After next winter you could have spent £3,000 on energy. That’s a sickening amount of money gone forever. I have written a lot about some elegant solutions, and indeed, if you have lots of money you can literally reduce the cost of energy to under 3p/kW.hr instead of the 50p (for electricity) we are soon going to bear. However rising prices from all directions are already stretching budgets so a fresh look at some less expensive options is needed.
So what’s the plan?
Stage 1: We need energy and solar panels are the answer. A modest but useful array of 5kW is going to cost about £5,000. The returns on capital are about 30% so borrowing to do this makes sense. Bimble Solar offers interest free credit so there are definitely ways to get going without producing much cash up front. With electricity heading towards 50p/kW.hr there is absolutely no question that solar panels make sense and paying off the loan is better value than buying electricity. Solar panels don’t just mitigate your electricity bills, they can form an important part of your heating strategy too.
Stage 2: Once you have free electricity you need the magic multiplier to leverage your investment; a heat pump. Although the Government will chip in £5,000 this is a step too far for most people when the total bill could be twice that when all the connections to the existing system are factored in. But all is not lost. A mini-split (air to air) heat pump doesn’t get the grant but the cost, fully installed, is around £1,200. It doesn’t connect to your wet heating system to heat the whole house but it will provide a core of heat that runs free off your panels during the daylight hours. With one of these suitably sited the existing heating system can be left off for a lot of the time. An added bonus is that you’ll have air-conditioning in the summer too. Typically, these consume about 1kW and produce 3kW and there is a lot of choice to go bigger or smaller.
Stage 3: You can sign up for an Octopus Go car charging account that will sell you cheap power. 4 hours every night for 7.5p/kW.hr. This is a fixed contract for a year so you can lock in with confidence. They don’t mind what you use it on so the heat pump can bring the house up to temperature in the early hours, night storage heaters can be topped up, the immersion heater can kick in, appliances can run. You need to have an electric car on order at least – with a two year waiting list on some that’s not a problem. Just order one you can’t have now then cancel it later. You never know, you might even be able to flip your new car for a profit.
Stage 4: Cooking with gas and electricity is a big expense and needs addressing with two essential bits of kit. A microwave and a slow cooker. The microwave can cook so cheaply that at current electricity prices it could be just as cheap to buy ready made meals than to cook them yourself. Even cheaper of course is to build up some expertise on microwave cookery. A slow cooker consumes very little power and a hot stew is quick to prepare and always a good winter warmer. If you had solar panels they would trickle charge your lunch free of charge.
The choice, before next winter arrives, is to do nothing and watch your money start to erode, or to start taking action at the early stages of this crisis and end up even better off than when it began. To consolidate your ideas check out a deeper discussion on Heating News – Spring 2022
Energy crisis edition Nearly free electricity and a free car!
Price caps for everyone.
Oil and gas now costs the energy suppliers so much that they all have to charge right up to the government price cap and there’s worse to come in October.
All offers therefor will settle at about the same level, 34.64p for electricity and 8.38p for gas with some sneaky increases on daily charges. Meanwhile energy prices continue upwards so future caps are very likely to be even higher. The new norm for total domestic energy costs looks more like £3,000 – £4,000 and that’s money that has been taxed. I make this point because any savings you can make are tax free. As usual the discussion for remedies largely revolves around PV solar panels and heat pumps, preferably both at once. We’ll have a look at turning down the thermostat too – what actually happens.
Solar panel returns – worth it?
The 1,000 cluster: By a strange coincidence 3 solar panels cost about £1.000 fitted. They will have a bit over 1,000W power rating and make over 1,000 kW.hrs in a year. At 35p per kW.hr saved on your bills the 3 panels will make you £350 a year paying you back the £1,000 in 3 years.
So the deal goes a bit like this. You give me £1,000 and I’ll pay you back £350 a year for 3 years. Only then are you back where you started, which doesn’t sound so clever. However, by then prices could be up by 50%, at least, so you get £525 a year for the next 3 years (£1,575 ahead at this point) and then on the same basis another £2,360 over the next 3 years and so on. Crazy maths? Well electricity price rises have been steady at 8% a year and that was before the energy crisis so this all looks pretty real. Remember we are just looking at 3 panels for £1,000 here. Your real installation could be 6 times as big.
Not spending money on fuel bills puts money in your pocket but unlike other investments this is tax free and very like a pension scheme. On that basis PV panels make more sense for higher tax payers but still a good deal for … er … the rest of us.
New 240v solar panels
In the last issue I featured an Enphase Micro inverter with the comment that soon PV panels will have them built in as a matter of course. Since them Hanwha Q-Cells have launched a lovely all black, 385W panel (Q.Peak Duo BLK-G6+/AC 340-345 ACM) with the Enphase Inverter built in. So instead of high voltage wires going to one inverter box the panels all link up easily and deliver 240V directly to your mains circuit. The days of balancing strings, matching inverters etc are over. Now you can put panels in any shaped clusters that suit you. Enphase are having a major focus on Europe so we’ll hear much more from them in future especially when they use their superior electronics skills to launch a new electric car charger.
Turn down the thermostat – the real savings
‘The rate of loss of heat is proportional to the excess temperature of the surroundings’ So the warmer your house is relative to the outside the more energy you lose, and it’s a linear relationship. That makes the maths easy. If, say, your house is at 20c and its 5c outside the difference is 15c so a reduction of 1c on the thermostat reduces the heat loss by 6.66%. So, it’s the percentage reduction on the difference in temperatures. If it is 10c outside the difference will be 10c so a 1c reduction on the thermostat reduces the loss by 10%. Your bills corelate directly to this so whatever percentage is saved on the day is what comes off your energy bill, so the chances are you will be saving £200 or more over the year. One extra click down on the stat doubles the saving!
