There is no doubt that creating a completely smart and environmentally friendly home does not come cheap. Subsidies and incentives to build such a home can certainly make the deal sweeter but when these are reduced or removed, is it still worth the bother and financial outlay?
The real cost of a miniature power station
We read with interest a story about a couple in Somerset in the UK, Tim and Margaret Willcox, who receive a cheque of up to £1,500 from National Grid each year for their home-generated energy.
The couple built a super-insulated eco home which generates its own electricity, the excess of which is exported to the central grid and which National Grid pays for.
The home, acting like a miniature power station, cost them more than £500,000 and includes two types of solar power – one heats water while an array of photovoltaic panels generate electricity.
While this outlay is enough to make any homeowner sweat, there is an upside. Over a 12 month period, the couple used £292.87 of gas and another £413.53 of electricity, totalling £706.40. However, they received a payment of £1,471 from the National Grid for the electricity they supplied to the rest of the network. That meant their energy bills were wiped out completely and they made £764.60. Based on receiving £1,471 a year from the grid, the cost of the house is covered in just over eight years.
Valuable with or without incentives
While these homeowners are laughing all the way to the bank, unfortunately others won’t be so lucky since the UK government recently cut tariffs paid to homeowners to export solar power into the grid, making the panels less cost-efficient.
While the installation of the same solar system will now cost £5,000 (about half what the Willcox’s paid almost a decade ago), the tariffs paid today for the electricity would be worth only around £350 a year under a contract that runs for a maximum of 20 years. Using these figures, it would take more than 14 years for the cost of the solar panels to be recouped.
The National Grid contract with the Willcox’s, set up before the tariff reduction, was set for 25 years and the tariff payments will rise in line with inflation, guaranteeing a good profit.
But even without the payout, it would seem that the Wilcox’s have got themselves a good investment.
The house has a rainwater harvesting system, which diverts water from the guttering into a 5,000-litre tank so it can be used to flush their toilets. As a result, their water bills – charged through a meter – have been reduced by about 60%.
The property is super-insulated, built using 25cm-thick polystyrene panels in the walls and roof and there is a ventilation system that draws out stale air and brings in fresh air, eliminating draughts and damp- a real cost saver when it comes to switching the heating on in winter.
The planning and construction of the home took two years and the couple have lived there for six. The land cost £170,000 and the building costs, including a detached garage and the eco installations, came to £350,000. That put the total cost at £520,000. However, the home is now worth more than £800,000 because of these environmentally and energy efficient additions.
According to Mr Willcox, the very high efficiency of their insulation and heating systems combined means that they keep saving more money despite the increasing price of gas and electricity. Prices have escalated considerably over the last six to eight years.
Reducing the need for power stations
Mr Willcox believes his home, which took ideas from house-builders in Sweden, could provide the template for hundreds of thousands of others. He says that what they have done can be achieved by anybody in a new-build property.
Of course, not everyone has the financial ability to spend over £500,000 on a property but perhaps this could open doors to new innovations and market potential.
This is a door that utilities should squeeze through before others charge through especially since these homes have the potential to massively reduce the need for expensive new power stations. We wrote recently about business parks becoming more energy independent and it’s a matter of time before the residential sector moves more aggressively into this space. [Business Parks Off-Grid Trend - A Utility Disruption].
There are both long term and short term benefits for market players and end users and it will be interesting to see who snaps up the opportunities.