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HOW TO REDUCE YOUR HOME ELECTRICITY BILLS CONSIDERABLY

Most of us are aware of the current cost of living crisis because a variety of different pressures are pushing up the rate of inflation which reached a scary 9% in the 12 months to April 2022. This means costs are higher across the board, from food to petrol and energy bills, rather than prices rising in just one area.

There is increasing comment in the media about domestic energy poverty too. This relates to a situation where a household does not have access or cannot afford to have the basic energy or energy services to achieve day to day living requirements.

It all sounds quite sad to me but I do question whether or not these wild claims in the media are actually true or not. The reason I question it is because my personal experience and that of people I know and am in touch with do not appear to be suffering as much as is being reported in the media.

Look I do accept we are going through a period of high inflation. There is no getting away from that fact. For an explanation of inflation read the blog I wrote six months ago about it.

https://wealthandtax.co.uk/why-inflation-destroys-your-savings-and-what-to-do-about-it/

I do understand that I mix with people who are generally better off than the average person in the street so I am aware that the large rise in energy prices affects those on low incomes proportionately far more than people who have above average incomes. So this blog is directed at people who are home owning baby boomers. In other words people who are aged 55 plus. In this cohort I see little or no signs of energy poverty. In fact quite the opposite. Energy abundance.

Generally speaking I find that people who are self-disciplined in one area of their life are usually self-disciplined in all areas. So our clients are people who are good with money. They are self-disciplined so they spend less than they earn. When they spend money on their properties they are usually quite sensible with what they spend it on and not extravagant or wasteful.

A number of our clients have not only invested in solar panels but solar batteries too. They tell me that their energy bills are ridiculously low. In fact laughably low. So low that they pay little, if any money, above the standing charge element of their bills.

I have always maintained that every person has an individual inflation rate because everybody’s expenditure is different. For example if you are a smoker and a drinker and you drive a petrol or diesel car then your personal inflation rate will probably be higher than that of a teetotal, non-smoking driver of a fully electric car.

So it is with home energy costs. Not everyone is affected by higher energy prices. A near neighbour of mine who has just had solar batteries installed, claims that his energy bills have reduced by 90% in spite of the recent energy cost hike.

I had solar panels installed 7 years ago at a cost of £7,000. My feed in tariff (FIT) payment has averaged £600 a year since so I have just about reached break even point. I have now ordered a solar battery which will cost me £6,000. This will result in my home energy costs reducing to a minimal amount each month. The payback period on this investment is likely to be even quicker. My latest FIT payment for the last quarter has been calculated at £248 and will be credited to my bank account shortly.

A solar panel system will typically cost you around £5,000 to £7,000. The payback period could be 10 years or more.

Fuelling your house with solar-generated electricity can shave a hefty sum off your monthly energy bills. Typically, a 4 kWp solar PV system could save you between £85 and £220 each year, depending on where you’re located in the UK.

The Feed-in Tariff scheme closed to new applications on 31 March 2019.

However, households that have an eligible system in place to generate their own electricity from renewable or low carbon sources, such as solar or wind power, can still receive feed-in tariff payments – as long as they successfully applied by 31 March 2019.

According to energy regulator Ofgem, FIT payments are made to the homeowner or operator of a solar PV system. So, as a general rule if you as a homeowner were to move house the payments would normally transfer to the new property owners.

The Smart Export Guarantee is a government-backed initiative that compels large energy suppliers to pay homeowners for renewable energy they send back to the National Grid.

If you produce energy with solar panels, wind turbines, micro combined heat and power, hydro, or anaerobic digestion, you can request payments from one of more than a dozen companies.

SEG began in January 2020 as a replacement for the defunct Feed-in Tariff (FiT), but works differently – mainly because it puts the responsibility on consumers to choose the best rate.

It’s especially profitable for anyone with solar panels, because unless you have a solar battery, you’ll likely export half of your power back to the Grid – so why not get paid for it?

You can benefit from solar battery storage in 4 key ways:

  1. Store energy for later use
  2. Significantly lower your energy costs
  3. Earn money by selling stored energy to the grid
  4. Become independent from the grid

Currently, the costs typically range between £1,200 and £6,000 depending on the capacity, chemical composite of the battery, and its life cycle.

So when shouldn’t you fit solar panels and batteries?

Going solar isn’t right for everyone. Solar panels and solar batteries may already be installed when you buy your home. You may not live in the property long enough for the investment to break even. Your property may not accommodate solar panels. You may prefer to wait for the cost of solar batteries to fall once their usage becomes more widespread and the cost per battery falls. Your property may have an alternative source of electricity supply. You may not be in a position to afford the investment. You may not have the legal right to install a solar system. You may not live long enough to break even.

So there you have it. If you are a homeowner you should seriously consider having solar panels and solar batteries installed, assuming it is feasible and you fit the criteria, in order to reduce your electricity costs substantially and experience energy abundance. However, it is important to get expert advice from a solar specialist as it is a complex subject and a solar system isn’t right for everyone. You know it makes sense.*

*The value of your investment can fall as well as rise and is not guaranteed. The contents of this blog are for information purposes only and do not constitute individual advice. You should always seek professional advice from a specialist. All information is based on our current understanding of taxation, legislation, regulations and case law in the current tax year. Any levels and bases of relief from taxation are subject to change. Tax treatment is based on individual circumstances and may be subject to change in the future. This blog is based on my own observations and opinions.

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