How Home Electrification turned a $9,930 annual expense into a $1,220 income

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By David Washbrook
My Energy Guide CEO & Founder

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Soaring electricity, gas and petrol prices make every bill feel like a financial punch.  The fluctuating costs can wreak havoc on budgets, and the feeling of limited control over usage adds to the frustration.  For many, these bills are a constant reminder of dependence on external factors, and for the environmentally conscious, they can be a source of guilt.
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Now imagine transforming your annual power bills into an income stream. That's the power of Home Electrification.  But the benefits go way beyond your wallet.  In our case, we cut our direct carbon emissions from 14 tons of CO2 per year to a mere 0.1 tons (or negative 4.9 tons after exporting excess solar).  

What is Home Electrification?
As the name suggests Home Electrification involves replacing fossil-fuel dependent appliances with electric ones.  This could mean swapping your gas stove for an induction cooktop or installing a heat pump for your hot water.  For the purpose of this article, the definition of Home Electrification also includes rooftop solar, battery storage and EVs.   

Why invest in Home Electrification?
Imagine a world where every home is powered by clean and sustainable energy.  Gone are the days of our dependence on fossil fuels and their harmful emissions. Our children breathe cleaner air and our planet thrives.  This was the primary motivator for our journey to electrification.

​However, the savings on electricity, gas and petrol bills are now so attractive that it is economically irrational not to go for it.
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Our household pre-electrification 

1.  Electricity ⚡ Prior to embarking on our Home Electrification journey, we used approx. 7,800 kWh of electricity per annum.  Based on today’s prices, which seem to be forever increasing, that would result in an annual cost (including the daily service charge) of approx. $2,932.  The NSW grid is still heavily reliant on coal, resulting in an estimated 6.2 tons of CO2 emissions from this electricity usage. 
 
2.  Petrol and car maintenance costs ⛽ Our previous car, a 2017 Kia, had an advertised fuel efficiency of 11.6 litres per 100 kilometres. However, real-world driving often falls short of these numbers.  Our hilly area, frequent short trips with numerous traffic lights and air conditioning use pushed our actual fuel consumption to 17.5 litres per 100 kilometres. This reflects a common reality – advertised fuel efficiency can be difficult to achieve in everyday driving. 

​Considering our annual distance of 13,300 km and Sydney's current petrol prices (as per the NRMA), the annual cost to fuel this vehicle is $4,987.  Additionally, with each litre of fuel releasing 3.1 kg of CO2 (including well to pump emissions of 0.7 kg), our driving habits resulted in 7.0 tons of emissions per year.

The annual maintenance costs for this vehicle are approx. $1,300 p.a. to give total annual petrol and maintenance costs of $6,287.     
 
3.  Gas 🔥 Gas was used for cooking and hot water.  For heating, our home already had dual cycle air conditioning fitted.  Before disconnecting our gas, we used 13,116 MJ in a year.  Based on today’s prices this would result in an annual cost of $712 (including the daily service charge) and 0.7 tons of CO2 emissions.   

Our household post electrification

Note: Post electrification emissions includes a 5-ton offset from exporting excess solar. This assumes the exported solar displaces coal power which may not always be the case. Rooftop solar can sometimes displace large scale solar. Actual household emissions post electrification excluding the impact of excess solar are 0.1 tons per annum resulting in a 13.9 ton benefit.

​1.  Electricity ⚡

🌞 Solar.  Solar panels are the foundation of Home Electrification, unlocking the potential for further energy savings with batteries, electric vehicles, and efficient appliances.  We prioritised this by installing a premium 11 kW solar system designed for a lifespan of > 20 years.

🔋 Battery storage.  Our setup utilises two Tesla Powerwall 2 batteries, offering a total of 27 kWh of storage and 10 kW of dispatchable power.  While this provides excellent results for us, a single battery is likely sufficient for most households, especially considering the relatively high cost of the initial investment.

🏠 Grid usage.  Since fitting our solar and battery system 18 months ago, we have not used any power from the grid and still exported 5,000 kWh per annum.  This has resulted in the elimination of 6.2 tons of CO2 emissions, and the avoidance of a further 5 tons of CO2 emissions via the export of excess solar to the grid.

☎️ Retail plan.  Excess solar energy gets exported to the grid, with the home occupier receiving a Feed-in Tariff (FiT) as compensation.  While historically lucrative, FiT rates have gradually declined to a current range of 3-5 cents per kWh.  Despite exporting 5,000 kWh annually, and not using any power from the grid, our net rebate averaged only 50 cents a day.

We recently switched to Amber, a provider offering access to wholesale electricity prices. While wholesale rates for the FiT are typically low before 2pm, and sometimes even negative, this isn't a concern with battery storage or an EV that can charge during these off-peak hours.  The real benefit comes later in the day, from 2 pm onwards the FiT generally increases.  Rates regularly exceed 30 cents per kWh, and during peak evening hours (5 pm to 8 pm) prices can climb above 60 cents per kWh, with occasional spikes as high as $18 per kWh! Amber allows you to dispatch power from your battery to the grid during these peak periods, maximising your earnings.

This switch has resulted in an average daily income of $9.54 (vs 50 cents under our last retailer).  This amount may decrease over the winter months, and post 30 June 2024 if the current bonus rate reduces, but we should still see a significant increase to our annual rebate compared to our previous plan.  An average daily income of $7 was assumed in the above analysis. 

Prior to making the move to Amber we had over 12 months of close to zero cost electricity bills with a more main stream retailer.  This is probably a more conservative longer term position.  However, even with breakeven on electricity costs as opposed to a $7 a day income the financial benefits are still significant - refer to the ROI and Payback analysis below.

