Maximising Savings: Navigating My First Year with Octopus Energy and Heat Pump Running Costs

Navigating My First Year with Octopus Energy and Heat Pump Running Costs

To provide some context, we moved into a property in 2019 and selected Bulb as our gas and electricity provider. The property, constructed in the 1960s, features good insulation in both the loft and cavity walls, and is equipped with solar panels on the south-east facing roof. A couple of years later, after the COVID lockdowns, we expanded our home with a large extension/annexe. During the renovation, we decided to remove our gas combi boiler and transition the entire property to an air source heat pump (ASHP). We also added more solar panels and installed a small (4.5kWh) battery. More recently, we updated our kitchen, replacing our freestanding gas stove and eliminating all gas appliances from our home. This allowed us to say goodbye to the gas standing charge, which was a significant win.

As the energy crisis began to impact the market, causing many smaller suppliers to go out of business, we were hopeful that Bulb would survive. However, we also decided that if Bulb were to fail, Octopus Energy would be our preferred alternative. Unfortunately, Bulb did eventually fall victim to the crisis, and as a result, we were automatically transferred to Octopus Energy in March of the previous year.

Initially, we were placed on Octopus Energy’s default Flexible tariff after being transferred. Aware of their variety of smart tariffs, I quickly started exploring the options. The range of choices was overwhelming—there were so many! While navigating my Account page, I discovered the option to download a CSV file of my smart meter data. This marked the beginning of my deep dive into understanding our energy consumption and evaluating different tariffs.

With a heat pump installed, I found the Cosy tariff appealing, and the Agile tariff also caught my attention. The Agile tariff was especially interesting because of its plunge pricing feature. During certain short periods, the cost per kWh can become negative, allowing you to effectively get paid to import electricity from the grid.

I started to track my energy consumption data weekly, monitoring daily costs on my initial Flexible tariff and comparing these with potential costs on the Cosy and Agile tariffs. I attempted to gather as much historical consumption data as possible. However, I was disappointed to find significant gaps in the data, particularly for periods more than a few weeks old, which was before the transition from Bulb to Octopus. During my research, I discovered, an excellent resource for accessing both current and historical tariff data.

I quickly observed that both the Cosy and Agile tariffs could potentially be more cost-effective than the standard Flexible tariff. The Cosy tariff offers three different rates: a discounted rate (40% less than the Flexible tariff) during 04:00-07:00 and 13:00-16:00, a peak rate (60% more than the Flexible tariff) between 16:00-19:00, and a rate equal to the Flexible tariff for the remaining 15 hours of the day. As we were exiting the heating season and had the added advantage of some battery storage, switching to Cosy seemed like an obvious choice. By minimising our grid electricity usage during peak hours (utilising the battery as much as possible), switching to Cosy was bound to save us money, since its rates outside of peak hours are lower or equal to the Flexible tariff.

Although Agile appeared to potentially offer greater savings, the lack of sufficient historical consumption data and the risk of very high rates during winter made me cautious. Consequently, I opted for the safer choice of switching to Cosy, where the rates are fixed. I programmed the ASHP for hot water cycles (including the occasional Legionella cycle) during the morning and afternoon low-rate periods. I also made sure it wouldn’t operate during peak hours. Additionally, I leveraged the low-rate periods for charging the battery and running energy-intensive appliances like the washing machine and dishwasher, shifting as much consumption as possible to these cheaper periods.

When the heating season returned in the autumn, I started to experiment with the scheduling of the ASHP’s flow temperature to shift heating loads as well. Knowing that the ASHP operates most efficiently at a lower and slower rate, I was curious about the impact on its Coefficient of Performance (COP) when increasing the flow temperature during the cheaper tariff periods. I also wondered if we would notice a difference during the three peak hours when the ASHP wasn’t heating at all. Deciding the only way to find out was to try, I adjusted the settings and found that on milder days, the ASHP only needed to run during the low-cost periods for both Domestic Hot Water (DHW) and heating. This approach provided sufficient warmth throughout the day. On cooler days, the ASHP required some operation between the cheapest periods to maintain comfort, but I ensured it never ran during the peak hours. Surprisingly, the house retained enough warmth during these three hours without any issues.

