Off-grid households in the UK using heating oil are now covered by the Alternative Fuel Payment (AFP) scheme, which provides a £200 credit to help manage rising energy costs. Administered by the government, this support targets the approximately two million households that do not use mains gas, ensuring they receive equivalent assistance to those on the Energy Price Guarantee.
How the Alternative Fuel Payment Works
The UK government introduced the Alternative Fuel Payment to support households that rely on fuels other than mains gas for heating. According to the Department for Energy Security and Net Zero, the £200 payment is designed to offset the significant price volatility experienced by consumers purchasing heating oil, liquefied petroleum gas (LPG), or biomass.
For the vast majority of eligible households, the credit is applied automatically to electricity bills. This process removes the need for consumers to apply manually, as energy suppliers identify eligible accounts based on data from the Elexon database, which tracks properties not connected to the gas grid.
Eligibility and Application Requirements
Eligibility for the scheme is determined by a property’s location and its lack of connection to the national gas grid. While most payments are automated, some households—such as those in park homes, houseboats, or properties with multiple dwellings on a single electricity meter—may not be automatically identified by the system.
For these specific cases, the government launched an online application portal to ensure no household is left behind. Applicants are required to provide proof of address and evidence of fuel purchases to verify their status. The scheme operates alongside the Energy Price Guarantee, which limits the unit cost of electricity and gas for the average household, providing a dual layer of financial protection for off-grid residents.
Comparing Heating Oil Support to Mains Gas Subsidies
The £200 AFP payment serves as a direct intervention to bridge the gap between mains gas users and those reliant on heating oil. While mains gas users benefit from the Energy Price Guarantee, which caps the cost per kilowatt-hour, heating oil prices are driven by global market fluctuations and delivery logistics.
| Feature | Mains Gas Support | Alternative Fuel Payment |
|---|---|---|
| Primary Mechanism | Energy Price Guarantee (Cap) | Direct £200 Payment |
| Delivery Method | Automatic via Tariff | Automatic or Application-based |
| Target Audience | Grid-connected homes | Off-grid/Oil/LPG/Biomass users |
Why the Scheme Matters for Off-Grid Households
Heating oil prices are significantly more sensitive to supply chain disruptions than mains gas, which is regulated by Ofgem. According to the Competition and Markets Authority, off-grid households often face higher upfront costs because they must purchase fuel in bulk rather than paying monthly based on usage.
The £200 credit provides a buffer during winter months when fuel consumption peaks. By formalizing this support, the government aims to mitigate the risk of "fuel poverty" in rural or remote areas where infrastructure options are limited. Ongoing monitoring by the Energy Ombudsman ensures that suppliers correctly apply these credits to customer accounts, providing a recourse mechanism if the automated payment is not reflected in a billing statement.
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