Solar PV annex building – the Powerhouse
Recently I have been pondering on the idea of an annex building with an integrated all solar roof. This involved juggling various layouts of panels, roof angles etc, so to prevent a whirling descent into madness I have constructed an Excel model that does all the calculations, right down to the finished size of the whole building. Happy to share if you are wrestling with the same ideas.
PV panels don’t like being roof integrated because they get too hot. The annex roof has an air gap under the panels so that air flowing upwards under them raises their efficiency. This slightly warmed air is directed into a void in the peak of the roof and then ducted down to your air source heat pump which runs very nicely on the warmer air giving a double whammy; better PV efficiency and better ASHP efficiency. In addition, the ASHP avoids the colder ground air and largely avoids costly defrosting cycles. A similar concept is even easier to implement on a car port or garage.
The combination of an ASHP and the PV is a marriage made in heaven. Free power is turned into over 3 times more heat as all our small gains in efficiency are multiplied up by the COP of the ASHP. The Powerhouse makes electricity and heating and pretty much covers most domestic energy needs.
One attraction of the powerhouse is that it can be sited to point south unlike some houses which also suffer from shaded roofs, chimneys etc. Also, the local planning committee will tend to look more favourably on applications that involve innovation and ecologicalness.
What about batteries?
After the sun goes down batteries deliver free solar energy back to you; …… or do they? Actually, the batteries cost money to buy and they degrade with every cycle so there is effectively a charge to your pocket for each kilowatt.hour they store and you’d be shocked by how much. Ordinary lead acid batteries will charge you nearly 50p to recycle a kilowatt.hour, so more expensive than the mains. It gets better with lithium batteries with 20p a regular figure and 5.5p seems to be the limit. So, if you choose carefully the batteries will beat the mains on delivery cost. The Bimble Solar web site lists masses of batteries with their energy delivery costs so check it out before you buy.
Cheeky thought of the day. The Tesla power wall costs about £8,600 and stores 13.5kW.hrs and like all batteries it wears out in time and has to be replaced. However, the battery in your electric car is much better than that and if you are leasing the car you don’t care about degradation. So check out two way charging where you can get power out as well (V2H). The cost comparison is interesting. 4 Powerwalls would cost £34,400 but the batteries in a Nissan Leaf store more for the same money and they come with a free car thrown in as well! I admit it’s early days for this type of thinking; V2H chargers are expensive and not many cars support V2G or V2H but you might as well get ahead of the curve for your future energy strategy. At the moment you are probably looking at a Nissan Leaf and within a year a VW.
Late night power for car charging costs 7.5p/kW.hr with Octopus Go. What this all means is that two way charging with a battery makes your electricity cost 7.5p/kW.hr as opposed to 35p++ and that makes a leased electric car a viable consideration. I’d still think twice about buying one with ready money though as depreciation is likely to be bad while electric car pricing changes from a premium to a discount.
To underline the significance of all this. Your car battery will easily run a 3kW heat pump over a winter afternoon and evening consuming say 21kW.hrs and delivering 63kW.hrs or more to your heating. A 7kW wall charger will recharge your battery with 28kW.hrs later that night for £2.10. There will be some efficiency losses but the astonishing fact is that solar panels + car + heat pump will slash your energy costs to below 5p when everyone else will be paying 50p odd.
While doing your sums, don’t forget night storage heaters. They store energy more efficiently and cheaply than batteries. Everybody hates this old technology, especially with electricity prices soaring, so you might find some cheap ones on Ebay.
The technology for all of this exists now, heat pumps and electric cars will soon be the norm so many of us will be ready for this anyway. Storing energy makes renewables work better so it makes one wonder if we need to build more nuclear power stations.
Heat pumps update
The renewable heat incentive on heat pumps ended in March 2022. Instead, you can get £5,000 for an ASHP and £6,000 for a GSHP. Your installer makes the claim so you might not actually find all this money in your own pocket. All this leaves a big question over heat pump viability especially with daft quotes from the suppliers.
If you have town gas, why bother? Heat pumps run on electricity that costs 4 times as much as gas.
Gas boilers are cheaper and usually much more powerful and they almost certainly suit your existing system.
In favour though:
If you make your own electricity then a heat pump is a perfect partner.
A small mini split system (air to air) is about £1,000 and will run free on your panels – it does not qualify for the grant though.
Using surplus electricity to run the immersion heater means you don’t need a new water tank so a heat pump installation will cost less. Knocking say £2,000 off your heat pump quote will buy you some PV panels.
There’s a theme emerging here: Get some panels running before you even think about a heat pump.
Solar car port
A simple car port with some 240v panels must be an early consideration in the energy battle. Cheap to put up, no scaffolding, no roof attachments just useful power and a new useful building. A 4×5 panel layout is likely, so about 7kW and £7,000. By the way – have you seen postcrete in action? Stick a post in the hole, pour the dust around it, make sure it’s straight then pour in some water; job done. That car port will be up in no time.
The latest 240v panels, with their own microinverters built in, allow us to make some improvements as they don’t need string matching and we can vary the tilt angles. The highest row can be tilted up slightly without making the car port too high and the lowest row can be tilted down to pick up more winter sun. Assuming you are going to put panels somewhere on your property the car port makes a sensible option. With no rooftop scaffolding costs this is an easy construction with space for as much power as you need and you add value to your property too.
The air cooled roof idea works really well with a PV car port and even more so with my air assisted hybrid ground source heat pump. The hot air under the car port panels is blown down through a string of radiators and that warmed water makes the ground source system work better. See https://wordpress.com/post/originaltwist.com/4622
I was plugging this idea when the incentives were in the order of £20,000 ….. too late now and not worth doing on the reduced payment but an air source heat pump working with the car port makes sense.