I understand some may worry about the temperature drop during the peak hours, especially in homes that are not as well insulated. However, in our new extension, which is equipped with underfloor heating (UFH) throughout, the air temperature continues to rise until 18:00 as the floor releases the stored heat from the afternoon’s cheap tariff period. The main part of the house, which has radiators, experiences a quicker temperature drop than the extension, but we still manage to stay comfortable through the peak period without feeling cold.

In late September, I had the OpenEnergyMonitor Level 3 monitoring kit installed, which provides a detailed overview of the electricity consumption and power output (thus, the COP) of the heat pump. This level of detail was something I couldn’t see with my previous NIBE controller. I discovered that although pushing the ASHP harder during the low-cost periods slightly reduces its COP compared to a more consistent operation, the significantly lower tariff rates during these times make it more cost-effective than running it on the Flexible tariff. This strategy, despite the COP trade-off, results in overall savings.

In the 11 months since we switched to the Cosy tariff, our daily electricity costs have been, on average, 18% lower than they were on the Flexible tariff. Meanwhile, I’ve continuously analysed what our costs would have been each day had we been on the Agile tariff. Despite tailoring our usage to fit the Cosy tariff, I found that the Agile tariff would have been cheaper almost all the time. There were only a few instances where Cosy proved to be more economical than Agile, and even then, the difference was minimal. Most of the time, Agile offered more significant savings, averaging over 40% compared to the Flexible tariff. However, considering that many of these savings occurred during the warmer months, when our total kWh consumption was lower, I remained cautious. A 40% saving on a low-consumption 6kWh day in summer could easily be offset if Agile turned out to be just 4% more expensive on a high-consumption 60kWh day in winter. Therefore, despite the attractive savings, I hesitated to switch to Agile without a full understanding of our winter consumption patterns.

Now that we’re nearing the end of this heating season, I feel more confident about managing the potential risks associated with the Agile tariff and decided to make the switch earlier this month. This change has allowed me to be more adaptable with scheduling hot water runs, charging the battery, and operating appliances. Every evening, I review the Agile rates for the next day and adjust our schedules to optimize savings. While I could continue following the patterns suited to the Cosy tariff, knowing that Agile would still be cost-effective, I prefer to maximise our savings. This does require some daily effort to check rates and update schedules. I’m considering exploring apps or devices (like Home Assistant, Homely, or IFTTT) that might automate this process, provided they’re compatible with my ASHP and battery. This exploration into potential automation is an ongoing journey for me. Additionally, I’ve returned to operating the ASHP in a more consistent and efficient manner, avoiding the large temperature boosts.

One key comparison I’ve been keen to make is determining whether running the ASHP is more cost-effective than using a gas boiler. Given the current price caps, the rate for electricity is approximately four times higher than that for gas. Therefore, to achieve equivalent running costs, assuming a gas boiler’s efficiency is 85%, the ASHP would need a Coefficient of Performance (COP) of at least 3.4. To break it down further: if electricity costs 28p per kWh and the ASHP achieves a COP of 3.4, the resulting cost for heat is 28p divided by 3.4, which equals approximately 8.235p per kWh. Conversely, with gas priced at 7p per kWh and considering an 85% boiler efficiency, the heat cost is 7p divided by 0.85, also amounting to around 8.235p per kWh. Therefore, if the ASHP operates with a COP higher than 3.4, the cost per useful kWh of heat decreases, making the ASHP more economically efficient compared to a gas boiler.

Utilising time-of-use tariffs to lower the cost of importing electricity also effectively reduces the heating cost. However, when comparing electricity tariffs, it’s only fair to acknowledge that there are more competitive gas tariffs available beyond the standard price cap rates. For instance, the Octopus Gas Tracker tariff offers gas at approximately 4p per kWh. This option highlights that, just as with electricity, choosing a more advantageous gas tariff can significantly impact the overall cost efficiency of heating.