2.  EV charging costs and maintenance 🚘. The vast majority of EV charging is performed at home for no cost using excess solar.  A process made easier by Charge HQ, an app that automatically diverts excess solar to your EV (or the Tesla app can do this if you have a Tesla car and Powerwall battery).    

Even on longer journeys (generally less than 400km) a cost is rarely incurred due to leaving home with a full charge and then charging from a standard 240v plug socket, or a free Destination Charger, at the end location.  However, included within the above analysis is $200 to allow for annual Supercharging (giving approx. 2,500 km of driving range); this should be more than sufficient for our needs.

​As a side note, zero cost charging from the grid is also possible with Amber, and a number of other retailers, during the middle of the day on weekends when wholesale rates are at their lowest.

We took ownership of our EV two years ago and maintenance costs have been zero to date.  Tesla cars have no mandatory servicing requirement and therefore no recurring annual cost.  However, $700 p.a. has been assumed in the above analysis based on data provided by caredge.com.  EV’s have around 20 moving parts compared to over 2,000 for a petrol vehicle resulting in far lower service and maintenance costs.      

3.  Gas 🔥.  Replacing gas appliances with electric appliances is often the final frontier for households.  While there are cost and CO2 benefits from doing so, they are often less than those that can be achieved from transitioning to solar, battery storage and an EV. 

​We spent $2,579 to replace our gas stove with an induction cooktop and $5,500 to replace our gas hot water system with a heat pump system.  This will result in a saving versus the gas appliances of $14,240 over the asset’s lifetime and CO2 savings of 14 tons (and cleaner air with no threat of carbon monoxide poisoning in the home!).   

Note: Post electrification emissions includes a 5-ton offset from exporting excess solar. This assumes the exported solar displaces coal power which may not always be the case. Rooftop solar can sometimes displace large scale solar.

What did all this cost?

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A low-risk investment with high potential returns
Investing in Home Electrification offers a compelling combination of low risk and high return, especially in a country like Australia that is blessed with an abundance of sunshine.

Upfront costs might be a concern for many households, however there are various financing options to make Home Electrification accessible including:

• Tapping into your home equity: Drawdown on your existing mortgage or consider refinancing to take advantage of potential "green" mortgage discounts;
• Asset-specific financing: Seek out loans designed specifically for Home Electrification upgrades.  Most main stream banks have some form of Home Electrification loan offering as well as specialist providers such as Brighte; and
• Government support: Stay informed about potential government schemes, like the recently debated HECS-style program, which would make Home Electrification more affordable to an even wider segment of the population. 

Even when factoring in financing costs, investing in Home Electrification can still yield substantial savings. For example, with a 6% interest rate, the annual benefit in the above analysis would reduce from $11,150 to $8,280, but it would still achieve a return on investment of 246%.

Final word
While Home Electrification isn't currently feasible for everyone, particularly those who rent their home, it still presents a significant opportunity.  The 2021 census revealed vast potential with over 9 million homes in Australia, including 6 million owner-occupied. This pool provides a strong foundation to begin the transition towards a more electrified future.  Additionally, anticipated government support for lower-income households offers a promising path to further widen accessibility.     
  
By making informed choices about electrification, you're not just investing in a more comfortable and efficient home, you’re improving your financial independence while actively shaping a cleaner, more sustainable future. 

Our 11 kW solar system provides the foundation for Home Electrification

Two Tesla Powerwall 2 batteries, offering a total of 27 kWh of storage and 10 kW of dispatchable power. Battery storage is key to maximising the value from your solar generation; you can not only keep your home off grid during peak hours but you can also export energy from your batteries to the grid when prices are at their highest.

$428 was earned in a single day in May-24 from exporting excess energy to the grid via Amber Electric.

Tesla Model Y. At $64,000, this car is now significantly cheaper than comparative combustion engine vehicles such as a BMW X3 or an Audi Q5. But the cheaper upfront cost is just the beginning, the Tesla also benefits from no fuel costs, no mandatory services and minimal maintenance costs.

The final step in our Home Electrification journey was the replacement of a gas hot water system with a heat pump system. This new system uses only 2.5 kWh of energy a day.

Goodbye gas!!

We had reservations about replacing our gas cooktop due to our historical negative experiences trying to cook with old ceramic electric stoves. However, we have been very impressed by the latest induction technology; it provides a superior cook experience to gas without all the waste heat, CO2 and potential for carbon monoxide poisoning!

(1) The system and components presented above utilises premium components and delivers great results, however it may be more than is necessary for some households. You can still achieve benefits with a more budget-friendly system using mid-range components (potentially reducing costs by around 25%) and a single battery.  

(2) Includes all installation costs and net of any rebates via STC (Short Term Certificates).

(3) Assumes a 20-year life for the premium setup and a 15-year life for the mid-range setup.  While the solar panels and inverter are warranted for 20 years, the Tesla batteries are only warranted for 10 years.  However, the expectation, based on the performance of the battery packs in some of Tesla's earlier cars, is that they will last far beyond 10 years.  If the batteries do not last for 20 years then the Lifetime benefit, ROI and payback period presented in the above table could be worse than that presented.  

​(4) While the cost of an electric vehicle (EV) wasn't factored into the above analysis, it's important to consider. Interestingly, our experience defied expectations. Our chosen EV, a Tesla Model Y, was surprisingly more affordable than comparable gasoline-powered options like the BMW X3 or Audi Q5. This trend is extending to the mid-range market as well. EVs like the MG ZS EV or BYD Atto are now competitively priced against traditional petrol options such as the Mazda CX-5.

​(5) ROI calculated based on Lifetime benefit less Upfront cost)/Upfront cost.

(6) Payback period calculated based on Upfront cost/Lifetime benefit.