How to Zero Your Energy Bills

How much did you spend on household energy usage in the last year?

Let's include electricity, gas, bottled gas (LPG), wood, and petrol / diesel for your car(s).

Most households in Australia spend around $5,000 on these fuels each year (see here and here). Note that $5,000 per year is less than $100 per week. So if you tally up all of your energy usage, you may find you exceeded this average.

Our total for the past year is about minus $300. In other words, we ended the year in credit, accounting for all of the above fuels.

This annual total for electricity, plus a few hundred dollars for petrol, still left us in credit for the year.

We are a relatively small household with two people and a dog. But, we also live in a cold climate (high heating requirements), and we work from home (so the house is occupied nearly all the time).

Here's how we did it:

Step 1) Energy Efficiency

Energy efficiency is the first step because it is the most important.

And everyone can do it - even if you rent.

This is also the cheapest step to implement and has the fastest payback time. 

It's probably no surprise that all our lights are LED (because we sell them). Nor that I use a wireless electricity usage monitor to track my power usage.

But we also:

• Use a low power DC fan to keep cool in summer.
• Use a foot mat heater and heated throw in winter (in addition to, or instead of, reverse cycle AC).
• Insulated our hot water pipes, reduced the hot water set-point temperature, and installed an ultra low flow shower-head.
• Insulated under the floor, and draught proofed extensively.
• Only use one fridge/freezer. There's no energy-guzzling drinks fridge in the shed here, sorry!
• Control any high usage standby power loads with simple gadgets like these.
• Run the washing machine on cold and hang our laundry out to dry.

When we did a small renovation, we also took the opportunity to replace four large windows with double glazed units. But I don't want to overstate that, it's a great idea, but it's not a necessary step for most households to zero their energy bills.

Want more tips? See my blog post on the high electricity bills.

Step 2) Quit Burning Gas, Wood & Petrol

Next up, things got a little more involved.

Here's what we did:

• Replaced the gas stove with induction.
• Removed the central gas heating system and replaced it with a high efficiency split system AC.
• Replaced the gas storage hot water tank with a high quality heat pump unit.
• Capped the two old brick chimneys in the ceiling (it's an old house) and removed the slow combustion fireplace.

The above steps allowed us to close our gas account. And 'burning stuff' is now restricted to efficient charcoal BBQ'ing or the odd fire pit.

As for petrol usage: no, we did not buy a Tesla.

A few years ago we purchased a plug-in hybrid which has both a petrol and electric motor. But unlike a conventional hybrid which you may be familiar with, it can run exclusively on electricity for up to around 40km distance. This takes care of about half of our driving - we re-charge at home between short trips. On longer journeys the petrol motor kicks in. Our small amount of petrol usage is more than offset by our negative electricity bill (see next point).

Want more tips? See my blog post on climate change in Australia.

Step 3) Solar Power

The final step was to replace an old solar system on our roof with 10kW of PV panels. It's important to note this is deliberately way more than we actually need.

The reasons to oversize your solar PV system are three-fold:

1. Get more solar power into the grid!
2. Earn some credit to offset the rest of your electricity bill. Note: you get paid less for what you "export" than for what you use.
3. Prepare your house for more electrical loads, such as an electric car (see point 2 above).

Here's an example from our place which resulted in an annual electricity bill of minus $700:

Green = power exported to the grid. Orange = electricity purchased from the grid.

Zero or Very Low Energy Bills - Busting Some Myths

If you read my above guide, it seems kind of simple - and in some ways it is. But you're likely to meet some resistance on your journey, as we did.

Here are some examples:

Myth: Heat pumps don't work in cold climates

We installed the heat pump hot water system against the advice of a few plumbers. They said "that won't work in this climate." Incorrect - it's installed and has been working well for a few years.

Note: the apprehension around heat pumps likely stems from when they actually didn't work well (10 to 20 years ago). Also: not all brands are designed to handle sub-zero temperatures.