I’ve been extracting data from my OpenEnergyMonitor (OEM) kit to align the ASHP’s consumption and output with the 30-minute intervals recorded by the smart meter, allowing me to calculate the effective average daily cost per kWh of heat under the Flexible, Cosy and Agile tariffs. I have compiled a couple of charts that illustrate the average cost per kWh of imported electricity for each tariff, as well as the effective cost per kWh of heat, factoring in the average daily Coefficient of Performance (COP) of the ASHP.

The cost savings when comparing the Cosy tariff to the Flexible tariff, and the Agile tariff to the Cosy tariff, are quite evident. Even when using the Flexible tariff, the average cost of heat often falls below 8p/kWh, making it more cost-effective than gas at the standard flat rate. The Cosy tariff further reduces the average cost to 6.34p/kWh, while the Agile tariff brings it down to an impressive 4.63p/kWh. This makes it competitive with, or even cheaper than, the Gas Tracker tariff rates. It’s important to note that these figures could actually underestimate my savings, as they don’t account for any contributions from solar generation or the utilization of the battery.

While my analysis has primarily centered on comparing the Flexible, Cosy, and Agile tariffs, Octopus offers a range of other smart tariffs that might be more advantageous for different setups. For instance, if you have an electric vehicle (EV) and/or a substantial battery and solar panel system, you might find that tariffs like ‘Go’ or ‘Flux’ offer better value. These alternatives are designed to cater to specific energy usage patterns and can provide more cost-effective solutions depending on your circumstances.

Although the Agile tariff appears to be the most beneficial for my situation, it’s important to remember that past performance doesn’t guarantee future outcomes. There will undoubtedly be days when the grid’s renewable energy mix is less favorable, potentially making Agile the most expensive option. However, I’m willing to take this risk, betting that the number of cheaper days will substantially outweigh the more costly ones over the year. This is especially true considering my ability to shift energy usage outside of peak periods with the help of the battery. For those who are more risk-averse or have limited capacity to adjust their energy consumption to avoid peak times, the Octopus Electricity Tracker tariff could be a suitable alternative. It still adjusts prices according to wholesale rates, but these changes occur on a daily basis instead of every 30 minutes, providing a more stable and predictable pricing model.

As you might have gathered, I’m quite enthusiastic about data analysis, which is why I enjoy downloading data and exploring it through spreadsheets. Fortunately, for those who may not share the same level of enthusiasm, Octopus Energy’s API facilitates access to several third-party apps that allow for comprehensive analysis of your energy usage and comparison across different tariffs without delving deeply into the data yourself. A few apps I’ve found useful include Octo-Aid and OctopusCompare. I’ve also heard positive reviews about OctopusWatch, although I haven’t tried it personally due to concerns about compatibility with my older iPhone model. Additionally, the website is a valuable resource, offering a detailed Octopus tariff dashboard and downloadable data for every UK region, making it a must-visit for anyone looking to understand or optimise their energy usage.

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3036 kWhs
1 month ago

@Steve D and @Toodles, we’re all on a similar journey here. Perhaps to a lesser or greater extent of data acquisition, analysis and statistical geekery!I’ve recently changed Octopus tariff, seamlessly and instantly, from Cosy to Agile. A ‘suck-it-and-see’, and reassured that I can flip back at any time I choose without penalty. Average Agile tariff is currently lower than my average was with Cosy. I have 13kW of solar PV battery storage, so 85% of my consumption in the heating season is off-peak cheap rate tariff vie schedule charging. Moving to Agile leverages the savings a little further. When I first moved to Cosy I wanted the assurance of predictable £/kWh rates for low, standard and peak tariffs. With a year behind me on Cosy, I’m comfortable that Agile will be a cheaper option based on our usage pattern and when we schedule charge the solar PV batteries twice a day, and not too worried about £1/kWh max rate. Our solar PV inverter battery storage output is 3kW, so we do pull power from grid during higher rate times, when the kettle is on, cooker, hob, etc. in addition to the ASHP. But I don’t worry about that, because it’s not for long, and the vast majority of our consumption is lower rate via battery storage.
The one bit of geekery I am yet to master and properly fathom is when to stop schedule charging the solar PV. Broadly speaking that’s at the end of heating season, but we get into a murky area where on some spring days, like today, our solar PV generation is good, 16.7kWh, and the batteries have partly self-recharged after the morning usage through solar generation. But the afternoon charge period is from 1:30pm – 4pm. The batteries would have only needed 1hr to completely charge, and for the remaining 1.5hrs I’m drawing from grid as the batteries are programmed to charge. It’s still pre-peak evening rate however.
When our solar PV generation typically equals or exceeds our consumption, which is the late spring, summer and early autumn non-heating season, I need to disable the central heating and the schedule charging. The inverter will take care of itself and the solar PV batteries will have enough power in them to see us through the evening and overnight. The ASHP is by far our biggest consumer, but it’s electricity consumption varies hugely depending on ambient temperature and whether it is regularly defrosting. The big picture is my household energy bills are half what they were now when I was on a standard rate OVO tariff and had oil central heating and hot water. Our household CO2 energy footprint is 25% of what it was. 

