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

Hundreds of homes will receive free energy bills for five years under a scheme being rolled out by Octopus Energy and housebuilders.

The ‘zero bills’ scheme sees homes installed with green technology, such as a heat pump, solar panels, smart meters and home batteries, and then signed up to Octopus’ zero energy tariff.

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

However, each household only receives a limited amount of free electricity per year before charging for it, and the average household is likely to exceed that amount.

Electricity is generated by solar panels installed in each home and managed by Octopus’ Kraken system.

Octopus will divert any excess energy a house generates.

The zero bills scheme started small, with three eligible homes built by Bellway on 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 homes without bills by 2030.

The average UK household pays energy bills of £1,568 a year, which will rise to £1,717 on 1 October, Ofgem’s price cap level.

Which households can register?

Currently, the zero bill scheme only works with new construction homes that have been designed following the specifications of the Zero rate.

But in the future Octopus hopes to expand the system 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-invoice standards.

Regional housebuilders Verto and GS8 have said 100 per cent of their future homes will be bill-free.

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

Bill-free homes are also available for rent and shared ownership through housing associations Platform, Clarion and SNG, along with private rental providers Citra and Packaged Living.

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

“In just six years, 100,000 homeowners, families and couples could live without having to think about an energy bill.”

Is energy really free?

Yes, but there are several important caveats.

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

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

A house with one or two people living in it, such as a flat or a smaller property, uses around 9.3 MWh of energy per year, meaning you wouldn’t have to pay Octopus any extra.

However, Octopus says the 10 MWh limit is “approximately double expected usage” and homeowners should only exceed it if they have above-average heating needs.

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

There are no ongoing charges with Octopus Zero rates.