My Plan to Achieve Energy Freedom - The Road to Zero Energy Bills

Hi everyone - long time, no see! For a while I've been meaning to look at the up-to-date data on our generation, energy costs, etc and check in on payback of all of the energy investments we've made. Here goes. 

Five years ago we heated our house with 13,813 kWh of gas each year. We powered our car with 8,173kWh of petrol each year. And we powered our house with 8,000kWh of electricity. Today, we have electrified all of our energy consumption with an electric heat pump and electric car, and we generate a lot of that electricity ourselves (see the post here) at a cost that is locked in and inflation proof at a fraction of what it costs to buy electricity from the grid for the next 23 years at least (the warranty period of the solar panels is 25 years, they'll probably go on generating for another few decades thereafter). 

If you're wondering whether it still makes sense to make the same switch - the answer is yes. It makes even more sense than it did two years ago. Energy costs have skyrocketed while the cost of SolarPV, Heat Pumps and Electric Cars (particularly second hand electric cars as we're two more years into the switch to EVs, so another wave of EVs has hit the second hand market) has stayed roughly static if you shop around - price decreases have roughly offset general inflation, unlike most other areas. 

Insulation and Heat Pump

Since installation, our heat pump has been cranking out heat for the house, and all the hot water we need, without a single issue. It's an 8kW Hitachi R32 Yutaki-SCombi 2 5HP 200L. Heat Pumps can be 200-400% efficient by virtue of that fact that they are not creating heat, they are simply pumping it in from the outside. For every one watt of electricity you power the Heat Pump with, it delivers 2-4 watts of heat into your house. The outside unit of our heat pump looks like this up on the wall: 

If you read back through the post about our installation of the heat pump, at the time, the heat pump cost €0.03 / kWh of heat delivered to the house versus gas which cost €0.06 / kWh of delivered heat (and €0.08 /kWh for oil). Gas and oil costs have increased more than electricity since, so the savings from the heat pump have increased significantly since then. Gas now costs €0.14 per kWh with a €0.382 standing charge per day (.382 * 365 = €139.43 per year). Gas costs have also led to increased electricity prices, but because wind generation represents about half of all electricity generation in Ireland in winter, gas and oil costs will likely continue to increase more than electricity now and into the future. 

SolarPV

A snapshot of electricity prices on offer in Ireland on the day I write this: 

Two years ago, when we installed the SolarPV system on the roof, electricity cost €0.19 / kWh from the grid. The SolarPV system generates electricity at €0.07 / kWh over it's lifetime (cost of the system divided by all the kWh it will generate in it's warrantied period). So for every kWh it generated, it was saving us €0.12. Flash forward two years - at time of writing, Electricity now costs about €0.48 / kWh as a standard rate in Ireland (minus whatever discount you can wangle from the provider!). Solar still generates electricity at €0.07 / kWh and will do so until the end of its 25 year warranty. So each kWh the PV array generates now saves €0.48 / kWh - €0.07 / kWh = €0.41 / kWh. Before the installation, I had estimated the PV system would generate 4,260 kWh per year. This turned out to be an underestimate - with two full years of data now, it has averaged 4,975 kWh generation per year. The simple calculation for the savings of the SolarPV system at today's electricity prices, if we use the electricity during the day, would be 4,975 kWh * €.41 saving versus buying from the grid = €2,039.75 per year. This saving calculation will vary for you depending on whether you use all of the electricity generated during the day or not so take this into account when calculating the ROI for installing PV, but a simple message to take is that the recent increases in energy prices have drastically reduced the time it takes for SolarPV to pay for itself. 

The other major development since we installed the SolarPV system is that there is now a Clean Export Guarantee in place in Ireland whereby anyone with a SolarPV system installed will be paid for the generation they feed back into the grid (see more here, and this is one supplier's FAQ on it). The rate varies with each supplier. As of August 2022, rates for each supplier were: 

SSE Airtricity 24 cents / kWh

Pinergy 21 cents / kWh

Energia 18 cents / kWh

Electric Ireland 14 cent / kWh

Bord Gais 18.5 cent / kWh

Flogas 20 cents / kWh

If you have a SmartMeter, your export will be measured with that and you'll be paid for every kWh you export. If you don't, an estimated export number is used of, I believe, 35% of the estimated generation of your SolarPV system. While our supplier is yet to make the first payment, they have confirmed when they start it, it will be backdated to February 2022. If the formula is indeed 35% of estimated generation, our CEG Payment would come in at €417.9 per year. If this is the case, and it remains stable for the remaining 23 years of the SolarPV's system's warrantied lifetime, it alone will cover the cost of the system ..even before the savings of the other 75% of the generation which we consume, which now save us in the region of €.40 / kWh. I'll write an update here when we receive the first few payments and have a good yearly estimate at what the CEG payments will work out at and how it impacts the economics of a SolarPV system, but in any case, now that it is more than zero, it will only improve the numbers on what they were previously. 

These two things - (1) that electricity prices have gone up, and additionally (2) we are now paid for our excess solar generation - means the payback I initially calculated on the system underestimated the payback considerably - it will pay for itself much more quickly now as it is saving us more money than we had originally calculated because the cost of electricity has increased over time since we installed it. While the price rises have been quite extreme this last year owing to geo-political factors, energy is likely to continue increasing in price broadly over the next 10-15 years even if energy generation costs fall, to pay for new transmission and distribution infrastructure. Installing rooftop solar continues to be a very good financial investment, and a means of reducing your exposure to the risk of energy markets. If you can get together the cost of installing SolarPV on your house (and remember there is an SEAI grant available of €2,500), I find it hard to think of any other alternative investment for that money with as good a return on investment, nor the certainty with which it will return money. 

Here's an updated chart of our monthly electricity consumption and generation these last few years: 

We made changes over time which you might notice as the months progress in the chart - switching from a petrol car to an electric car meant higher electricity consumption but vastly reduced costs overall as it removed our petrol bills entirely (and most of our road tax and maintenance costs), switching from a gas central heating to an electric heat pump increased our electricity consumption again but removed entirely our gas bills, then installing the bigger 6kW SolarPV system in 2020 allowed us to generate a lot of the electricity required to run the house, electric car, and heat pump ourselves outside of the winter months, greatly reducing the cost to run it all. 

So all up, we haven't experienced any issues with insulating and switching to a heat pump for heating, an electric car for transport (though we cycle wherever possible as that is cheaper than anything!), and generate some of that electricity ourselves with SolarPV. The payback periods for each have reduced significantly as energy costs have increased in the last two years. They've also meant a lot less anxiety about those energy costs. If you haven't considered making the same changes, I recommend you do now.