Zero Bills Standard

Octopus Energy's new groundbreaking "Zero Bills" initiative

Free Energy for 5 Years on New Build Homes That Meet Octopus Energy Standards

Octopus Energy, the UK's leading energy supplier, currently holds a 22% share of the energy market, serving around 6.8 million households. Founded in 2015 by entrepreneur Greg Jackson, Octopus Energy has been at the forefront of the UK's green initiatives. Their latest scheme, however, is set to revolutionize the energy market in an unprecedented way. Named Octopus Zero Bills, this initiative offers residents of newly built homes a unique tariff with zero energy bills for five years, guaranteed. To qualify, these homes must meet strict standards, equipped with a combination of solar panels, a home battery, and a heat pump.

Currently, the scheme is in a beta phase as Octopus Energy partners with developers to ensure these new homes meet the necessary guidelines to achieve the Zero Bills tariff. The company has ambitious plans to expand this offering to existing properties in the future, potentially transforming the way homeowners manage their energy consumption.

Incentives Through Partnerships with Leading Mortgage Lenders

Octopus Energy has not only partnered with developers to create more eco-friendly homes, but they have also joined forces with the UK's first covered bond bank, Perenna. This partnership allows homeowners purchasing these energy-efficient properties to access better mortgage rates, with the smart technology installed in these homes factored into affordability calculations. This makes sense from a lender's perspective, as the technology adds value to the property and helps homeowners save an average of £1,800 per year on energy bills.

Costs and Considerations: Is It Worth It?

With domestic heating accounting for 14% of the UK’s total carbon emissions, Octopus Zero Bills is undeniably a step towards a greener future. However, this does not come without cost. To qualify for the scheme, homes must be equipped with specific technologies, such as solar panels, a home battery, and a heat pump, which will likely cause these properties to be marketed at a premium compared to standard new builds. The key question remains: is it worth the investment?

Cost Breakdown :

1.Heat Pumps  

Octopus Energy requires that the appliances installed in these homes integrate with their advanced technology platform, Kraken, allowing for optimization and control. Only certain brands of appliances can be used, and the costs can vary:

Option 1: Daikin
Daikin offers various models of heat pumps, with an 8kW air-to-water heat pump and hot water tank costing around £15,000, including installation.

Option 2: Octopus Energy’s Cosy 6  
The Cosy 6 is a 6kW heat pump priced at approximately £10,500, including installation.

2. Solar Panels

The cost of solar panels varies depending on the property's size and expected electricity usage. Since solar panels will be the primary source of power, Octopus Energy requires a photovoltaic (PV) system with an output of around 8kWp to 12kWp. This necessitates a substantial number of solar panels, and in smaller properties, panels may need to be installed on both sides of the roof.

To understand the costs better, it’s important to know that kWp (kilowatt peak) measures the maximum output power a PV system can generate. For instance, an 8kWp system running at full capacity for one hour will produce 8kWh of electricity.
 

8kWp System
Solar Panels: £12,000
Labor: £1,800 (2 installers for 3 days)
Roof Space Required: 50m²
Total Cost: £13,800

12kWp System
Solar Panels: £18,000
Labor: £2,400 (2 installers for 4 days)
Roof Space Required: 80m²
Total Cost: £20,400

3. Battery

To complement the solar system, a battery must be installed to store the energy generated. This ensures no electricity is wasted when no one is home to use it. A significant advantage of a storage battery is that it can be charged during off-peak times, such as overnight when energy demand is low, potentially allowing you to store energy for free.

The Tesla Powerwall is one of the most reliable options on the market. The Tesla Powerwall 3 is priced at around £7,995 in the UK.

This third-generation battery storage system by Tesla has an impressive energy capacity of 13.5kWh, allowing for significant storage of solar-generated power. The Powerwall 3 is designed for long-term reliability with a 10-year warranty and offers seamless integration with solar panels. It also features an advanced energy management system that optimizes energy use, reduces reliance on the grid, and can be monitored remotely through Tesla's mobile app.

Is It Worth It?

The total cost of installing these technologies ranges from £32,500 to £43,500. With an estimated lifespan of around 30 years for these systems, the average annual cost would be approximately £1,200.

Currently, Octopus Energy only offers the Zero Bills scheme on new build properties, which could be a strong selling point for developers. However, the company has indicated plans to extend this scheme to existing homes if the initial rollout is successful. From a property investor’s perspective, the decision to install such a system depends on whether you can increase rent by more than £1,200 per year to offset the costs.

The effectiveness of this investment varies by region. In the North of the UK, where the average rental price is £750 per month, increasing rent by £1,200 annually might deter tenants. In contrast, in the South East, where the average rent is around £1,400 per month, a rent increase equivalent to one month's rent might be more acceptable, especially with the added benefit of no utility bills.
 

This scheme could be particularly beneficial for investors in Houses in Multiple Occupation (HMOs), where the landlord typically covers utility bills. Significant savings could be achieved over time, but it’s crucial to accurately assess the energy requirements before installing these systems, as HMOs generally consume more energy than standard single-let properties.