Which home energy improvements actually save you money?
We’re all looking for ways to reduce the cost of heating and lighting our homes. But with many energy efficiency improvements costing thousands of pounds to install, can you rely on them to quickly pay back your investment through energy bill savings?
This guide focuses on evaluating major energy efficiency upgrades from a purely financial perspective: how quickly will you see a return on your investment (ROI) and how much can you expect to make over the course of a product’s lifespan?
How are home energy improvements ranked?
Each improvement is ranked solely on its return on investment - in other words, how the average annual saving on your energy bill will eventually pay back the cost of installing the upgrade. For example, if you pay £1,000 for something and it saves you £150 a year on your bills, then it will have paid back your initial investment in the seventh year. All future savings can then be banked as ‘profit’.
There’s one additional consideration: the projected lifespan of the improvement. How long the improvement lasts before it needs replacing determines how valuable the investment is, as the table below shows with regard to our earlier example:
| Period | Cumulative energy bill saving | Return on £1,000 investment (ROI) |
|---|---|---|
| 1 year | £150 | -£850 |
| 3 years | £450 | -£550 |
| 6 years | £900 | -£100 |
| 9 years | £1,350 | +£350 |
| 12 years | £1,800 | +£800 |
Some additional considerations include:
- Be wary of manufacturer claims: these are always best-case scenarios and you’re unlikely to meet, let alone, beat these expectations except in extreme circumstances (like another major hike in energy prices)
- Focus on realistic payback periods: the figures used in this article come from reputable independent sources, including government data, the Energy Saving Trust and the Eco Experts. However, these are only average projections and you should do your own research - for example, savings and costs vary depending on various factors, such as the size and type of home; whether you’re fitting something brand new or upgrading an existing efficiency improvement; and your energy usage.
Top energy-saving home improvements
The following list of home improvements are evaluated solely on how quickly they will pay for themselves through reducing your energy consumption (all costs include installation).
Loft and roof insulation
The first thing you should do is explore insulating your loft and roof. Adding the recommended 270 mm of insulation will really make a difference - professionally installed loft insulation will pay for itself within four to five years and has a lifespan of over 40 years, so the ROI keeps growing. It can also add up to 10-15 points to your home’s EPC rating.
- Cost of roof insulation: £800-£1,200
- Potential savings: £210-£430 a year (or £8,820-£18,060 over its projected 42-year lifespan).
Is cavity wall insulation worth it?
Yes. Another big win can be gained by insulating the external walls of your home. Homes built after 1930 have cavities that can be filled with insulation to help prevent warm air escaping through the walls, helping drive down bills.
- Cost of cavity wall insulation: anything from £1,100 for a mid-floor flat to £4,300 for a detached house
- Potential savings: £120-£420 a year (or £5,040-£17,640 over the course of its projected 42-year lifespan).
Underfloor insulation
Underfloor insulation is most effective in older houses with suspended floors (wooden floorboards placed over the top of a void). Cold air is brought into the room through gaps in the floorboard. There are numerous ways to fix this, but the most effective is to install underfloor insulation. However, while it will undoubtedly make your home feel more comfortable, the ROI is questionable:
- Cost of underfloor insulation (suspended floor): £2,000-5,000
- Potential savings: £45-£120 a year (or £1,890-£5,040 over the course of its projected 42-year lifespan).
Are solar panels worth it in the UK?
Calculating the ROI on installing solar panels is difficult because you'll save money on your electricity bills by using the electricity you generate yourself, and you’ll also receive money (in the form of an SEG or Solar Export Guarantee payment) for any unused electricity you sell back to the grid. (Although it’s worth noting that you’re unlikely to generate enough electricity to cover all your own usage.)
The amount that solar panels can save you depends on where you live, what direction your home is facing and whether you’re at home during the day. Depending on your answers to these questions, you may have to wait anywhere between 10 and 21 years before solar panels have paid for themselves, but they have an average lifespan of around 25 years.