Driveable solar annex. The latest energy costs have made it time to review my mad idea for a solar powered driveable house. Apart from being a massive power supply with its sun tracking solar array (makes £2,500+ worth of electricity a year) it can earn over £1,000 a week on AirBnb. The transmission has been made much simpler and easier with regular car parts and the panels now mount on one side – the other side is all sliding glass doors for your viewing pleasure. Catch up here.
Casio LCW-M170TD-1AER Lineage Waveceptor
You might remember me going on about my Casio solar powered and radio timed watch. Some 15 years on with no new batteries or straps it is still ticking on faithfully. However, Casio have made a new watch which has been reviewed as maybe the best watch in the world. I’ve bought one and it’s hard not to agree. Super light, slim and with solar and radio timekeeping. One amusing feature is the second hand. It figures there is no need to tick if you can’t see it, so in the dark it just parks until light returns then it shoots round to find the exact second. The titanium case and strap are a dull grey colour which gives a more grown up, less bling, look to a very understated watch. I love it.
Camping with a tent makes sense – a small package opens up to become a big thing. On that logic a caravan looks daft; transporting empty space. You start with a big thing and end on site with a big thing; a bit like putting up your tent before you leave home. It is more sensible to have something that can be towed easily, full of all your kit, and then be opened up on site at the press of a button. A full off-grid energy system built in would be the cherry on top and a satellite dish that gets the footie running straight away wouldn’t hurt either. And that brings us to the Original Twist Camping trailer.
Ever had one of those tool boxes where the top parts push away to reveal the box underneath? Well this trailer is just a big one with wheels on. The door frames at each end support the roof and lift it just like a four poster car lift. You arrive on site, the roof lifts up, the sides pop out and the roof closes down on them. The links that control the movement of the sides are steadied with torsion bars and chain and sprocket ties so powering it all is quite simple. The drawing shows one half closed and the other open; in practice both sides deploy together. The roof lift easily copes with the weight of the solar panels, dish, awning etc.
The side pods can contain beds with lights and TV built in and/or a kitchen unit. The choice is yours.
A shower room can be fitted over the draw bar as a separate cubicle that is entered privately from the main living quarters.
This design could be scaled up or down. Here it starts as the size of an SUV, for easy storage and towing, but still sleeps up to 5 when you get there. A bigger version would be sensational when deployed; imagine rolling into the campsite and opening up straight away, the dish locks on, footie on, beers out, all in about 2 minutes. A caravan that’s 4 metres wide before any canvas extensions go out! Stand by for a crowd of onlookers.
Heating is by a truck cab mini heat pump or gas.
The generous PV array raises an interesting question. If your electric tow car also had panels on the roof there could be significant range extension when all the panels are combined. In the new electric era tow cars will need all the help they can get. Note that the PV still works when you get home so it makes a useful uninterruptible power supply for your house – unless you park in your garage of course.
So there’s the idea. Does it exist? No, not yet, but let me know if you would like to build it.
Fits in a normal garage
Easy to tow – only as wide and as high as a car
Aerodynamic for economical towing
Automatic opening out and closing in a minute or two
Microinverters have passed an important tipping point and will soon be all the rage, but first, what are they? Grid tied PV panels usually feed high voltage DC current to a single inverter which converts that power to 240v AC. High voltages present safety issues and shading can reduce efficiency of the whole set, although, as thousands of examples testify, this system works well enough. But there is another way gaining traction – microinverters. These neat little boxes bolt up under each solar panel and make 240v right there, on the spot, with simpler wiring too. At a stroke the shading problem disappears, voltages are reduced and individual panel monitoring is possible. The monitoring is the best bit with the whole array mirrored on your PC screen. Each panel shows how it is performing and all the relevant history is retained for your viewing pleasure. The system is completely expandable and more panels can be clipped on at any time. The only drawback is higher cost with prices around £100 for each microinverter compared to a single inverter like the £1,000 Sunny Boy 5kW, but as you will see below that balance will soon swing the other way.
Panels – More power for same money
The case for going solar gets more compelling by the day. How about an all black JA 370W for just £130! Three of these with micro-inverters would cost £690 plus fitting etc so the ball park is around £1,000 for 1,000W of power (or better) and just over 1,000 kW.hrs a year of production. 1000 for 1000 for 1000!
So how many panels do you want? And what do you get back? Well, that 1kW pack of 3 will make £180 worth of electricity (at 17p/kW.hr) if you consume all they make, but only £58 if you sold the remainder to Octopus for 5.5p. That makes annual paybacks of a rather good 5.5 years or a bad 17 years so there must be a sweet spot in the panel count. Your background domestic consumption with lights computers and fridges will often be around 1kW so the first 3 panels/1kW are definitely worthwhile. However because panels rarely produce their rated output, and never in winter, the first 9 panels/3kW should be deemed good. All the rest will boil kettles and run appliances from time to time but after around 4kW and 12 panels any extra will be bad ones unless you can increase your self consumption. One great way of doing this is to route any excess production to your immersion heater and a SOLiC 200 for £195 will do that for you. With that fitted your 12 panels will always be enough to spin up a domestic appliance with all the excess being used to heat water and give a 5.5 year pay back. A couple more panels might be justified to give better utility without diluting the payback too much so it looks like 14 panels might be the sweet spot for most households. All this kit is expected to last for 20 years: pretty compelling when electricity prices have been increasing by 8% a year. If that 8% persists then payback falls under 5 years and you’d recoup the same amount again after just three more years and then 10 times your money over the expected life of the panels. As I say, it’s pretty compelling
Of course, if you are running a heat pump then more self consumption will justify more panels but If you have town gas you’ll be making hot water much cheaper than with electricity and that will drop your panel count.
