I live in an old house, built in the 1920’s. Isolation, energy transition and sustainability did not exist in that time. My house is also pretty big (for Dutch standards), which means that the energy bill is quite steep.
As described in analyse and compare your expenses my monthly energy bill is EUR 240,-. Last year I took a number of measures (investments) to seriously reduce my energy consumption (gas and electricity). I was happily surprised when I received my yearly settlement last month. My new monthly payment will be cut in half and I am receiving back more than EUR 1500,- from last year’s payments.
These are the main actions I took to cut my energy bill in half:
Making sure you need less energy to heat your house is the first step. The energy you don’t use is the first saving. The main measure to make sure you use less energy is isolation. When we bought the house, it was in original state (read: old). As part of the renovation, we already included some of the bigger jobs, like replacing single glazing for double glazing and isolation of the roof. Later on I added isolation of the wooden floor.
Less gas, more electricity
In the Netherlands, government policy is focused on decreasing gas usage and promoting electricity usage. Therefore taxes on gas have been increased this year with 3,63 cents per m3. Taxes on electricity have been lowered with 0,87 cent per Kwh. On average, Dutch families will therefore pay EUR 130,- more on an annual basis.
In order to make use of these tax changes (and future movements in the same directions can be expected), I had a heat pump installed. A heat pump works as a reverse air conditioning. An airco unit uses the energy in the outdoor air and uses this to heat up water to (help) heat the house. This is cost efficient for 4 degrees celsius outside temperature. The effects on the energy bill are a big saving in gas usage, with an increase of electricity use. For newly constructed houses (which are much better isolated), it is possible to heat the house with a heat pump only. For old houses, heating with gas is still needed, in my case on days where the outdoor temperature is below 10 degrees celsius.
The downside of a heat pump is increased electricity use. Therefore I had 15 solar panels installed on my roof. The solar panels generate more electricity than the heat pump uses (last year my total production was around 4.500 Kwh). In the Netherlands you can (still) sell unused energy for the same price you pay for electricity (around 21 cents per Kwh). This is a key part of the equation, because I mainly generate electricity in the summer, and use it in the winter. This will not be sustainable in the long run looking at the energy grid, but with the current rules in my country this is very beneficial.
ROI of 6,7%
A heat pump and solar panels are expensive to install. But they also deliver an interesting return. It should be seen as an investment. My total cost was almost EUR 11.000,-I could make use of various subsidies, from both the government as well as my city. This reduced the investment to around EUR 8000,-.
The first year results were a return of prepaid monthly energy bills of EUR 1500,–. However, I will calculate around EUR 1200,– per year as a return on the safe side. The yearly return on my investment is therefore 15%.
This sounds nice, but the heat pump and solar panels need to be written off in their lifetime. The payback period for my investment of EUR 8000,- is 6 years and 8 months. After this, the returns will be pure profit.
Assuming a lifetime of 15 years (expected real lifetime is longer, more like 25 years), I will earn EUR 18.000,- in reduced energy bills. My real return on the investment will therefore be (18.000 - 8.000) / 15 = 6,7%. A pretty decent and secure investment.
Title photo by Federico Beccari on Unsplash
Solar panel photo Baptiste Lioi on Unsplash