The average monthly electric bill with solar panels in the UK falls by anywhere from around £28 to £54 depending on where you live. The following case examples are based on an installation cost of £6,100:
| Region | Annual saving on bills | Savings over 25-year lifespan | Projected ROI |
|---|---|---|---|
| London | £530-£650 | £13,250-£16,250 | £7,150-£10,150 |
| Manchester | £470-£580 | £11,750-£14,500 | £5,650-£8,400 |
| Aberystwyth | £480-£600 | £12,000-£15,000 | £5,900-£8,900 |
| Stirling | £430-£540 | £10,750-£13,500 | £4,650-£7,400 |
| Belfast | £340-£540 | £8,500-£13,500 | £2,400-£7,400 |
Figures: Energy Saving Trust
To get a personalised estimate of how much solar power would cost and how much it could save you on electricity each year, check out the Energy Saving Trust’s solar panel calculator.
Is it worth adding battery storage?
According to The Eco Experts, a small 4kWh battery system costs £3,000-£4,000. Green Home Systems claims such a system can save an additional £401 on your annual electricity bill, but that doesn’t necessarily factor in the reduced SEG payments from exporting less of your electricity to the grid. It's also a harder sell when you consider solar batteries currently have projected lifespans of just 10-15 years, so even an annual saving of £401 might not be enough to pay back the cost of the system.
Do heat pumps save money?
Yes, these low-carbon alternatives save money on your heating bills compared to most (but not all) other heating systems, but whether the ROI is worth it depends on the type you install (air source heat pumps or ground source heat pumps) and the system it replaces. In most cases, you’ll choose an air source heat pump as it’s less disruptive to install and significantly cheaper:
Air source heat pump
- Installation costs: £11,000
- Potential savings: depends on your existing heating system:
| Air source heat pump versus… | Annual saving | Lifetime saving* |
|---|---|---|
| Old gas boiler (G rating) | £260 | £3,900 |
| New gas boiler (A rating) | -£40 | -£600 |
| Old electric storage heaters | £1,200 | £18,000 |
| New electric storage heaters | £700 | £10,500 |
| Old oil boiler (G rating) | £65 | £975 |
| New oil boiler (A rating) | -£220 | -£3,300 |
| LPG boiler | £270-£700 | £4,050-£10,500 |
| Coal | £700 | £10,500 |
*Based on projected lifespan of 15 years. Figures from Energy Saving Trust
Ground source heat pumps perform better than air source heat pumps. For example, installing one will save you an estimated £40 per year when replacing to an A-rated gas boiler as opposed to adding £40 a year to your bills. However, they’re significantly more expensive to install (around £29,000) and may not be suitable for your property.
The best time to consider switching to a heat pump is when your existing heating system has come to the end of its natural life. With the government’s Boiler Upgrade Scheme you can save £7,500 on the cost of installing a heat pump, potentially reducing the cost of an air source heat pump to £4,000. This compares more favourably to the current costs of installing a new gas boiler (£3,700) or oil boiler (£5,000), although switching to a heat pump may incur additional costs in the form of upgrades to your radiators and piping to accommodate lower water flow temperatures.
Heat pumps also use electricity, so you may find that combining this with solar panels (and even a solar battery setup) makes the ROI case more compelling.
Glazing and energy-efficient windows
The most effective window upgrades occur when you replace single-paned windows with the latest double-glazed or triple-glazed windows. However, the high cost of the windows is rarely covered by the payback in terms of reduced energy bills.
- Installation costs: around £12,000 for a semi-detached house
- Potential savings: £140-£160 a year (or £2,800-£3,200 over the course of a projected 20-year lifespan).
Smart thermostats and heating controls
Installing heating controls like thermostatic radiator valves and smart thermostats gives you more control over your heating system, allowing you to reduce bills by only using your heating and hot water when necessary. If you don’t already control your heating using a timer or thermostat, they’re a no-brainer and should pay back the initial cost within 4-5 years.
- Installation costs: £410-£550
- Potential savings: £110-£120 a year (or £1,320-£1,440 over the cost of its projected 12-year lifetime).
