How solar panels and batteries are saving me £1,600 this year

Lets talk about Giles Parker, a resident of Ickleford in Hertfordshire, who has managed to power two electric cars, run his eco-friendly home on renewable energy, and still save £150 on his monthly electricity bill. Sound too good to be true? Think again.

Last year, the 69-year-old invested £9,500 in a solar panel system that comprises 14 panels installed on his east-west roof, as well as two solar batteries with a combined capacity of 8.2 kilowatt hours, housed in his garage. Nine months later, Giles has cut his annual electricity bill by 50%, and is on track to save around £1,600 this year.

Once again, energy bills and how to reduce them have made headlines, with mounting pressure on the government to postpone a cut in support for households. Despite Monday’s announcement of a drop in the industry price cap by almost £1,000, consumers still face increased bills from April. Giles Parker, who owns a digital signage business, is relatively unique in that he and his son drive electric cars, resulting in significantly higher electricity consumption than most households. However, through careful management of his solar panel system, including setting home batteries to charge during super-cheap night-time electricity hours, he has managed to reduce his expenses and carbon footprint.

 According to MCS, the installation of solar panels has doubled this year and is at its highest level since 2015. The solar panel industry faced a setback when the government stopped paying feed-in tariffs, but the availability of affordable home energy batteries capable of storing a household’s daily electricity consumption has given the sector a new lease on life. With the prices of electricity having increased nearly three-fold over the past few years, with the average yearly bill now standing at £1,200, many households are searching for ways to save money. As a result, more people are turning to solar panel installations as a way to reduce their electricity costs.

Parker, who runs a digital signage business, installed solar panels on his east-west roof not only to reduce his carbon footprint but also to save money. During the Guardian’s visit on a sunny February day, Parker’s panels generated about 1kW of power, which could increase to above 4kW on the brightest summer day. For reference, the kettle, typically the highest-consuming appliance in most households, has a rating of about 3kW.

“When we are out and the sun is shining, the power generated is automatically sent to the battery for later use when we are back home,” Parker explains. He opted for two batteries to future-proof his home and take advantage of the 5% VAT discount when purchasing them alongside the solar panel installation. With an old boiler, an electric hob, and an immersion heater, he anticipates needing more capacity when the boiler needs to be replaced, possibly with an electrically powered heating system.

Parker credits part of his savings of £150 per month to Octopus Energy’s Intelligent electric vehicle tariff, which charges only 7.5p per kWh for recharging his home battery system between 11.30 pm and 5.30 am.

According to Parker, his solar panel system means that he rarely has to purchase electricity from the grid at the full price, which is currently around 35p per kWh. Instead, he can use his home batteries to power his house, except for high-energy items like kettles that exceed 2.6kW. He manages the system through a mobile app and has significantly increased his use of off-peak electricity, which is charged at a much lower rate.

While Parker’s success is impressive, one issue for others looking to follow in his footsteps is that the cost of solar panels and batteries has increased since he installed his system.

At present, the cost of a solar panel system with a 4kW array and a 9.2kWh home battery of good quality is approximately £11,000-£13,000, including the inverter and other necessary components. However, the overall cost may vary based on factors such as the size of the roof, location, and type of hardware selected. Opting for this system is an easy way to reduce your home’s carbon footprint and enhance its Energy Performance Certificate (EPC) rating. Once set up, the panels will supply power to your home or recharge the battery, with any excess energy being exported to the grid.

By adjusting your energy consumption pattern, such as doing laundry during peak sunshine hours, and charging the battery with cheaper off-peak electricity at night during winter, most households can significantly reduce their electricity bills from the current average of £1,200 per year to as low as £200-£400. This results in a payback period of around nine to ten years, based on current prices. Solar panels are usually expected to last for 25 years, while the batteries come with a 10-year warranty, but can continue to store power at a slightly reduced capacity for many years beyond their warranty period, making them a worthwhile long-term investment, especially if you have no plans to relocate.

Selecting the right electricity tariff is critical for the financial success of these systems. While many major suppliers have reduced their old Economy 7 tariffs that used to offer low-priced night-time rates, Octopus Energy is embracing this concept with various tariffs tailored to customers requiring electric car charging and, more recently, battery charging, offering some of the cheapest off-peak rates. The company recently introduced a new tariff, Octopus Flux, designed for customers with a solar PV and home battery setup. Although more complicated than most other tariffs, it incentivizes customers to avoid buying power during the 4pm-7pm peak period, during which it charges about 49p a kWh. Conversely, the company will reimburse households about 40p a kWh for every unit exported to the grid during peak times.

Households that charge their battery at night pay approximately 21p per kWh, which is considerably higher than the 10p per kWh charged to new electric car owners on the company’s Intelligent tariff, but lower than the day rate paid by other customers. Currently, customers on EDF’s Economy 7 rates pay around 47p per kWh for day usage and 11p per kWh for off-peak power. However, they only receive 5.6p per kWh for power exported to the grid.

The new tariff launched by Octopus Energy, called Octopus Flux, has been designed to cater to the increasing number of homeowners who have installed solar panels and battery systems. Rebecca Dibb-Simkin, Octopus’ head of marketing, who has recently installed 18 solar panels and a battery system at her Midlands home, says that the new tariff is an easy and quick solution for homeowners looking to reduce their electricity bills. According to her, homeowners using solar panels and batteries will end up paying for electricity only about 60 days of the year, generating their power for the rest of the year. Octopus Energy has also begun to offer solar PV panel and battery installations in the Midlands and parts of the south of England and plans to expand this service nationwide.

When asked if investing £11,000 or more in solar panel and battery systems could become a poor decision if energy prices decline back to previous levels, Rebecca Dibb-Simkin argues that it is unlikely to happen. She believes that energy prices will not fall back to those levels in the future. Investec, a financial services company, predicts that the Ofgem price cap will drop to £2,165 starting in July, lower than the £3,000 expected in April under the government’s energy price guarantee scheme. Cornwall Insight’s analysts also anticipate the price cap to decrease to £2,112 in July and then remain at £2,118 until the end of the year.

In the end, the return on investment for these systems will be influenced by electricity prices in the future, which may or may not decrease if and when the conflict in Ukraine is resolved. If prices remain relatively high in the coming years, many of us may regret not following Parker’s example.