Smart meter / off-peak electricity question

[Mottie]

I currently have plans submitted to demolish a workshop and build a couple of studio flats on a piece of land I own. It's going to be a self-managed job. It has electricity, mains water and drainage but no gas. They will be well insulated and I was planning to rent them out. I am thinking of using all electric - mainly because of the cost of installing gas to the properties, fitting two gas central heating combi systems and the ongoing servicing/repair/annual safety checks etc. I was thinking electric shower, small electric water storage heater for kitchen and bathroom sinks and electric storage radiators for the heating. I was wondering about the white meter / cheap night time electricity that is used for storage heaters and just wondered whether with smart meters, if they are used anymore?

I have a smart meter in my house and according to the blurb, the electricity use is read (or recorded?) every 30 minutes. Bearing this in mind, is that not one of the benefits of a smart meter? Can it be set up to differentiate between the electricity used at peak and off-peak times or do you still need to have two meters fitted per property?

 

[ericmark]

It would seem as yet the "Smart" meter has not been standardised between suppliers, so it may allow off peak but you need to ask your supplier there is as yet no standard meter so swap suppliers and the meter may no longer be smart.

 

[matz]

our smart meter reads electric almost in real time approx 30secs whilst gas has a bit of a lag....

 

[stillp]

Can it be set up to differentiate between the electricity used at peak and off-peak times or do you still need to have two meters fitted per property?

My E7 was supplied via a single meter that switched tariff at the appropriate times.

 

[ban-all-sheds]

It's going to be a self-managed job.

Have you got any experience?

 

[endecotp]

Think about how much more rent you could charge if they had proper heating and decent showers.
Talk to some lettings agents locally if you're not sure. There's a reason why "GCH" is shown prominently in their property descriptions.

 

[ban-all-sheds]

Yes but...

I currently have plans submitted to demolish a workshop and build a couple of studio flats ... They will be well insulated

If he makes them airtight and well insulated enough they might not need any heating, or if they do it would be such a small amount that the capital costs of gas would make that uneconomic.

 

[Mottie]

Have you got any experience?

Not in a job this size but I'm a pretty practical type. Did a load of work myself restoring my first house - electrics/plumbing/windows/removing chimneys/replacing rotten joists and floors/fitting new kitchen & bathroom etc and I have self managed (and did a bit myself) on an extension on my current house. I dare say I'll come across a fair few problems along the way but it's a pretty loose budget and it's not the end of the world if I get fed up halfway through and get someone in. As I already have the land I'm expecting to spend £120-150k on the build - not even began pricing anything up yet as it's currently with planning and my architect says it will probably need modifying - it's been drawn up to my design which they say probably will need changing but I don't mind that if I have to. Already been 'advised' by the local council that a CIL (Community Infrastructure Levy of just over £4.5k MAY apply if and when they are built). That's surprise number one and I ain't even dug a hole yet! Ive got to get a party wall agreement and that's going to cost me a new roof on the adjoining property as well!

endecotp - Thanks. I'll certainly look into the gas central heating/Mains gas installation plus maintenance costs before making a final decision.

 

[Mottie]

Yes but...



If he makes them airtight and well insulated enough they might not need any heating, or if they do it would be such a small amount that the capital costs of gas would make that uneconomic.

That's sort of along the lines that two architects have told me already which is why I am considering being all electric.

 

[ericmark]

It's the unexpected which catches one out, I have tried to get heating right in mothers house, it did not seem to matter what I did, the camera which also had a temperature read out was showing huge swings in the temperature of one room, which was the main room of the house.

Then I had to move in, there was some small problems, but the major one was down to the design of the house, it catches the morning sun at the back of the house, three rooms, two bed rooms and kitchen with standard windows not a problem, but the living room with a bay window is like having a conservatory at back of the house and catches all the heat from the sun, in winter it reaches 26°C with heating off. There is only one answer, leave the door open to rest of house.

Now if we had electric storage radiators in that room it would simply not work, because it's all down to cloud cover as to if it needs heat or not. My brother-in-laws old house had heat storage, but not bricks it was two large water tanks, the main advantage is it can store the hot water for a week, where with bricks they have problems storing it for a day, so his system took heat from wood burner, solar panels, LPG boiler and electric and then the pumps and valves delivered the heat to house as required. The disadvantage was the size taken up with the storage tanks, but with a new build one could allow space for these so since fitted to begin with it was not a problem for him.

However not cheap, I would think if you can get gas, then that would be cheaper than using electric for heating even with a good off peak system. With a well insulated house with a heat recovery system it is debatable if off peak works, the modern method is only heat the room when required, so no heating during the day to bed rooms, and no heating at night to living rooms, and also no heating when not at home, often uses mobile phone to turn heating on when within X miles from home. Unless using the water off peak storage this will not work with off peak power.

The major problem with off peak power is although off peak power is cheaper, the peak power is more expensive, so to be able to shower using off peak power you need to store hot water, once you go for off peak you need to do all you can with off peak, washing machine, tumble drier both with timers so can run over night, this means good sound insulation as well as heat, as you don't want to be woken up by the washing machine going into spin dry cycle. Also since running unattended you have to consider fire. So where the machines are needs to be reasonable fire resistance and of course a good fire alarm.

