sizing changed, and why the old method oversized by around 30%
How Middle East supply risk reaches UK energy bills

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