Home energy upgrades: which ones are worth it?

This content is for information purposes only and should not be taken as financial advice. Every effort has been made to ensure the information is correct and up-to-date at the time of writing. For personalised and regulated advice regarding your situation, please consult an independent financial adviser here at Smith & Pinching in Norwich, Lowestoft and Eaton. The Financial Conduct Authority does not regulate taxation advice, estate planning or inheritance tax planning.

The cost of energy has come into sharper focus for UK households in recent years, particularly between late 2021 and much of 2022 when global wholesale energy prices rose sharply. To protect against further price rises, many clients have expressed more interest in how to make their homes more energy efficient – for instance via heat pumps, boilers, appliances and insulation. This is also partly driven by changing laws about energy efficiency in properties in pursuit of “net zero”. For instance, since 1 April 2020 all let or sold UK properties must now have a minimum EPC rating (energy performance certificate) of ‘E’ or above.

However, which energy upgrades for a property are really worth it? Can a heat pump reduce your monthly utility bill, for example? Below, we take a closer look at the financial rationale for some of the most popular energy-saving upgrades in 2023-24. We hope these insights are useful to you. If you want to discuss your strategy with us, please get in touch to arrange a no-obligation financial consultation:

01603 789966
[email protected]


Solar panels

The idea of generating your own electricity can be very attractive. This takes away the power of electrical companies to hike your bill. Indeed, some households could even generate a “profit” by selling excess electricity back to the grid via a “feed-in tariff”.

Realistically, however, solar panels are more or less viable depending on your location. Solar radiation is generally more intense in the South West, South East, Yorkshire and Humberside, and East. The average cost to set up solar panels on a house lies between £6,000 – £8,000, saving around £729 per year on energy costs.

Good solar panels should last 25 years and the average pay-off period is around 13 years. There is uncertainty about whether having solar panels can boost the future sale of your home. Some studies suggest that they can add up to 25% in value to a property, but others suggest that they can put off many would-be buyers.


Heat pumps

These systems are popular in many parts of Europe especially cold countries like Norway and Sweden. They work oppositely to a fridge (which takes hot air “out of the box”) – i.e. by transferring heat from outside air, ground or water into your property. Here, your home must be well insulated to reliably raise the indoor temperature via radiators, taps and showers.

Heat pumps are not cheap. They cost between £1,500 – £3,500 for an air-to-water pump and between £8,000 to £18,000 for an air-source heat pump (ground heat pumps are even more expensive, costing up to £45,000). Some households can access up to £5,000 in government funding under the Boiler Upgrade Scheme to help pay for installation, but not all properties will be eligible for this.

Most households moving to a heat pump save between £70 and £250 per year – although moving away from an old inefficient gas boiler could save over £400 annually. However, the savings could increase if the government changes subsidy rules for gas.


Home insulation

The government estimated that approximately 7.7 million properties had uninsulated solid walls in December 2022 (nearly 90% of total homes with solid walls). A 3-bedroom semi-detached house costs between £8,500 – £12,000 and can lead to savings of over £500 per year.

However, the outlay could be even smaller – e.g. £1,000 – if your property only needs to fill gaps in walls using foam (cavity wall insulation). Just insulating a loft and roof can cost between £550 – £1,000 and can result in savings exceeding £350 per year.


Boiler upgrade

Replacing your old boiler can cost between £1,150 – £5,500. The savings will depend on the difference between the old and new systems. For instance, moving from a G-rated boiler to a new A-rated condensing model could result in £300 – £600 in savings per year.

However, newer boilers may be less profitable to upgrade. It is worth noting the aforementioned law, since 1 April 2020, which stipulates that all let/sold properties must have an EPC rating of “E” or above. Having an old inefficient boiler could pull your rating down by 2 bands, making it difficult (perhaps impossible) to rent out or sell in the future.


Summary & invitation

Purely from a financial standpoint, it does seem that certain energy upgrades are more viable than others in 2023. Heat pumps arguably make the least sense given the higher up-front costs and lower potential savings compared to other options. However, if you can opt for an air-to-water pump and qualify for government funding, the option becomes more compelling.

For most households, better savings will likely be found by focusing on home insulation and boiler upgrades. In some cases, solar panels could be a good option. Regardless of which option(s) you may choose, be careful to consider how they may impact the future value of your home – not just the potential monthly energy savings.

If you are interested in discussing your own financial plan or investment strategy with us, please get in touch to arrange a no-commitment financial consultation at our expense:

01603 789966
[email protected]