Can a green home pay?

Doctor Jeremy Ferguson is part of a very small minority. Back in October 2009, the GP had solar photovoltaic (PV) panels installed on his four-bedroom detached home in Wimborne, Dorset.

The work, which was carried out by Jeremy's energy supplier, npower, marked a pièce de résistance in his 20-year campaign to make his home more energy-efficient.

"Common-sense green measures like insulation should always come first," says Jeremy. "As well as gradually installing triple glazing over the years, I've put in cavity wall insulation, floor insulation and a thicker than standard 400mm of loft insulation."

While these basic measures have paid off financially by reducing his energy bills by up to two-thirds, the crippling expense of PV panels is a different story.

The 16 panels cost £14,000 (plus VAT), minus a government grant of £2,500 that he got through the Energy Saving Trust (EST). This scheme, run by the Low Carbon Building Program, is now unfortunately closed and homeowners now have to fund the panels themselves.

The extent of the improvement, however, means that he becomes eligible for feed-in tariff payments, a government initiative launched last April that offers financial support for microgeneration technology projects in the UK. The saving you receive depends on how powerful your PV panels are.

"The fact that I qualify for the scheme means I receive £500 a year from the government," says Jeremy.

"But even with the estimated £200 annual saving the panels will give me from heating bills – they generate 70% of my hot water – it will be around 20 years before I recoup the expense. And without the subsidy it wouldn't make sense at all."

So are there any green measures homeowners can take that will make a noticeable difference to their pockets any sooner?

Make your home energy efficient

According to EST, most of a home's wasted energy (33%) escapes through the walls, making cavity wall insulation one of the most effective green measures you can take.

On average, it will slice an estimated £110 off heating bills every year, says EST. But, at around £500 for an unsubsidised installation, the initial outlay will take more than four years to recoup.

Replacing your old and inefficient G-rated boiler with a new A-rated condensing model can save up to £225 a year on energy bills, according to EST figures. But you can expect to pay in excess of £1,000 for one. Again, it's likely to take more than four years to break even.

Double glazing is another obvious energy-saving improvement as 19% of a home's wasted heat is lost through the windows. If single glazing is replaced with double glazing on an average property, heating costs will fall by about £130 annually, says EST.

But the cost of double glazing an average house is £2,500 according to the Double Glazing & Conservatory Ombudsman Scheme (DGCOS). Such an outlay would take you a staggering 18.5 years to recoup from the reduction in energy bills.

However, with any energy-saving measure, if you qualify for a government-funded grant, being green suddenly becomes a lot more appealing.

The Warm Front Scheme, for example, offers householders up to £3,500 towards the cost of cavity wall and loft insulation, oil, gas or electric central heating and even draught-proofing, which alone accounts for 12% of wasted energy.

Do you qualify?

Sadly, access to the scheme is limited. "There is speculation that money for the scheme is running out, and replenishing depleted funds is crucial if struggling households are to be helped with their energy bills," says Scott Byrom, utilities manager at

"Qualifying households that have applied for help from the incentive scheme may also have to wait up to six months for aid."

Not everyone will qualify either. You will need to be over 60, or pregnant, or have a child under 16. You will also need to be in receipt of benefits such as housing benefit or income support.

There have been other disappointments.The previous government's well-intentioned boiler scrappage scheme – which offered grants of up to £400 to replace inefficient boilers – ran out of funds within three months of its launch in January this year.

On the plus side, your energy provider itself will have to provide a certain number of grants for green improvements under a new carbon emissions reduction target scheme.

"Energy providers, no matter what their size, each have to put aside £45 a year from every household bill," says Ann Robinson, director of consumer policy at uSwitch.

"They are then charged with using this money to demonstrate a benefit to the environment through their customers' homes."

Robinson urges consumers to call their energy provider to find out what's available. Contributions will be means-tested, but you won't need to fall into a particular category to qualify.

She adds that it's also worth checking whether your local authority offers help with the cost of home insulation.

Unfortunately, the property price payoff from green measures is minimal. Nick Salmon, a fellow of the National Association of Estate Agents, says: "If you had two identical homes next to one another, one with energy-saving improvements and one without, the former might fetch a few more pounds, but the issue has not really reached the nation's consciousness yet."

But he adds that improvements such as double glazing, which will not only makes your house warmer but will also shut out noise and heighten security, can help you get the best price for your home.

If you have yet to be convinced of the benefits of green investments, you can experiment by spending just a few pounds first before undertaking a more significant outlay.

Fitting an insulating jacket to your hot water tank could cost as little as £10 and save the average home £35 a year. Warm air escaping under doors and through windows and letter boxes accounts for 12% of a home's lost energy, while draught excluders cost around £5 each.

Some energy-efficiency measures cost nothing. Reducing your heating thermostat by 1°C can save around £55 a year, says EST; it doesn't cost anything to throw on a jumper. Closing your curtains at dusk to stop heat escaping will also shave money off your bill.

But those keen to make major energy-efficiency improvements today will have to take a financial hit upfront. "Early adopters will always pay over the odds," warns Jeremy.

"PV panels will need to be a tenth of the [current] price before most people will consider buying them. But over the next five to 10 years, I'm sure this will happen."

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Your Comments

I am a 78 year old and thinking of having solar panels fitted on my roof. the cost for 18 panels will be in the region of £13000. I realize that at my age I would not recoup the investment. But do you think I would be financially better off considering the price of electricity is going to rise in future? also the 13000 that I have invested is earning peanuts, and also will be eroded by having to use some of it to pay the rising cost of electricity? I would also be earning money from the feed in tariff.