And what about car charging you say. Well, yes, that too makes for more self consumption but, just to rain on that parade, Octopus are offering power for car chargers at 5p/kW.hr for 4 hours a night so don’t up your panel count too much and maybe not at all.
Astonishing high power panels – 540W!
High powered panels are here. For example Canadian (it’s a company) are offering a 540W panel for £200. Expensive alright but with micro-inverters it’s a game changer. Take our 3 panel set above for 1,020W and, with 3 micro-inverters, £690. Then compare 2 x 540W Canadian panels for 1,080W and only 2 inverters for a total of £600. Overnight, higher powered panels have made microinverters the best choice. The best you can get is the cheapest option. No doubt that is going to be the way forward from now on and it would make sense if panels started to come with inverters built in too.
C.E. approved ground source pump for £1,600
You might recall my design for a hybrid ground source heat pump that optimally combined air and ground heat sources. Full RHI payments and less digging etc. If you are contemplating this you’ll be interested to know that a 10kW C.E. approved ground source heat pump unit can be found on Ebay for £1,600. That makes a great start when you think that around £20,000 is the usual cost of a regular installation.
Mini-split heat pump – up and running
We had an unheated laundry room and a small Mitsubishi mini-split (an air to air heat pump) has made a perfect addition. It heats the room while blowing warm air over the clothes racks. In summer the cooling setting will make ironing bearable and some cold air will spill out to make a cool refuge in the adjacent room. Brilliant.
The kit was installed in about 4 hours and the total cost, fitted, was under £1,000. As soon as the solar panels are installed it will run for free but when I checked recently it was only drawing about 350W so no stress there. Solar panels output can be excessive in the summer so running the air conditioning will increase self consumption and be guilt free too.
Nice steep south facing roof? Dormer potentially giving shadow problems? It could still work.
The roof is about 11 metres long so with panels 1650mm long you can fit 2 rows of 6 along the unshadowed top. Place one more under each end to make 14 total.
How much power?
14 panels at 330W each makes a 4.6kWp array producing 4,000+ kW.hrs annually or about £500 worth of electricity. This will easily exceed your annual consumption but that extra power is needed to make the system useful on cloudy days. As the power only comes in daylight you’ll soon acquire the habit of running appliances when the power meter gives you the nod.
Total parts cost about £2,500 (£3,000 fitted?)…. See Bimblesolar.com
The rest of your total energy consumption is gas – about 17,000kW.hrs.
At current prices £500 worth of electrical power is matched by £100 worth of gas. Clearly the value you derive from PV depends on how you use them. A heat pump multiplies up the power by about 3 times so that becomes worth £1,500 of electricity but £300 of gas. Sadly it’s the gas figure that’s relevant because that’s mainly what a heat pump will be defraying. It might seem obvious to charge a car but you can buy late night car charging power from Octopus for 5p making those 4,000 kW.hrs worth only £200. Car charging is not a particularly good use of your power.
The production curve would be like this
(data 4.6kW array – Gatwick area)
The steep roof angle is good for a winter biased production curve and explains why the main peak is not mid summer.
Fattening out the shoulder months is a good thing.
Augmenting your heating with a mini split – a hot and cold blower thingy completely separate from existing heating system. It is a heat pump.
…. Front hall mounted maybe?
e.g. Panasonic double head unit (for 2 rooms) chucks out about 5.8Kw but, being a heat pump, consumes about 2kW. The cost is £900 and quite easy to fit as it is already gassed up.
A simpler single unit for half the power is only £510 and would definitely run free almost all day.
Mini splits do air conditioning and dehumidifying too…. Good for the laundry room for sure.
A £200 Solic 200 immersion heater controller can divert any unused energy to your immersion heater. NB Gas heats the water tank cheaply already so electric heating is not a bargain but free is always worth having. SMA are bringing out an inverter that does the same thing but is aimed at electric car charging.
Bottom line Spend £4,000 and get back about £450 a year but not more than £500.
The utility value is high though with at least 2kW available on most days and the hot water tank often fully charged. In summer there will be a surplus which makes the aircon idea look sensible.
From a financial point of view it’s not exactly a no brainer but it’s not necessarily a bad idea either especially when inflation etc keeps raising energy costs. PV prices will continue to fall so this will make more sense each time you look at it again.
Without the mini-split extras the payback drops to about 6 years if you use all the electricity made. Grid parity is here.
Heat pump energy delivery can be calculated using just 3 parameters. The flow of water passing through the machine and the inlet and output temperatures – that’s all. Heat pumps deliver energy at lower temperatures than gas or oil boilers so they need to flow more water to contain and transport that energy. That’s why the pipes coming out of a heat pump are fairly large. When that high flow is confronted by the slightly smaller pipes of a system designed for radiators it can get bogged down, even more so when the house has zoned heating areas and many parts are shut down. For these reasons the heat pump must be able to modulate the output flow – not all can.
The same 3 parameter calculation – flow and temperature drop – works for the heat output of radiators and for that matter, to heated floors. In typical 15mm OD pipes, leading directly off a radiator for example, flow will be around 7 litres/minute and, when supplied from a gas or oil boiler, at least 65C on the inlet, dropping to say 55C on the outlet (Dt of 10). The power extracted and delivered to the room in this case would be 4.9kW. So very hot radiators work well.
As flow is constrained by pipe size it is the design and size of the radiator that decides how much energy it can transmit and what the resulting Dt is. Heat transmission is restricted by any sludge on the inside and also the insulating boundary layer of air on the outside, just like the slower water flow near the banks of a river. The rate of loss of heat is proportional to the excess temperature of the surroundings, so clearly hotter radiators work best and also benefit from a stronger updraught which strips the heat off.
