Homes that produce their own energy

“We're in a rather good spot,” says Harry Shepherd-Cross of his nine-bedroom, 17th-century farmhouse, set in 40 acres of land west of Aylesbury, in Buckinghamshire. “We're on a windy, southwest-facing hill – and we don't have many neighbours.” Better still, at the bottom of the hill stands an old windmill, its threshing and grinding equipment intact. “There are some old boys in the village who keep it going. They let it go every Sunday.”

Shepherd-Cross, 39, a property developer, and his wife, Dorte, 37, decided last year to put up a windmill of their own: a 5.3-kilowatt(kW) Eoltec Scirocco wind turbine. While they were at it, the couple also fitted an array of 16 mono-crystalline photovoltaic (PV) cells – solar panels to you and me – on the roof. Together with the turbine, these produce about 9,500 kilowatt-hours (kWh) of electricity a year.

The installation cost them a total of £40,000 – reduced to £27,000 by government grants (which are no longer available). Shepherd-Cross calculates that it will take 10 years to recoup this investment through lower energy bills. From then on, the family will effectively be getting their energy for free – and, in fact, making a profit by selling any surplus electricity they generate back to the grid. Given the rising cost of gas and electricity – heating bills could be 40% higher in the coming winter than last year – they might do even better than that. “If energy prices double, the pay-back period will halve,” he says.

Shepherd-Cross's “eco-warrior” children, Jack, 11, Hughie, 9, Daisy, 8, and Kitty, 6, are impressed by what he has done. “Even quite young children now have environmental and sustainability issues injected into them,” he says. “Their friends come round to have a look. They can be disappointed if there's no wind, but that's not very often.”

Welcome to the new eco-industrial revolution. Until now, many people who have installed solar panels, wind turbines or other such green paraphernalia have done so largely out of ideological conviction. Increasingly, though, it can make economic sense, too, thanks both to the rising cost of energy and to a series of financial incentives, unveiled by the government last week, that will allow householders to sell surplus energy to the grid at premium prices. The proposals, which include the building of 3,500 onshore wind turbines, are designed to ensure that Britain hits its EU target of generating 15% of its energy from renewable sources by 2020.

Companies producing solar panels and turbines, or converting redundant water wheels, are reporting a sharp rise in sales as more and more of us try to move partially or completely “off grid”. Even Prince Charles is said to be looking at plans to dig 600ft down to install a ground-source heat pump beneath the gardens of Highgrove.

Such is the rise in demand for energy-sufficiency that County Homesearch, a property-finding company, has launched a specialist service, in conjunction with Gage Williams, a former army officer turned micro-generation consultant, that helps buyers to locate homes capable of producing enough surplus power to generate a considerable income. The company's Cornwall office has identified 800 promising mills in the southwest, in various states of ownership and repair. If converted, they could produce enough electricity to pay back the cost of a turbine in as little as four years.

“The idea of becoming energy-sufficient is hugely appealing,” says Jonathan Haward, managing director of County Homesearch, who is based in Truro. “People want to be in control of the one thing that is out of their control at the moment: that is, rising energy prices. Now that you can sell back any excess and add value to your house by generating an income, it is even more appealing.”

Haward calculates that a 50kW hydro-turbine, which costs about £200,000 to install, would generate £34,000 of electricity a year. Such a potential income stream, he believes, should add £300,000-£400,000 to the value of any property. “That's quite a big turbine,” he says, “but even at half the size, you're going to be putting £200,000 onto the value of the property.”

Examples abound of people who have taken the plunge: Annette Austin-Smith, for example, installed a hydro-generator at her home, Kenningstock Mill, in Camelford, Cornwall, which generates £7,000 worth of power a year. Sonia Newton has a similar arrangement at 19th-century Sowton Mill (actually two mills, side by side) on the River Teign in Dunsford, Devon. A retired music teacher, she inherited the mill from her father and installed the present system, capable of generating 28kW, in 1986, spending a “fortune” of £40,000.

“Micro-hydro power is initially capital-intensive, and it might take up to 10 years to recoup the costs,” she warns. “After this, running costs are small and you get a steady income for your life – and your children's lives.”

Steve Harris, senior architect at the sustainable housebuilder Zedfactory, has recently finished a study on the pay-back time for solar electricity and solar water heating. When he first did the sums, people said the price of energy would never rise as quickly as his models suggested. “Now it's going up faster still,” he says.

His analysis, based on using the ultra-cheap panels Zedfactory imports from China (£500 each, compared with a typical retail price of £750), and finance from the Ecology Building Society, which lends money at a discount to fund sustainable building and improvements, found that schemes could pay for themselves in seven years – and that was after factoring in borrowing costs.

So far, so good, but where to start? According to the Energy Saving Trust, the average household consumes 3,300kWh per year, but not every home can be easily adapted to alternative technologies.

Zedfactory is part of a government-led group that is designing a web tool, Towards Zero Emissions Refurbish-ment Options (T-Zero), to advise householders on fitting renewables. The idea is to save the expense of calling out expert consultants. T-Zero, based on 35 standard housing types in England and Wales, launches later this year. In the meantime, you can visit www.greenenergy360.org to find out what system best suits your property.

As a general rule, you need photovoltaic panels, wind turbines or hydro-generators to generate electricity. The ideal scenario is a combination of all three, to avoid problems when the sun goes in, the wind drops or rainfall levels go down. The electricity produced can then be used in the home or sold to the grid.

A photovoltaic system will normally cost £4,000-£9,000 per kilowatt; a 1.52kW setup can supply almost half the needs of a typical family. Turbines work out at a similar price: a free-standing system generating 1.56kW will be priced at £4,000-£18,000, while smaller roof-mounted ones are cheaper. A typical 5kW hydroelectric system, meanwhile, could cost £20,000 – and, of course, you need a source of fast-flowing water.

Using renewables to heat your home will not produce an income in the same way, but can reduce your energy bills. The main methods are solar thermal collectors, which heat water in pipes on your roof; heat pumps, which extract warmth from the ground; and wood-burning boilers. A basic solar thermal system should cost about £1,800 and provide about 80% of a typical family's hot water during summer months – and make a useful contribution at other times. A typical ground-source heat pump – which requires either a deep hole in the ground or a large horizontal area – could cost between £6,400 and £12,000, while you could buy a 20kW boiler for £5,000.

Saving money is not just about generating your own power. Reducing the amount of energy you use can be much more effective, whether through cavity-wall insulation or a better-insulated front door – not to mention little changes to your behaviour, such as making sure you don't leave televisions or computers on standby. Don't forget the little things, either: rather than spending £300 on a solar panel that will generate 75 watts, you can save the same amount of energy by buying a low-energy bulb for just £3.

There are limits, though. Most of us are unable to increase our external walls to the optimal 3ft thickness. And in period properties, although you can do your best to prevent draughts, it is hard to eliminate them entirely. (If you did, you'd need to install an expensive ventilation system to avoid mildew.)

For Shepherd-Cross, it was doing the right thing, rather than making a profit, that moved him to install his turbine and solar panels, though he hopes this doesn't make him sound too pious. “I don't think there was a single Pauline conversion, but it's impossible not to be aware of the implications of global warming and the need to move to renewable energy,” he says. “Somebody has to be the pioneer – and I seem to be in a position to do that.”

Read John-Paul Flintoff's blog on living the eco-life at Green Central:timesonline.typepad.com/environment