As to how long we will have off peak for is another question, solar panels means we are getting more renewable power in the day to at night, with massive solar panel farms we may get to a stage where night time off peak is no longer offered to us. With the "Smart" meter the supply company can easy change the times when off peak is offered, this could be an advantage economy 10 I think gives a boost during the day already. But it can also be a pain if you have to alter all your heaters to match. We have seen reports here where the times have gone out and people have had huge bills as a result.

 

[JohnD]

... with massive solar panel farms we may get to a stage where night time off peak is no longer offered to us....

I think that depends how many nuclear stations the taxpayer ends up paying the French to build for us, where we subsidise the build, and guarantee to buy their electricity for more than the market price for a lifetime.

As I write this, our (small number of old) nuclear stations are providing 22.3% of demand. Wind is producing 23.4%. Both are at high, but not maximum, output. Solar is not metered, but is estimated to be producing 12%. One day, it is possible that we can have large, clean, tidal lagoons. However this has been prevented for at least 40 years due to the interests of waterfowl and boating enthusiasts.

In all of these cases, once the plant is built, it costs next to nothing to keep it running, so they will sell electricity into the market for whatever it will fetch. We need access to enough power even at times when there is no sun and no wind, so our maximum capacity will usually exceed demand.

So if we multiply nuclear capacity, and keep building windfarms, there are going to be times when surplus power is cheap. Often it will be at night when demand drops.

So I think we are approaching an era of dynamic pricing. This is where Smart Meters will enable the electricity companies to maximise their profits by sucking in demand with low prices, and winching up prices at times of high demand.

You can see that this increases average prices and profitability, because they will be selling more electricity at high prices when demand is high, and less at low prices when demand is low.

Utility pricing is regulated by the government, to the extent that they can set profits as a percentage of the value of the plant and systems needed to provide it, and to the extent that the valuations have not been manipulated and massaged by the providers.

Thanks to Thatcherism, most of Britain's electricity industry is now foreign owned, some of it by the French state. It is interesting to reflect that a foreign takeover of Danone was blocked by the French government, in order to protect the vital national interest of the strategic French yoghurt industry.

You can however still buy shares in SSE if you want.

http://www.economist.com/blogs/schumpeter/2014/05/blocking-foreign-takeovers

 

[Mottie]

I can see a lot of what others say about gas, off-peak, storage heaters, showers etc. During the discussions with the architect, she gave a few ideas - for example, one being a joint entrance hall with doors leading off to separate flats (one upstairs, one downstairs) which I didn't like. She reminded me not to make the mistake that others who build/buy to let make and that is NOT to have what I would have as I won't be living there.

Of course if I was building something for myself it would be different. I'm building these to rent so at the moment, I'm looking at the building costs and any running costs that I will incur. Any heating costs etc will simply not be my problem.

Does anyone have a rough idea what installing mains gas to two properties plus fitting two combi systems in would be? And how about an annual service and landlord gas safety check?

Next question, the most important one, just how much more do you think renters will be prepared to pay per month for having gas? I'd really appreciate some rough ideas on the numbers to confirm my reasoning - never done anything like this before and I may be well out with my thinking.

Very roughly, I'm thinking around the £13k mark over 10 years for installation including servicing and a few repairs. Divide that by the two flats and divide that by 10 years and then by 12 months gives a figure of £54 per month approx. That would be just a break-even figure that could go up. I want to make money, not break even! Plus I could do without the aggro and expense if a boiler needs replacing. Would a tenant be prepared to pay £60+ per month extra for the luxury of gas?

Perhaps in a well insulated, modern built, small one-bed studio flat, a couple of wall mounted oil filled radiators may do the job?

 

[ericmark]

Location will make a huge difference. Where I live in North Wales we get a fair few Polish who to be fair are good tenants, they seem to look after the house, but they are here to make money to take home, so you have no idea how long they will stay for, and this is the problem, if your house is expensive for the tenants to heat then they will likely not stay long and you will have both empty flats more often and you need to re-test the flat every time the occupant changes. I know my daughter swapped flats a few times because of things which they had not considered when moving in, or thought the low rent would compensate for it.

The first flat was a listed building so could not have double glassing, and the floor was also not level, there were a load of steps to front door, but there was a shortage of flats in the area, they moved to a better one, once they could and that was across the road from first one. So they saw a whole load of people move in then out, each time winter came you would see tenants leave.

My sister rented out her house and granddad rented out his and the tenants stayed for their life. That's the type of tenant you want, you just collect the money. Unlikely to get that so much with a flat, children often force a move. I did wonder at times if I did right thing buying my house, so often I have worked away for an extended time and if I had been renting the family would have come with me. I have only rented a flat once, and that was in Hong Kong. Didn't thing about it then, we did have gas, but all the cooling was electric so very little gas used.

 

[JohnD]

Any heating costs etc will simply not be my problem.

A common view of the bad landlord.

I hear that tenants who have tried living in a home with night storage or other electric heating, usually vow never to rent such a home again.

 

[Mottie]

A common view of the bad landlord......

There must be a lot of 'bad' landlords round here then. I've just checked on rightmove and there are thirteen one-bedroom flats in my postcode area ranging from £1050 to £1350 per month. Only one of them is advertised as having gas central heating. Looking at the pictures for confirmation, most have either no heaters or electric radiators on the wall. One of them even stipulates that the tenant must be on a minimum salary of £34,500. Can they do that?