If we lower the temperature range to say 45 in, 35 out (typical heat pump) the calculation for power delivery would remain the same (Dt of 10 again) but the temperature drop is harder to achieve as the lower differential to the room cuts the updraught and also the heat transfer. The result can be a disastrous drop in performance – more than half. Your shiny new heat pump might have the nominal power output but the rads just can’t shift it to the rooms.
Assuming you are not able to dig up your floors for under-floor heating the solution is to blow air over the radiator surface to shift that boundary layer and replace it with cool air at room temperature, just like blowing on a hot cup of tea. That’s what fan-coil units do – they are fan assisted radiators and with their lower operating temperature they can make a heat pump system actually work.
Reverting back to our power calculation the other parameter is flow, so turning up the heating circulation pump speed is worth a try although pipe size imposes limits on this. Of course increasing pipe size is an often suggested solution and the right one if micro-bore pipes are in use. However my model suggests that the normal 15mm pipes will do as long as the delta T can be reached.
Quite often the main feed will be in 22mm pipe with 15mm take offs to the radiators. So just one pipe feeds all the radiators from your main heat source. This can easily flow about 14 litres/minute which with a 10 degrees Dt produces 9.8kW. The choice of power output of the heat pump is limited by the pipes it serves. Don’t buy a huge expensive heat pump because it won’t make any difference.
Of course if two or more pipes can be fed in parallel from the source then all these flow issues disappear.
Theoretically some heat pumps can deliver 60 degree temperatures but it is a struggle, particularly in very cold weather, and will result in a COP near to 2.5. Running costs will be worse than town gas. Fitting fan-coils will lift the COP to about 3 and give much better performance all round. The order of play should be to get the heat pump installed then start fitting fan-coil units and turning down the set point as you go. Check out here for an inexpensive DIY fan-coil unit (pictured)
DIY fan-coil unit
At this point you might be dismayed to realise that your house needs more energy than your pipes and radiators can transmit. Don’t despair though. Have a think about installing a mini-split as well. These are independent, air to air heat pump units, quite cheap and they can do air conditioning as well as make heat. They make excellent partners with PV panels which apart from running your heat pump in the winter will have masses of surplus power in the summer to run air conditioning.
If everybody in the U.K. was made to stand in line according to age they would make a giant bar graph like this. Your place is there too; as you grow older each year your own line takes a sideways step to the right, and so does everyone else’s.
The steep ramp down to zero starts earlier than you would expect, from as young as the mid fifties. This is due to population growth (fewer people were born in the past so the corresponding lines are smaller) and also early death. You don’t have to wait for old age to join the 542,000 deaths each year; over 300,000 die from cancer, dementia, heart and stroke, all of which can strike prematurely.
The chart illustrates how demand from an ever increasing population made the meteoric rise in house prices inevitable. Look at the biggest and tallest block on the chart – the sixties baby boomers. The biggest population surge ever seen, grew up, got jobs and bought houses as fast as they could be built. Easy access to cheap money accompanied the latter days of the surge so it was inevitable that the run in prices would continue into territory that now looks uncomfortably overbought. That is just the nature of markets.
Once the rush started a new ‘truth’ emerged. With prices perpetually rising, for many borrowers there was no question of repaying their interest only loans; they could always sell at a profit, pay off the debt, buy a car and live happily ever after. This sort of thinking actually worked when prices kept rising; even the lenders got sucked in as their loans appeared to be safe. Old habits die hard it seems but what happens to those loans in a stagnant or falling market? Debt is a deferred payment which has to be paid by someone. Could it be that current buyers are not fully aware that they will have to pay back every penny? Now those mad days are over some recent house purchases may never be paid for, much to the chagrin of the lenders. An unfortunate knock-on from this mistaken optimism is that it inevitably depletes the inheritance tally of the next generation and their ability to buy a house.
Today the bulk of the boomers are middle aged, employed and at the height of their earning power, they mostly bought their houses cheaply and have seen their equity rise enough to borrow against it. There is a smart car on the driveway (brand new for one in ten households), holidays, restaurants, life is good. The bounty doesn’t stop there though, their parents are dying, a house is inherited to be sold or rented out. If only life could be so easy for everyone. The chart says no.
After the peak of the boomers the birth rate started to decline, 13 years in a row, and that signaled the end of their powerful influence on property prices and a lot more besides. The big arrow on the left of the chart shows the annual birth tally in gentle decline for the last 50 years. For now, births still exceed deaths so the population is still growing but births initially make more expense for the very group that is already struggling with high house prices.
The arrival of the baby boomers caused some seismic but positive effects and now, as they start to retire, we can expect to see some negativity as those effects are reversed. More people will retire for each of the next fourteen years until half the current block of baby boomers is drawing pensions with the other half still to go. From 2020 on, retirees start to overwhelm the young earners (backward slope in their area) coming up behind them.
The chart has an even bigger story to tell. Note the two big arrows on the chart and the abrupt change in direction just where the baby boomers peak occurs some 50 years ago. This is a momentous event not seen before for centuries; it signals the end of population growth and the start of a new ex-growth era. The effects of this will be profound, affecting pensions, business, stock valuations and more. As the change takes place the money – that washed plentifully over industries like travel, baby goods, retail, house builders and automotive – is drying up, with results that have recently been all too obvious. Sector by sector is succumbing to a lack of cash. The change is well under way with a lot more to come. House prices will be next. Ironically, as the wealthy baby boomers decrease their spending the resulting job loses are born by the next generation and job uncertainty holds back house buying decisions.
The Government will have to fund all the extra draws on the NHS, pensions, debt funding etc. by increasing taxes or borrowing more. But with the number of tax payers declining the Government will have to sell more bonds and this at a time when pension funds become net sellers of bonds (to pay out the pensions of course). With fewer buyers for bonds the only way to make them more attractive is to raise yields and this devalues existing bonds so even more have to be sold to pay the pensions. This is just one example of how ex-growth U.K. faces some intractable vicious circles. The point though is that this puts upward pressure on interest rates. The bank base rate is now 0.75% so there is very little scope for a fall so when change does come it is likely to be bad for property prices.