4994 kWhs
Reply to  AllyFish
1 month ago

@AllyFish Indeed Allyfish, swapping from one tariff to the other only takes a couple of days and, as you say, one can swap back again if wished; there is no charge for doing so. I think I shall be staying with Agile this time; having tried the other (Cosy) camp, I find that Agile works best for us. Add to this the ‘Saving Sessions’ and the ability to charge the battery at the lowest rates, further savings may be made.😉 We now just need to wait for more equitable levies on Gas/Electricity. Having now passed our first full year with an ASHP and no gas consumption, I am able to see that we consumed 8 MW/h from the  grid in the first full year but I haven’t yet calculated how much more was supplied by the PV; nor have I totted up the total export figure but I will in due course. This figure includes the ~ 10kW/h for the rest of domestic use and also the ~4 kW/h per day for the Sunamp Thermino DHW supply. Regards, Toodles.

627 kWhs
1 month ago

Thanks, that is a nice clear comparison.
For us, eliminating CO2 emissions was the most important thing, but also worth noting that price wise heating oil has been in my experience around 45 to 85p per litre, and about 10kwh if burnt perfectly per litre, perhaps more like 8 Kwh per litre, makes heating oil as cheap as or cheaper than gas.  Thus attractive to many, especially in the countriside if they only take costs into comparison. 

3036 kWhs
1 month ago

45 to 85p per litre, and about 10kwh if burnt perfectly per litre, perhaps more like 8 Kwh per litre, makes heating oil as cheap as or cheaper than gas

Agree, heating oil prices vary short-term seasonally, and longer-term with the cost of a barrel of oil. We found we could always purchase it for less than the equivalent £/kWh cost of mains gas. We would buy it out of the heating season to bunker until we needed it. There’s no standing charge either, which these days is around £200 a year. We used to spend about £1200 a year on heating oil, and around £800 on electricity, £2000 in total. Now we’re under £1000 a year solely on electricity, but that’s largely due to Agile tariff, solar PV+BESS. The spark gap between heating oil and electricity for us is around 2.9 right now. Electricity averaging 18p/kWh incl standing charge and VAT, and heating oil trading around 6.3p/kWh incl. VAT. The ASHP has an estimated SCOP of around 3, (OK, but not earth shattering) so it’s not saving anything except a huge amount of CO2 emissions and that awful kerosene smell that used to linger in the utility.
I should add though that we now have the heating on all day every day throughout the house, because it is so cheap and efficient, whereas with the oil boiler I would only have the CH morning and evenings, and heat just the study during the day with an electric radiator. The house was invariably cold during the winter days. We’re much more comfortable now. 🙂

4994 kWhs
Reply to  AllyFish
1 month ago

@AllyFish I was watching a very recent Youtube presentation from Anthony Dyer in Aberdeen who has presented quite a few on subjects including his PV, battery and travels in his Tesla EV amongst other things.
This new presentation is about his newly installed Daikin ASHP with Hydrobox. This is the first presentation I have seen in which his wife Rachel makes an appearance. We see the wall stat indicating 22 degrees C and she mentions that this is the first time she has felt warm in all thw years they have lived there and that the warmth is even throughout the whole house.😊 Their previous heating was an oil burner plus a wood burning stove in the living room. Regards, Toodles.

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