Two things happened this week that should make you think twice about your energy supply:
- SSE, one of the Big Six energy suppliers, announced it will put up the cost of gas and electricity by an average of 6.7 per cent – the last of the large providers to announce an increase in what will be a fortnight of price rises from today for customers of the big fossil fuel suppliers.
- Royal Bank of Scotland, one of the big five banks, announced it would no longer finance environmentally damaging coal and tar sands projects. It’s the first big UK bank to do so.
So, a rise in household bills from fossil-fuel derived energy, largely driven by the volatile oil price pushing up the cost of electricity, happening at a time when thousands of homeowners are coming to the end of their fixed rate energy tariffs.
Steven Day, co founder of Pure Planet, said: “We’re calling it Price Hike Fortnight. This will cost consumers nearly £400mn. They shouldn’t be distracted by the warm sun outside but make the quick switch to avoid big bills all year.”
And also a major step away from dirty to clean energy by one of the biggest UK banks.
Its worth mentioning that RBS’s move is not simply the bank coming over all environmentally conscious – it’s move is also financially prudent. The investment case for fossil fuels is waning as global policy initiatives to decarbonise gather pace. According to Carbon Tracker, the think tank, more than $1.6 trillion of oil and gas investment is at risk as a result of efforts to meet global emissions targets.
Even the Governor of the Bank of England is worried about the economically destabilising impact that investments in fossil fuels could have.
So, how can you personally align yourself with the energy transition and profit from it?
Below are three ways to make money from renewables, and three ways to save.
Ways to make money from renewable energy
- Community share offers in local renewable energy projects. Ethex is a great place to find community share offers to support the construction or refinancing of projects. Look for Thrive Renewables (a Good Egg company), Resilient Energy and Westmill Solar here.
2. Renewable energy debt-based crowdfunds. Renewable energy projects lend themselves to debt-based crowdfunding, where the crowd lends money to a project, because they offer steady, fairly predictable long-term returns once they are installed and running. Abundance, another Good Egg firm, is the home of debt-based renewable energy crowdfunding. But some of the projects on Ethex also fit this description and there are other crowdfunding platforms that feature renewable energy projects, such as Downing Crowd (also a Good Egg) and Assetz Capital. It’s worth checking the term as well as the return and whether you can lend to projects using your ISA allowance, through the Innovative Finance ISA option (here’s a guide to what these are all about) now available on some platforms.
3. Renewable energy investment funds. You won’t find any fossil fuels in the Impax Environment Markets fund, WHEB Sustainability or Foresight Solar. Here are seven ethical and sustainable investment funds that will put you on the right side of the energy transition. And here’s the Good Investment Review, with information on financial performance of ethical and sustainable funds, too.
Ways to save money with renewable energy
- Switch to a renewable energy tariff
These days, tariffs on offer from some of the newer, smaller green suppliers, such as Pure Planet, are much cheaper than the standard tariffs from the big suppliers. Pure Planet reckons they can save users up to £400 a year on bills versus the Big Six. That’s partly because they are nimbler, leaner and more technologically advanced – and they are able to pass these cost savings on to customers (their customer service is rated relatively highly so far too). Mr Day says: “The Big Six pollute and make a margin on all the energy they sell. We make zero margin on the energy, so you pay, what we pay. Our only tiny profit is in the membership rate.”
2. Install your own renewable generator
The feed-in tariff on domestic solar installations has come down so much that it really only makes financial sense for people who plan to live in their house for 20 years. Any less than that, and you won’t make a profit on the upfront cost (although you will be doing the right thing for the environment).
However there are other types of renewables with higher feed-in tariffs than solar panels, that might be worth considering for your home. These are ground source heat pumps, air source heat pumps, biomass boilers and solar thermal panels. Households with these installations receive something called the Renewable Heat Incentive for the heat they generate. You can see the rates paid here.
Ground source heat pumps absorb heat from underground to heat up water – if your house is currently heated with gas and you switch to a ground source heat pump, your initial investment will be paid back to you over 11 or 12 years, based on the current Renewable Heat Incentive set by the Government.
Air source heat pumps are a slightly less efficient alternative, but could be easier to install.
Biomass boilers cost about £7,000 for a 12kW version, which should heat a 4-bedroom house. Using a biomass boiler means the cost of heating your home will not be affected by fluctuations in the price of gas or oil. You need to buy pellets for biomass boilers and you need to “feed” the boiler every few days – so it’s a higher maintenance option. It works best for large, rural homes that are off mains gas.
Solar thermal panels have similar limitations to regular solar panels – they need to face south. They also won’t heat up your shower.
3. Solar appliances
If you can’t afford, or your home isn’t right for renewable energy generation, you can still make use of solar technology in other ways around the home. For example, solar battery chargers, only £5 here, will save you a fortune in batteries over time, particularly if you have young children with lots of battery-powered toys.
This blog was written in partnership with Pure Planet