LPG (liquid petroleum gas) for home heating

What is LPG?

LPG is a common and versatile energy source often used when camping and caravanning. However, it's also a method of heating homes and hot water. This is particularly relevant to the millions of UK households unconnected to the mains gas network.

LPG is created as a by-product when crude oil is refined. It can also be extracted from natural gas streams or petroleum.

It's considered a fairly clean fuel to burn compared to other fossil fuels - it emits less carbon than oil, for example - but it still does contribute to air pollution.

Other downsides include the fact it’s one of the most expensive heating options and can be inconvenient.

Bulk LPG

If you use so-called bulk LPG, you’ll have a tank on your property to store the gas, which may be above or below ground.

This is likely to be cheaper and more convenient than relying on cylinders. Cylinders are typically only used when there are problems arranging delivery of bulk LPG, or space restrictions on storage.

The Office of Fair Trading (OFT) published a report in 2012 detailing its investigation into the off-grid energy market. It highlighted that only 3% of the major suppliers' customers ended their supply arrangements every year. Just 0.5% of major suppliers' customers switched to an alternative LPG supplier. The Competition and Markets Authority noted in 2018 that while there have been improvements since the OFT investigation, switching levels are still low, at around 4%.

Supplier-owned LPG storage tanks

Although LPG storage tanks are typically sited on your land, the tank itself is likely to be owned by the supplier.

The LPG supplier will have agreed to your use of the tank in return for an exclusive contract to supply domestic bulk LPG. Such an exclusive contract may be expected to last for two years.

The supplier is required to make sure that the tank is safe to receive and store the LPG.

Cylinder LPG

Cylinder LPG is used for home heating where bulk LPG can't be supplied, for example due to space constraints. It typically involves the use of large 47kg propane cylinders.

The large cylinders require careful handling, and customers usually need to organise delivery and collection themselves. It's also important to understand that the cylinder remains the property of the supplier, and will need to be returned when finished with.

It's considered one of the more expensive ways to heat a home - even more expensive than bulk LPG.

Cylinder LPG users have several challenges when looking for the best price:

• They may have only a limited number of local suppliers
• They may pay higher heating costs on average than any other off-grid consumers
• They may be less able to readily switch to a different fuel type
• They are susceptible to road delivery disruptions

In view of these challenges, you should shop around for the best deal, make your energy usage as efficient as possible and check whether there are any government grants available.

A further challenge to switching and/or getting a competitive deal is found on park or holiday home sites (so-called metered estates). The estate owner may have entered their own contract with the LPG supplier for the whole estate.

If you’re in this situation you could get together with other estate residents to ask the estate owner to switch suppliers to get a better deal.

Money saving for LPG heating customers

Despite the challenges, there are still ways for you to save on your LPG energy bills.

Here are some top money-saving tips to consider:

• Shop around for LPG suppliers - the LPG market may be limited, but you can still research the available suppliers and play them off against each other
• Don't assume the price is set - haggling is always an option when you're shopping around, particularly in the unregulated LPG market
• Get together with friends and family - a cheaper price or delivery fee could be arranged if you buy in bulk with neighbours, family, friends, or others in your community
• Timing is crucial - buyers in summer will typically pay less than midwinter buyers
• Don’t leave it too late - if LPG runs low and you need to organise an emergency delivery, you may need to pay an additional fee
• Think about how you pay - each LPG order is likely to be a significant purchase. So try to pay for it in the way that works to your best advantage. If you're disciplined enough to pay if off each month, a cashback credit card could be an option
• Look for help where you can get it - while government grants for energy improvements have been cut back, they have helpful information for LPG customers wanting to switch suppliers. This includes a bulk LPG tank transfer price calculator.

Can LPG customers change their heating source?

If you’re connected to the main gas network, switching to a gas boiler and heating system should be relatively straightforward. Although initially expensive, some modern boilers burn mains gas as well as LPG. This can help cut switching costs.

Mains gas should be cheaper than LPG. It’ll also make shopping around for energy more straightforward. A mains gas boiler could also add value to your property.

If you’re not connected to mains gas, there are other options:

Heating oil is one of the cheaper options, although it's not one of the more environmentally friendly choices.

While it's not necessarily a cheaper option, electrical heating may be more convenient and easier to budget and shop around for. Electric may also be a better long-term option with the rise of time-of-use tariffs, the Smart Export Guarantee (SEG) and smart meters.

Other alternatives include solid-fuel options like coal-fired and biomass boilers.