As temperatures plummet, energy bills are set to rise for households trying to keep warm – but not for tens of thousands who live in so-called zero bills homes.
Such households are so well equipped with energy-efficiency measures that they don’t need to pay a penny for gas or electricity – even in extreme weather.
The idea of having no gas or electric bills to pay each month is, on the face of it, very appealing. But is it really more cost-effective to kit out your property with the latest technology rather than simply pay standard energy bills?
Money Mail has crunched the numbers with the help of leading energy experts to see how much you could save on your energy bills and if it’s really worth the cost. You may even be pushed into taking such measures – whether you would choose to or not.
The Labour Government is once again ramping up its efforts to turn Britain into a nation of heat pump and solar panel users.
This month, Ed Miliband, Secretary of State for Energy Security and Net Zero, is expected to announce a £15billion Warm Homes Plan.
Around £2billion is expected to be earmarked to subsidise the purchase of solar panels, heat pumps and batteries.
The ambition among ministers is to transform many properties into zero bills homes, with owners paying little to nothing for power.
Soon, households with traditional gas boilers could be hit with a new £30 green levy on their energy bills to subsidise heat-pump owners, under plans allegedly being considered by Miliband. A spokesman has denied this but details have yet to be revealed.
We discovered that a household that installs a heat pump and solar panels and battery would have to wait 20 years before they are better off, due to astronomical upfront costs.
Here’s everything you need to know.
What is a zero bills home?
A zero bills home is a property with no or very low energy bills.
It is possible to either buy a new-build property that is already a zero bills home, or turn your existing home into one by making it more eco-friendly.
Energy provider Octopus Energy has propelled the trend with its Zero Bills tariff, which launched in 2022.
Under the scheme, customers living in homes equipped with green technology are guaranteed to face no energy bills for a minimum of five years.
Octopus Energy is aiming to deliver 100,000 zero bills homes by 2030.
Much of Britain’s housing stock is old and poorly insulated, so advocates of zero bills homes claim that making your home more energy-efficient can save money in the long run. However, it often requires a heavy initial outlay.
How much does it all cost?
It costs between £5,000 and £20,000 on average to make your home a zero bills one, depending on the size of the property, according to Octopus Energy.
Installing a heat pump, solar panels and a battery would reduce a typical household’s energy bills by around £600 a year.
The solar panels generate your own electricity so you don’t have to buy it from the grid. The battery stores what you don’t use upfront so you can draw on it when the panels are not generating.
The heat pump keeps your home warm without the need for a gas boiler, by extracting heat from the outside air or ground and transferring it inside. Installing all three costs in the region of £11,623.
A heat pump typically costs £11,000, according to price comparison site Uswitch. However, homeowners can get a £7,500 rebate via the Government’s Boiler Upgrade Scheme, taking the net cost to around £3,500.
Solar panels and a battery will set you back £8,123 on average.
Natalie Mathie, energy expert at Uswitch, says: ‘Domestic solar panel systems typically cost around £6,100 and battery storage tends to cost between £5,000 and £8,000.
‘Many providers offer a combined solar panel and home battery package, which costs just over £8,000, based on one supplier.’
However, even these three items combined may not bring your bills to zero. To do so could require additional modifications, such as improved insulation or new windows and doors, which could bring the total closer to £20,000.
What can you save on bills?
Traditional households on a typical standard variable energy tariff (SVT) pay £1,758 a year on average at current rates, according to Octopus Energy.
Those who have locked in the cheapest available fixed tariff (currently a 13-month fix from Fuse Energy) pay £1,502 a year.
Those going all the way to make their house a zero bills home could save the full £1,758 per year, Octopus Energy says.
A new heat pump and solar panels on your roof will shave £600 off your energy bills, calculations from Uswitch show.
Mathie says: ‘With energy costs remaining stubbornly high, many households will be looking into whether they can save money by investing in heat pumps, solar panels and batteries.
‘Installing all three measures would give the greatest benefit to a household, but the investment could take a couple of decades to pay for itself.
‘A typical three-bed semi with 4kW of solar and a 5kWh battery might be able to trim £400 to £600 a year off energy bills, and some high-use households may save even more.’
She adds: ‘Installing a heat pump is a big change for households, and the pros and cons should be carefully weighed up, even if you are eligible for an installation grant.’
Heat pumps have other downsides to be considered, such as the noise they make.
Some households find they are insufficient to heat their homes, too.
Does it take time for it to pay off?
In the first year of installing, you would spend around £12,781, if you combine the cost of a new heat pump, solar panels and battery, as well as ongoing energy bills, according to Uswitch.
After five years, the total cost combined with ongoing energy bills would add up to £17,413, rising to £23,203 over ten years. This accounts for homes paying £1,158 a year – £600 less than traditional gas boiler homes.
Meanwhile, a household on a standard energy tariff with no heat pump or solar panels would spend around £8,790 on bills over five years.
That is £8,623 less than they would have paid by making their property eco-friendly. Over ten years, they would have spent £17,580 – £5,623 less than if they had made the ‘improvements’.
The numbers described are approximate, but highlight that it can take a long time for an eco-friendly home to start paying off.
Based on our calculations, which use current energy prices, it would take 20 years to offset the upfront cost of installing a heat pump, solar panels and a battery with cheaper energy bills.
If you go the full distance and spend £20,000 to make your home a zero bill property, it would take 11-and-a-half years to recoup the initial outlay at current energy rates.
Is a new zero bills home worth it?
Last month, Octopus Energy partnered with Barratt Redrow to build 54 zero bill homes.
The properties will be located in Wixams, in Bedfordshire, and Tewkesbury, in Gloucestershire. Residents are guaranteed to pay no energy bills for at least a decade, though electric vehicle charging is not included in the calculations.
Octopus Energy wants to roll out 100,000 homes on its Zero Bills tariff by 2030, and recently invested £100 million to fund the initiative. To date, more than 5,000 zero bill properties have been approved for several developers.
In December, Steve Reed, secretary of state for housing, said a sustainable housing development in Essex promising zero energy bills should be the blueprint for new homes across Britain.
The 113-home site at Carpenters Yard in Epping, Essex, has been built by private developer gs8 and financed by Octopus Capital.
The full price of a two-bedroom property on the development has been set at £525,000, but some shared-ownership options are available.
At Tilia Homes’ Landimore Park development in Northamptonshire, a two-bedroom, semi-detached, zero bills house is available for £287,000, though cheaper shared options are available.
A new-build zero bills home is typically more expensive than a standard new-build or existing property, though exact costs will depend on the size and location of the home.
This means it may take a while before any savings you make on energy bills outweigh the premium price tag.