Excess personal debt is a major threat to property prices. On the surface daily life looks normal and secure but in reality it’s artificially and precariously propped by debt. We’re flying by pulling on our bootlaces. Whether through poverty or imagined wellbeing, personal debt continues to grow. Average household credit card debt is now £2,603 – pretty astonishing for the average. It seems unlikely that anyone needing this much debt can pay it back very quickly and it is predicted that the figure will increase substantially in the next 4 years. Average adult debt for everything including mortgages is £59,823. With record debt there is hardly a wall of money heading towards the property market.
Then there is government debt. As the retirees swell to well over 17 million that produces an annual pensions demand of around £170 billion not including the extra demand on the health service. The pensions industry and the Government need to be ready for this. The former already have their prudence being tested (or exposed) by the ex growth phenomenon but the problem for the Government is more acute. Pensions have always been met by the expanding set of workers following behind; a system that always worked when earners were growing in number. After centuries of habit forming complacency that era is now over. The new paradigm must involve extra taxes and borrowing. In contrast to the private pension system there is no Government pension pot, just borrowings of over £1,800,000,000,000 which is £56,000 per taxpayer and nearer £75,000 when future pension obligations are added (a promise to pay in the future is a debt). With talk of ‘fiscal headroom’ and post Brexit expenses looming these totals will certainly increase. There is talk about the end of posterity but that’s a word we can expect to see again.
The property boom has divided society into two halves. The people on the right half of the chart live in houses bought cheaply and they are very well off. All the people on the left don’t have a house and can only ever buy an expensive one; after rent, rates, general living expenses these are the people with credit card debts instead of savings.
Take the younger group shown in grey; they are starting out on their careers with little chance of buying a house of their own except via inheritance or parental gifts. The national house price to earnings ratio might be at a peaky 6 but that’s an average. Take a typical cookie cutter house in the south of England for £450,000 and the average wage of £26,364 and the ratio is 17; totally unsustainable, especially as hopeful buyers trapped in expensive rental properties are more likely to be in debt rather than building a savings pot. Let’s be clear about house price to earnings ratios; if the ratio is 17 then it would take ALL your earnings over 17 years to pay for it, and that’s before interest. Potential buyers for houses at the current prices are not in this grey group.
Obviously there are buyers out there, not very many though and declining by the year, but there non-the-less. In the home counties in particular properties are being bought by new millionaire Londoners cashing in before prices retreat further.
And buying still makes sense right? The agents saw high demand for these high priced houses which were sold quickly too – business was booming. Hold on, hold on; that’s the first danger sign slipping by – high turnover. Turnover so high that your local high street can support several estate agents (but no banks) – something weird there. When there are too many buyers or too many sellers there is an imbalance and transactions are relatively low. When there is a transition from one state to another there is a period when sellers exactly match the buyers; perfect conditions for a peak in transactions and peak agents. Logically, when transaction volume is high the market is turning. What looks like a buying frenzy is actually a subtle warning sign. The bubble is about to burst. Is that now? The house builders, are no longer making hay – maybe change is in the air?
A market correction has never amounted to much before and setbacks have always been ironed out over time. You can’t go wrong in bricks and mortar can you? Well things might be different this time. At this point we hear the call ‘there is a massive property shortage so prices can’t possibly fall’. Actually there is a shortage of ‘affordable’ property, but there is no shortage at all of ridiculously expensive properties, the market is flooded with them. You might note how half of them have price reductions; they are not exactly being snapped up.
It would be no surprise if Brexit goes down in history as the trigger that turned the property market and burst some other bubbles too. The transition will certainly be disruptive in the short term. There are thousands of areas where there will be a threat to jobs and in turn a threat to property prices.
Watch the pound carefully while Brexit unravels. Any need to defend a weak currency could raise interest rates and that will make holding or buying property even more expensive. Actually it makes everything more expensive; a country with a huge debt burden can only expect huge interest burdens when rates rise.
It can’t be sensible to be invested in an overvalued asset class while all this is going on. Buy-to-let investors (already taxed and stamped) are reasonably liquid and might well see the sense in locking in profits right now. Any obvious downturn in the market will set them selling and after that most buyers will step back to watch the fall.
So, to summarise; property prices are unsustainably high, the money that bought them was easy and cheap but is now evaporating. The ex-growth G.B. effect has kicked in disturbingly early with still more jobs at risk. The market may be turning now, or very soon, and when it does the fall will be sudden and without respite. Bubbles don’t burst quietly.
Follow up March 2020: Well there we are; the pin to burst the bubble has arrived and all sorts of unexpected consequences are popping up. One yet to be seen is the effect on the lenders as their clients lose their jobs and maybe even their lives. In short they have lent on overpriced collateral to clients who can’t pay them back. A black hole in the accounts will decrease the funds to be lent. If turning off the money tap doesn’t trouble the property market I’d be very surprised.
As you might have read in the last Heating News, cheap PV panels have radically changed a few of our preconceptions about heating. The heating system layout has become much simpler (and less expensive) as under-floor heating and wet solar panels are deleted and heat pump connections are simplified.
heat pump – heating and cooling
The heat pump connections are easier thanks to the Original Twist Hybrid Heat Pump which indirectly supplies chilled water without breaking the rules for the RHI incentives. Note that the system copes with 2 set points from the heat pump; hot water is routed to the hot tank while the heating is kept going with stored energy from the cooler tank. For a lower set point heat is sent directly to the heating side without disrupting the stratification in the tank. The system can heat either tank while simultaneously supplying chilled air – how cool is that? An extra immersion heater helps use all that extra PV energy, useful now that FITs are trivial.
