In today’s post – an aside from my usual writings about starting, building and growing your ideas. I’m writing about the UK energy crisis and what options are available to help make the huge increases less of an impact.

I’m no energy expert, I’m no money saving expert – but I am a Mathematician and Actuary and tend to over-analyse anything involving numbers.

What’s the current situation?

Wholesale energy costs are rising, and energy firms are having to charge more (including a lot of smaller independent firms are going bust). Here’s how my own prices are changing (I’m not lucky enough to be on a fixed tariff).

Those increases work out at:-

• A 40% increase in the price of electricity per kWh (and 73% increase in the standing charge).
• A 81% increase in the price of gas per kWh (only 4% increase in standing charge).

That’s crazy. The way it works out is overall costs have increased around 50% when compared to using the same energy / gas a previous month.

In real terms, it’s also a large increase in monthly payments to the energy companies.

Profiteering…?

Energy companies no doubt purchase their energy at forward and future prices – so the energy they’re selling to you now they’ll have purchased at a cheaper price. As the higher wholesale prices bite, more of us may have put in place energy saving measures – so we may actually use less when we’re using the more expensive energy.

Also, the cynic in me thinks that the big energy companies will all post record profits in future quarters and executives get huge bonuses (who will have friends in the government).

They’re also FAST to raise prices, but slow to bring them back down… it’s criminal.

What can YOU do about it?

The first thing is reduce your usage – annoyingly I’ve not got a smart meter, nor am I on a tariff that has a cheaper off peak rate. But if you do, and you are – you can use things that use a lot of power in the off peak hours.

I sound like my Dad here, but other obvious things you can do to save energy are:-

Energy

• Only boil enough water for your brew (not a full kettle).
• Turn lights off in rooms when you leave.
• Fill your fridge.
• Fill your dishwasher if you have one.
• hand wash more vs using the dishwasher.
• Use the washing machine less (hard if you’re running a big household).

Gas / Heating

• Turn off radiators in rooms you’re not using.
• Reduce the theromstat to a lower temperature.
• Have showers not baths (using less hot water).
• Get a draft excluder for the front door.
• Draft proof any older windows.
• Make sure all windows are shut.

There’s actually loads more you can do, if you’re in the UK – you can bring up your properties EPC through this link – in it, there’s a list of everything it suggests to help improve the energy efficiency of your home.

Here’s all the recommendations from mine:-

• Recommendation 1: Increase loft insulation to 270 mm
• Recommendation 2: Cavity wall insulation – we don’t have cavitys in our walls
• Recommendation 3: Internal or external wall insulation
• Recommendation 4: Floor insulation (suspended floor) – sounds messy
• Recommendation 5: Draught proofing – including chimney sheep
• Recommendation 6: Low energy lighting – got (is an old EPC)
• Recommendation 7: Heating controls (room thermostat) – got HIVE (again old EPC)
• Recommendation 8: Replace boiler with new condensing boiler – done
• Recommendation 9: Double glazed windows – done (old EPC)
• Recommendation 10: Solar photovoltaic panels, 2.5 kWp – investigating.

Looking at the big hitters next – which have a significant outlay but would potentially bring down electric and heating costs – are internal or external insulation, and solar.

But first, hidden away in the report is the potential impact of loft insulation (if lower than the 270mm recommended).

Type of insulation	Amount of energy saved
Loft insulation	5137 kWh per year

That would save (using the higher tariff) £380 a year, and typical cost to install only £100 to £300. A no-brainer. Unfortunately I think ours was already done as part of the remodel before we bought (same as 6,7,8 and 9 above) and the EPC just wasn’t updated.

There’s a chance only minimal insulation was put up there though, so it’s definitely worth checking it out.

Big Hitter #1: Internal or external wall insulation

This is a biggie for saving on heating, since our house is an old victorian house – it’s not insulated and has no cavity between the inner and outer brick courses. So our options would be internal insulation (making each interior room smaller – stud walls, insulation, plasterboard, skim and re-decorate). This would wreck havoc and disruption to the house (which with a newborn, I highly recommend avoiding).

Or, external insulation where the outside of the house is insulated, and then rendered. Another big outlay.

From my EPC solid wall insulation could save 6,648 kWh per year of gas – which is about £500 a year. The cost of external insulation ranges from £8k to £22k – so this one is going to take you 44 years to pay back – yikes.

I’m pretty sure I’ll be dead by then.

Big Hitter #2: Diving deeper into Solar Panels + Solar Battery

I quite like the idea of this, but it’s a significant up front cost. Tesla offer an energy plan where they put you on a 10p per KwH electricity plan – but you need to have a Powerwall installed (£10k) plus Solar panels (£5k to 15k) depending on the size of your system.