Our electric heat pump hot water system. It's set up to run only during the day (when we are making plenty of solar power, and the air is warmer).

Myth: Cooking with gas is better

We installed an induction cooktop despite the myth that gas cooking is better. It is not. Apart from being a fossil fuel, gas also pollutes your indoor air and is a major cause of household fires. Induction offers superior (more precise) control, is safer, and is so much easier to clean.

Myth: Heating with gas is efficient

We removed our central gas heating. Gas is not better - it just burns hot and fast and at a high capacity. We now have to be more considered with heating, but we also have less draughts and gaps in our house (making it easier to insulate and heat).

Myth: You need a massive air conditioner

We installed an "undersized" reverse cycle split system. Again - against the advice of the installer. Why? This way we can use a high-star rated and low input power unit. It can operate off our solar panels even on a cloudy day in winter (as does the hot water system mentioned above).

Note: the reasons why air conditioning systems are often oversized are simple. First up, the installer doesn't want you whinging to them when it "doesn't work" on a 40˚C day (fair enough). Also, the sizing calculators assume a leaky and poorly insulated home. But if you get step 1 right, your home won't be like that anymore.

Myth: All you would ever need / want is a 6.6kW PV system

Most solar companies wanted to quote us their standard 6.6kW size systems. For most households: that won't cut it. If you have the roof space, install a bigger system. In our case it is 10kW of panels on a 8.2kW inverter with a 5kW export limit, as we are single phase not 3 phase.

10kW of solar PV Panels (and me) on the roof. More details below.

Myth: Feed-in tariffs will always offset your electricity bill

The dream run on feed-in tariffs - what you are paid for solar exported to the grid - will end soon. We currently earn a relatively high $0.21 per kWh exported. But solar power is only getting cheaper. This means over the next few years I expect our bills to drop from negative to cost-neutral or even a bit worse. But that's okay with me.

Myth: You need a battery to 'zero' your usage or bill

It's worth noting that we do not use a household battery to achieve the above results. It is far more cost-effective to spend money making your home as energy efficient as possible. Then, run the electrical loads you have during the day - for free - off your solar panels.

Hang On - What Did It All Cost!?

Good question, but this is not just about costs.

We have also improved the comfort and the safety of our home. We drive a car that is more pleasant to drive. And we're pumping out far fewer carbon emissions over all. In fact, our net emissions, much like our bills, would likely be negative (at least for energy usage).

Anyway, let's say all the home energy upgrades cost $25,000 (excluding the car, which is a money pit, just like any car). And let's say they're saving us the $5,000 average mentioned at the beginning of this article. That makes it look like a payback period of about 5 years. That's pretty good - when you consider the solar panels have a 20 year warranty.

BUT we didn't do it all at once. And when your hot water system breaks - you need a new one. So is it fair to include the full cost of that item in the price? No, it isn't, you should only include the extra bit for getting a better one. So depending on your assumptions, you can drop the payback period.

Here's a rough total for each of the three steps:

• Step 1 Energy Efficiency = less than $5,000
• This includes the LED lighting, fans & heaters, and insulation I mentioned earlier. Plus laying a new power circuit to the carport (to charge the car).
• Step 2 Quit Gas & Wood = a bit over $10,000
• This includes about $3,000 for the hot water tank (installed), $2,000 for a 3.5kW Hitachi spit system (installed), $2,500 for a new Bosch induction stove and oven (free-standing unit), and some building works (remove slow combustion fireplace, close gas vents, etc)
• Step 3 Install Solar = around $10,000 (and dropping every year)
• This was for a system purchased in 2019 including 32 x 315W Trina solar panels and Fronius Primo 8.2kW inverter with smart meter.

Finally, if you own your own home, these upgrades will surely add at least $25,000 to its value. If you plan to sell, place some copies of your zero dollar power bills on the table during the open home. Then make sure the real estate agent points them out. In this case, the actual payback period would be 0 years.

Over to you!