Non, Je ne regrette rien

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UPDATE:

I have recalculated some of these costs using the latest ‘price cap’ figures.
Please see the next article for details.

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Friends, one of the questions I am most often asked about the works I have had done on my house concerns the “Return on Investment” or “Payback Time”.

I hate this question for three quite distinct reasons.

Reason 1

Firstly, I hate it because it indicates that the questioner has misunderstood the nature of work I have undertaken.

For example, if someone has a leaking sewer repaired one doesn’t ask them about the “payback time”. Why? Because it’s just wrong to leak raw sewage into a public area. The repair is necessary.

That’s how I feel about putting carbon dioxide into the atmosphere when one has an alternative. It is similarly disgusting, except that carbon dioxide is dramatically more damaging in its effects than sewage.

Reason 2

Secondly, I hate it because the answer is quite difficult to work out!

I have never paid much attention to the magnitude of electricity or gas bills – I could afford them and I had no alternative but to pay!

I am conscious that the bills now are much smaller than they used to be, but it’s quite a lot of work to figure out exactly how much smaller. But that is what I have have done in this article.

Method

Since November 2018 I have read my gas and electricity meters each Saturday morning and so I know my weekly gas and electricity consumption for the last 4 years or so.

I have then trawled back through my records to find historical standing charges and unit rates, and re-constructed the actual weekly costs.

I have then modelled what the weekly costs would have been if we had not installed External Wall Insulation, Solar Panels, a Battery and an Air Source Heat Pump.

To do this I took the consumption between mid-2019 to mid 2020 and assumed that these patterns of consumption were repeated in future years. I have then re-calculated the weekly and annual costs.

Actual Costs 

From this data I can calculate weekly costs for electricity and gas, and then by adding up the costs for 52 weeks I can get an estimate of the annual costs. The results for my actual electricity and gas costs are shown in the figures below.

Click on image for a larger version. My weekly gas and electricity costs for the last three and a half years. Also shown in red is my projection for my bills based on currently signed contracts. The figures in boxes show yearly costs.

=============================
UPDATE:

I have recalculated some of these costs using the latest ‘price cap’ figures.
Please see the next article for details.

=============================

These graphs tell quite a story.

Prior to 2021 electricity usage was pretty constant at around 10 kWh/day costing around £15/week.

But after the installation of solar panels and a battery, the pattern of consumption of grid electricity changed significantly, with the house being almost off-grid for three to four months a year, and with electricity consumption usage peaking in winter.

The winter costs of this are low – peaking at £15/week – because we buy most of our electricity ‘off-peak’ and store it in the battery and then run the household from the battery for most of the next day.

Looking ahead, (red) if I assume that the coming winter is similar to last winter, then these projected costs will increase in the year ahead.

Regarding gas usage, one can see the winter consumption declining year-on-year as a result of first triple-glazing and then External Wall Insulation.

And then in 2021 gas usage flatlines after the installation of the Air Source Heat Pump. The residual gas usage is just for cooking – roughly 1 kWh/day – which I hope to stop in the next few months by switching to an induction hob – that’s why the projected gas costs for 2023 are zero.

If I had done nothing

The graphs below show my estimates for gas and electricity costs assuming I had not installed External Wall Insulation, Solar PV, a battery and an Air Source Heat Pump.

Click on image for a larger version. Estimated weekly gas and electricity costs for the last three and a half years assuming that I had not installed External Wall Insulation, Solar PV, a battery and an Air Source Heat Pump. Also shown in red is my projection for the coming year. The figures in boxes show yearly costs. Notice that the vertical scale of this graph (£50/week) is different to the earlier graphs (£30/week).

=============================
UPDATE:

I have recalculated some of these costs using the latest ‘price cap’ figures.
Please see the next article for details.

=============================

The same patterns of electricity and gas usage are repeated year after year.

The effect of forthcoming price rises for 2023 are estimates based on Octopus Energy prices.

Comparison

Finally, the graph below compares the actual bills I have paid with my estimate for what I would have paid if I had not improved the house. The graph combines gas and electricity costs.

Click on image for a larger version. Comparison of the actual annual combined gas and electricity bills with the counterfactual scenario in which I had not installed External Wall Insulation, Solar PV, a battery and an Air Source Heat Pump. Figures for 2023 are – obviously – projections.

=============================
UPDATE:

I have recalculated some of these costs using the latest ‘price cap’ figures.
Please see the next article for details.

=============================

Payback Calculation

So now we come to the third reason that I dislike calculating ‘Payback’: it is not very large.

The difference between the two realities in the graph above is – in round terms – currently around £1,000/year and will likely grow to around £2,000 year in 2023.

But the difference in expenditure between the two realities is External Wall Insulation (£27k), Solar PV(£4k), a battery (£10k) and an Air Source Heat Pump (£8k) which comes to around £50k.

So the return on my investment is just 2% and might rise to 4% – with payback periods of many decades.

But on the other hand, most people in the UK are at least slightly anxious about energy bills in the coming years, but I am not in the least concerned. And surely that has to be worth something too.

I honestly don’t regret a penny of the expenditure.

=============================
UPDATE:

I have recalculated some of these costs using the latest ‘price cap’ figures.
Please see the next article for details.

=============================

6 Responses to “Non, Je ne regrette rien”

  1. leedalton1979 Says:

    Interesting to see that you are not overly bothered by the financial roi. It’s the point that most of us start our journey (us included), but curiously not where we end up. Although having at least some control of the magnitude of the energy bills is a definite benefit of the systems you/we have installed.

    • protonsforbreakfast Says:

      Yes, I probably am a bit odd in my lack of interest in ROI. But in honesty, that’s how I feel!

      • leedalton1979 Says:

        I think it’s brilliant. Too many of the decisions that we make are based on arbitrary financial factors, that are largely decided by others.
        We love the freedom we have with our solar and batteries. And the heat pump just means that we know exactly what we are in control of. 😎

      • protonsforbreakfast Says:

        Yes!

        The word you used – “Freedom” – is just the kind of feeling I get when the house runs on solar all summer . Or when solar meets 20% of electricity demand in November! It feels like being in the presence of daily miracle!

  2. David Cawkwell Says:

    Thanks for posting this. People make their own choices about what they want to spend money on. For me the economics always win out so unless there is a financial insentive it wont get done unless I will experience a noticeable payback in some other way like enhanced comfort. For me I took a rather different approach. Since heating costs and silly house prices are major factor and I no longer work so I simply sold up and left the UK for warmer climates. The saving of what I would pay in council tax over the next 20 years in the UK has paid for my house in Portugal. Also the solar works a lot better here.

    • protonsforbreakfast Says:

      David,

      Thanks for stopping by. I am jealous of your solar yield, but I could not join you in your migration. After 26 years in the same house I think I will stick here until I die. I might get a few extra solar panels though…

      All the best

      Michael

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