Quick wins vs. long-term investments
Improving your home’s energy efficiency doesn’t have to involve huge outlays on major works that disrupt your home life. You can make your home more comfortable, energy-efficient and cheaper to heat by implementing some or all of the following proven ‘quick fixes’:
- Draught-proof your home: implement these yourself or pay £250 for a professional to draught-proof your doors, windows, floors and skirting boards, potentially saving you £85-£95 a year, according to the Energy Saving Trust
- Plug gaps in floorboards: if you can’t afford to insulate your home’s suspended floor, focus on filling gaps, which could save up to £40 per year per room
- Improve your radiator performance: by bleeding them regularly and fitting low-cost radiator foil to potentially save up to £25 a year
- Fit thermal curtains and blinds: or simply hang heavy curtains to block draughts through windows and slow down heat loss
- Explore alternatives to expensive double glazing, like fitting DIY insulation film or secondary glazing.
You’ll find more quick fixes with our low-cost insulation hacks that make a difference and 104 energy saving tips for the home guides. If you live in a home built before 1919, discover even more ways to make your home more energy-efficient.
Common home improvement myths and over-hyped upgrades
The most common myths include:
- Unrealistic baselines, from claiming savings on worst-case setups (e.g. single glazing only or no existing insulation fitted) to assuming best-case scenarios (e.g. maximum sun exposure on a perfectly aligned roof for solar panels)
- Ignoring hidden costs, from additional costs such as radiator upgrades or scaffolding to ongoing maintenance and servicing
- Using peak energy prices when calculating savings to energy bills.
Also be wary of expecting huge savings from upgrades that won’t pay for themselves without subsidies, such as:
- Whole-house window replacement - particularly when replacing existing double-glazing with a newer A++ standard
- Solid wall insulation
- Solar battery storage
- Ground source heat pumps
- Infrared/IR panels
- Underfloor heating
- Domestic wind turbines.
Grants and support schemes
There are many support schemes that can help cover at least some of the cost of energy efficiency upgrades. Applying to these schemes may reduce (or completely remove) the cost of your energy efficiency upgrade. As a result, the savings delivered by the upgrade will pay off the initial cost more quickly and increase your ROI.
Some schemes are limited to low-income households or households with poor EPC ratings. Check out our guide to find out which schemes you might be eligible for or find out more about individual schemes below:
- Boiler Upgrade Scheme: save £7,500 on the cost of installing a heat pump
- Great British Insulation Scheme: covers the cost of installing loft and cavity wall insulation in homes with poor EPC ratings
- Warm Homes Social Housing Fund: covers energy efficiency improvements to lift social housing to an EPC ‘C’ rating
- Warm Homes: Local Grant: pays for energy efficiency improvements for those on low incomes
- Energy Company Obligation (ECO) scheme: another scheme to help those on low incomes pay for energy efficiency upgrades.
FAQs
Is solar power worth it in the UK?
Yes, if you can afford the initial outlay and are prepared to wait at least 10 years for the savings to pay back the cost of installing them. Those living in the south and east of the country will benefit more quickly than those living further north and west, as will those who spend a good proportion of their day at home when they can take advantage of the free electricity generated by the panels.
How much does loft insulation save on energy bills?
According to the Energy Saving Trust, you can save between £210 and £430 a year on your energy bills after insulating previously uninsulated loft space. If you top up insulation from 120 mm to 270 mm, then the saving is more modest.
What’s the cheapest way to improve energy efficiency?
If you’re a capable DIYer, you could fit loft insulation yourself for just the cost of the material - around £10-£35 per square metre depending on the type of insulation, according to Checkatrade. Check out our guide to more cheap efficiency hacks.
How fast do heat pumps pay for themselves?
This depends on what heating system you’re replacing and whether you take advantage of the Boiler upgrade scheme to reduce the upfront cost by £7,500. If you’re replacing a gas or oil boiler, for example, you may never recoup the cost of your heat pump through reduced energy bills, but you should recover the cost of replacing electric storage heaters within 3-4 years.
Does double glazing really save money?
Double glazing will reduce your energy bills and make your home more comfortable to live in, but the annual saving - around £140-£160 a year according to the Energy Saving Trust - won’t come close to recouping the cost of double glazing within their projected 20-year lifespan. Note: some high-quality, well-maintained windows can last for up to 40 years.
Which energy upgrades are best for landlords?
Landlords will soon need to ensure their homes are rated EPC ‘C’ or better before they can be let. To find out more about which energy upgrades work best for your homes, visit our dedicated guide to EPC ratings and how to improve them.
