Thousands of new homes will pay £0 energy bills with Octopus Energy – here’s how it works

Hundreds of homes are set to get free energy bills for five years under a scheme being rolled out by Octopus Energy and housebuilders.

The ‘zero bills’ scheme sees houses get green technology installed such as a heat pump, solar panels, smart meter and home battery, then sign up to Octopus’s Zero energy tariff.

Octopus guarantees each property will pay nothing for energy even if it uses more than it generates.

However, each home only gets a limited amount of free electricity per year before being charged, and the average household is likely to exceed this.

Electricity is generated by solar panels fitted to each home and managed by Octopus’s Kraken system.

Any surplus energy a home generates will be siphoned off by Octopus. 

The zero bills scheme started small, with three eligible homes made by Bellway in Stafford’s Victoria Gate estate. 

But the scheme is now being expanded, with 250 more Bellway homes in Bedfordshire. Octopus wants to have 100,000 zero bills homes by 2030. 

The average home in the UK pays energy bills of £1,568 a year, due to rise to £1,717 on 1 October – the level of the Ofgem price cap. 

Which households can sign up? 

Currently the zero bills scheme only works with new build homes that have been designed around the specifications of the Zero tariff.

But in the future Octopus hopes to be able to expand the scheme to any home with solar panels, a heat pump and home batteries. 

Octopus estimates that 500,000 UK properties built since 2013 could be eligible to be upgraded to zero bills standards.

Regional housebuilders Verto and GS8 have said 100 per cent of their future homes will be zero bills.

Other smaller developers, including Thakeham, Edenstone, and Hill Group are also signed up.

Zero bills homes are also available for rent and shared ownership through housing associations Platform, Clarion and SNG, alongside private rental providers Citra and Packaged Living.

Octopus founder Greg Jackson said: ‘This new target for our zero bills project is something that has never been done before. 

‘In just six years, 100,000 homeowners, families and couples could be living without ever having to think of an energy bill.’

Is the energy really free?

Yes – but there are several important caveats.

Firstly, you only get 10 megawatt-hours (MWh) of free electricity a year, and Octopus will charge you for anything you use over that level.

Energy regulator Ofgem says the average three-bedroom household uses around 14.2 MWh of energy a year, or almost 50 per cent more than Octopus would allow under its zero bills scheme.

A home with one or two people living in it, such as a flat or smaller property, uses around 9.3 MWh of energy a year, meaning it would not need to pay Octopus any extra. 

However, Octopus says that the 10MWh cap is ‘approximately double the expected usage’ and homeowners should only breach this if they have above-average heating needs.

The Octopus tariff also does not allow electric vehicles to be charged for free, and this must be paid for too.

There are no standing charges with Octopus Zero tariffs.