Then, you’re relying on the UK weather and whether it’s going to generate enough electricity to power your home. The Powerwall batteries hold 13.5 Kw of energy, and you’re probably likely to be below this, so if there’s enough sun, the battery will power your home when there’s not enough sun (night time).

Winter, you might be back to relying on the electric grid however (but you’d be doing this at the 10p vs 28.2p rate).

Solar panels, installing 10, 370W panels getting 4hrs of sunlight can be calculated to generate 14.8 KwH of energy – which should (especially if stored) power a good proportion of your home usage.

The main “saving” from installing this system comes from being moved from 28p to 10p per kWh of energy. If you use 10,000 kWh a year, you’ll be “saving” £1,800 a year minimum just from being on the lower tariff.

If energy prices come back down, this saving will dwindle away – unless you’re generating 100% solar energy, at which point the saving would be less than currently.

If prices go higher, then you’d be saving more (assuming the 10p rate sticks). You also get paid 10p per kWh you produce and don’t use – so that can be quite handy (but not as generous as older UK schemes where you got paid 50p per kWh you produced (even if you used it).

A 20 panel system, plus a Powerwall in 2022 is around £20k to supply and install (scaffolding is also needed). A system this large could power your whole house if using 10,000 kWh per year (reliant on the sun, of course). This would maximise your savings to around £2,800 a year (at the current 28.2p). Paying off the cost of the system in around 9 years.

If the current prices drop to 15p say, then it’d be max £1,500 a year (based on 10,000 kWh).

If you go smaller – and say solar can generate 3,000 kWh in a year, you’d be reducing your bill by a further 30% and puts you at around £2,200 a year in savings.

Of course, the more you can power through your own energy production, the less reliant you are on energy prices – if 28.2p per kWh rises – then savings would amplify.

At the moment – it appears to make a lot of sense to future proof your home and start generating solar energy, but lets dive a litter deeper.

Amplify the savings

On top of this, fuel prices at the moment are at record highs, if changing to an electric vehicle, adding a charge point to your home is around £1k currently – but you’ll also benefit from using energy at a much lower rate (10p) to charge your vehicle.

At 10p p/kWh that’s around £6 per 220 miles (which I believe is the range on a Model 3) – that’s around 3p a mile (vs almost 20p a mile for my current Hybrid).

If you were to drive 8,000 miles a year – that’s an extra £1k to £1.5k a year in annual savings or £100+ a month in fuel costs.

That £6 would drop to £0 to charge the car if you’re using Solar / stored energy (not to mention EVs are cheaper to maintain and service).

Increase the value of your home

Installing Solar is expected to increase the value of your home if you came to sell. With payback periods of around 10-20 years it’s important on any big costs to plan on staying where you are to maximise the benefits of what you spend.

Interest rates on savings

The final thing to consider with any of this, is whether your money can be working harder for you elsewhere. If you have £20k sitting in an ISA, the best monthly return you might get is 5% (or £1,000) – whereas you get £2.8k a year through installing solar (but your £20k has vanished).

Of course, the ££ is “sitting in solar” vs sitting in a bank, and whether you’d realise that investment back (through higher house price for example) is another matter.

Bringing the Solar Argument together…

I quite liked a way a person on a YouTube video explained it (the video I can’t find now) but the way this was done was to amortise the cost of the Panels and Powerwall over the warranty of the battery – then compare that costs to what you’d save through having the system.

So let’s do that

Cost

• Say £20,000 over 10 years = £170 per month.
• Interest “lost” £20,000 * 5% / 12 = £83 per month.

Total cost: £253 per month.

Savings

• Energy saving* = £150 – 233 per month
• Car charging = £100 per month

Total saving: £150- 333 per month

This assumes 10,000 / 12 * 18.2p minimum savings (since having this system puts you onto the 10p kWh rate).

So from the above, spreading over 10 years it’s not much better, spreading over 20 years it’ll be more like £160 per month cost and is closer.

£20k is also potentially high, one option you can do is install the minimum amount of panels to qualify to be moved onto the 10p per kwH Tesla Energy Plan – this would impact the numbers but the initial outlay will still be £10k+ (since the batteryis almost that alone).

The tech nerd within

I quite like being able to see my energy usage and how solar could impact that through the Tesla app. It’s like a nice smart meter in my pocket. EDF currently don’t offer me a smart meter, and even if they do the app they have is garbage.

I’m not going to spend £20k just to have a nice app on my phone (and slightly cheaper electric) – or am I?

What would you do?