You can see the original system here along with a long list of all the benefits which still make this the best system on the planet.
You might have sussed that with 2 tanks here and 2 from the heat pump system your tech room is going to be large and, dare I say, impressive. I imagine all the tanks raised slightly on a low wall with wooden slats across the top. This allows most of the pipes to be hidden. The tanks are often raised when a wood burning stove is connected and gravity circulation is required.
So we could save the planet could we? Well yes, we could certainly do our bit in a big way. Recent advances in solar technology mean our homes can be made self sufficient in energy and leave us better off financially at the same time. The off-grid theme is all electric, quite simple and more DIYable too if that’s your thing. About 20 panels, a heat pump, some tanks of water and we are pretty much there. We can’t ignore an electric car, even though depreciation is going to slay us, so that could be in the mix too. So let’s chat about some of the issues that arise.
DIY power – cheaper than nuclear?
In the EU nuclear power costs $5,500 per kilowatt of capacity (each Kw producing 8,760kW.hrs a year). We pay that cost via our taxes and then pay again to buy that power. Put that way it sounds a bit perverse; could there be an alternative? A domestic PV array with battery storage could make almost as much energy for the same money and, as the owner pays for it, there is zero cost to the government. Could a mass take up of home energy production do away with a power station? Take the $10bn cost of a new nuclear power plant and instead give it to the 1.5m customers it would service and you’d have a subsidy of over $6,000 per person. You could twist a lot more than 1.5m arms with that sort of money yet the government has just ceased to pay feed in tariffs!
Heat pumps and the Renewable Heat Incentive
The RHI on a ground source heat pump is a government bung, to you, of something like £20,000 – £30,000 over 7 years. That’s high because a GSHP is expensive; but what if it wasn’t? The Original Twist hybrid GSHP concept (with air assistance) makes everything cheaper and more efficient. And by cheaper we’re looking to go well below that RHI contribution so your project cost is easily nil and beyond. It is all explainedhere.
Photovoltaic panel prices and power.
PV overclock and tilt
The power of new PV panels is increasing by the month. 350W, even 400W (at a price) is possible now.
As power rises the cost keeps falling quite noticeably. My old 4.6kW car port roof, – 20 panels – would now be good for 6.1kW and under £3,300 with some 305W Jinko Smart Solar Panels. The latter are not particularly cheap but they limit their own output voltage which makes inverter choices easier and helps with the overclock and tilt concept.
Feed In Tariffs – a new paradigm
It was all doom and gloom last March as the government FITs came to an end. Presumably PV kit had become cheap enough to make us self incentivised without a nudge from the government. You might remember, in the last newsletter, I pointed out that prices had fallen significantly, grid parity had arrived making off grid a viable option.
However, FITs have revived in an interesting way. With Octopus leading the way, the energy providers will be introducing their own FITs. ‘Outgoing Octopus’ is a plan which works alongside a smart energy meter and if you have energy to sell, from any source, they’ll give you 5.5p/kW.hr and it gets added to your account with them. Unfortunately for an 8kW PV system running a heat pump etc you’d be lucky to sell enough surplus to bag more than £200 a year but a grid connected system would not need any expensive batteries so you can get going at a much lower cost.
‘Octopus Agile’ is another offering which charges and/or pays you according to half hour market rates, typically between 4p and 10p. Even negative rates can occur where you would actually be paid to take in power. With some fancy software and a hook up to the car batteries we could all be future energy traders but, that aside, I think the off grid brigade will be going with this one.
Octopus Go. Charge your electric car for just 5p/kW.hr for four hours a night. This is better than trying to charge your car with your off-grid arrangement. It’s just not sensible to charge your house batteries during the day in order to charge the car by night. That would be an expensive heavy duty battery hammering. So going completely off grid is probably not for electric car owners. That 5p looks very attractive especially when combined with a little night-timed appliance and heat pump running, so we’ll consider below how to add it to an off-grid set up. You can’t combine this deal with Octopus FITs deals.
How to be off-grid but still connected.
OK, you have the car charging deal so you have access to the grid. You can’t sell to the grid so the flow can only be incoming. With that in mind you want an off grid set up – panels and batteries – with no two way connection to the mains. For a solution there is just one and only type of link – the mains can run a battery charger and charge the house batteries but they can’t return the flow. Similarly the mains is connected to the car battery charger. The net result is:
The car gets charged at 5p/kW.hr
Timed appliances and the heat pump can run cheaply at night if they need to
The house system is off-grid but has mains back up
A less mission critical off-grid system can be smaller and cheaper.
If all the panels get snowed up for a few days it doesn’t matter.
The lights stay on if there is a power cut.
Solar thermal panels are obsolete?
Why no mentions of the wet panels? Well PV is relatively cheap now so it is easier to just add more electric power rather than get involved with a more complicated installation. In weak winter sun wet panels don’t do much especially when the water tank is already hot. In summer there is enough excess PV solar power to run an immersion heater so, again, we don’t need the wet panels. That’s a big expense to cross off the list. Paradoxically you can get RHI payments on wet panels but not on PV – the government backing the wrong horse again?
Underfloor heating is obsolete?
Good insulation makes UFH an unnecessary waste of thousands of pounds. Fan-coils (basically a radiator with a fan on it) make more sense and can cost very little. Here’s the Original Twist DIY fan-coil which is arguably better than a tailor made one. This change of tactic alone could fund your off-grid move.
Gas is obsolete?
The Chancellor Philip Hammond has announced that gas heating will be banned for new build homes by 2025. A seemingly innocuous announcement but what it means is that the most used energy source (costing a quarter as much as electricity) will gradually be removed from our future heating choices. Apart from adding massive insulation the only way to restore reasonable expenditure is to drive a heat pump with electricity and we can expect to see a lot more of them from now on. The RHI payment on heat pumps will inevitably subside when they become practically mandatory so have a good think about locking into that now. Once boilers go, gas hobs and ovens will follow them into obscurity; there is no point in paying daily supply charges for minimal use when electric hobs and ovens are arguably better anyway.
It’s interesting to see the knock-on effects of falling PV prices and to react appropriately with the right heating/energy strategy. The all electric home looks much simpler and cheaper as a result. The bottom line is that going off grid saves you money, the government will pay for most of it anyway, and you can do your bit to save the world.
Heat pumps of all sorts (ground source or air source) are going to save the World. The debate over ground or air rages on but is largely irrelevant when a hybrid design could cherry pick the best bits from both. Both suck heat out their surroundings and pump it to a higher level. You get 3 or 4 times more energy out than is put in, a seemingly impossible engineering miracle which still, for many, defies belief. The in-out energy ratio is the coefficient of performance or COP.
First lets join the debate about ASHP vs GSHP by comparing the COPs of both across the season.
The ASHP operates in a wide range between the red line (day time running) and the blue line (night time running). Cold night time temperatures look pretty disastrous but warmer day time running produces consistently high COPs. On the black line the GSHP does without the wild swings and gently declines in performance as it sucks the heat out of the ever cooling ground.
Day COP vs. Night COP
While the GSHP (black line) gradually loses performance over the winter the ASHP can always do better on warmer days (red line) making the two systems closely matched during the daytime, up until Christmas anyway. Soon after that the daytime COP on the air source starts to improve while the ground source continues to deteriorate. The only redeeming feature of the ground source is that it is miles better than the air source blue line at night and cold days.
Even though the GSHP rules the night an ASHP system geared towards more daytime running would be a match for the much more expensive GSHP which, let’s face it, doesn’t always need to run at night at all.
However, some new electricity deals for electric car charging (7.5p/kW.hr at night – April 2022) make a GSHP, with more night time running, quite compelling. It might be thermally less efficient but the running cost is only 25% that of daytime rates.
If only there was a system that could cherry pick the best COP line on the chart for any given moment. It would need to extract heat from the air on most days – red line – and extract heat from the ground at night – black line. The air side would not run at night so the blue line can be ignored and the system would cherry pick between the red and black lines. The average COP over the season would be around 4 which is better than either system on its own, so best in the world then. Luckily designing such a system is easy really and not particularly expensive either.
Original Twist Hybrid heat pump.
For the core of the system we start with a GSHP unit. As the name implies we need to feed it with some warmed water from a ground loop or slinky and more on that later.
Air source module
There is already water going in and out of the GSHP unit so warming it with air is simple. Just connect a parallel circuit incorporating, say, a few car radiators (surprisingly cheap) and a fan or two to make the equivalent of an ASHP for about £200. 12v fans for cars are waterproof and easily available. A simple solar controller brings in the AS module whenever it can contribute. Of course you can just buy a regular air handling unit.
Hybrid heat pump
Two buffer tanks are used to handle the cold water coming out of the heat pump and the warmed water going in. The tanks allow the air side to store daytime energy. The energy flow diagram looks vague but the actual energy flow is effected by pipes and pumps and controlled by a simple solar controller.
Warm air is a great resource so we decouple the air source module and let it run whenever there is a benefit, whether the heat pump is on or not. The cold tank will nearly always be available to charge and the “hot” tank too when running on air source only. Like the solar stripper circuit on the heating system the solar controller turns on the fans and the circulation pump and also optimally switches tanks. When the colder tank is warmed up the flow back into the slinky is highly beneficial by raising the COP line slightly and delaying that end of season fall off in performance. The straight black line on the COP chart will bend upwards into better COP territory as shown in the new chart. The new system always selects the best source for the best COP and is always superior to conventional systems. The water coming out of the heat pump is around freezing so the air source module will nearly always be running.
Normally the ground starts the winter at around 12C then the GSHP and cold weather gradually take that down to around 0C. Permafrost around slinkies is not unusual. Normal ground loops are designed to perform at the worst end of this so they have to be huge. Not so with ours which can be very much smaller because:-
The ground starts the winter overcharged. We dump heat into it in the summer.
Frequent recharging takes place.
The cold return is usually pre-warmed by the air side before going back to the ground.
Day time running of the GSHP is less frequent so the ground temperature can recover better.
Towards the end of winter, as the air warms up, the Air Source Module takes on practically all the load. The end of season performance stress on the slinky is avoided so the design is less critical and it can be considerably smaller.
I’ve done a job where the slinky was trucked down from Switzerland along with a man in a white coat and a bill for thousands; a bit over the top when polyethylene tube from the local builders merchant is just as good and costs under £300.
The RHI payments have stopped and the incentive is £5,000 for an ASHP and £6,000 for a GSHP.
In the summer the cold tank can be left to get really cold and a coil can send the cold to the main heating system and onwards to the fan coil units. Aircon sorted for almost no cost!
BTW – the heat pump module will be making heat when the aircon is running so you can heat the pool! Think of the pool heat exchanger as just another radiator on the domestic circuit, it couldn’t be simpler or cheaper.
So that’s it. Better COPs than a GSHP or an ASHP, aircon, ground loop recharge, smaller ground loops and a better match to PV panels (more day time running). The smaller ground loop might just swing this for owners of regular sized gardens.
Ultimate Eco-heating system
If you are looking at heat pumps then I’ll assume you will have seen this heating system which particularly favours daytime running of Air Source Heat Pumps, a feature in keeping with the free power from PV panels.
Using big PV to go off-grid – or nearly off-grid – makes sense especially when driving a heat pump. You’ll need every trick to make a limited energy supply go further so make sure you check out the 6kW overclock and tilt concept.