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Does Octopus Energy’s ‘zero-bills homes’ project live up to the hype? We visit a site to find out
The promise of a home with zero bills sounds fantastic. But how does this concept work in practice for social landlords? And is it the future of housing? Zainab Hussain reports. Photography by Zainab Hussain
Does Octopus Energy’s ‘zero-bills homes’ project live up to the hype? We visit a site to find out #UKhousingImagine going from paying around £250 a month on energy bills to paying nothing. That was the case for Sophie Wates*, after she moved into a new build one-bedroom house in Essex, in autumn 2024.
As Inside Housing enters Ms Wates’ house, we’re greeted by her dogs barking. The living room walls are decorated with their pictures and a sign reads: “A house is not a home without a dog.”
Dog toys are laid on the grass of her garden. She looks out and says, with a laugh: “They love the garden. It’s become a dog garden!”
Before moving here, Ms Wates was at a point where she had to “choose between gas and electric or food”.
Her house is part of a project that has been attracting headlines and attention from housing associations. Earlier this year, Inside Housing revealed that nearly 100 social landlords were in talks with Octopus Energy about a zero-bills tariff set up for affordable housing providers.
Inside Housing has come to Essex to find out how a zero-bills scheme is working in practice and if it lives up to the claims. We also wanted to find out if this is a one-off, or could be replicated across the sector.
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Zero Bills is a smart tariff under which homes are fitted with solar panels, a heat pump, a domestic battery and a smart meter. This combination generates enough energy that residents do not need to pay energy bills for at least five years guaranteed, Octopus claims. The energy provider aims to have 100,000 zero-bills homes by 2030 including in Germany, France, New Zealand, as well as the UK.
Ms Wates’ home is one of 89 that are part of a development by house builder Hill Group in partnership with Octopus. The contract value of the project was around £32m, with the additional technology costs shared between housing association Clarion, Octopus and Hill.
Out of the 89 homes, 25 are affordable homes that were bought by Clarion under a Section 106 deal. Sixteen homes are social rent and nine are shared ownership. The other 64 homes on the development sold on the open market range from about £480,000 to just under £1m. All the homes are eligible for the Zero Bills tariff, but residents can opt out at any time and switch to an alternative tariff or energy supplier.
“We should be moving away from oil and gas. It’s not sustainable, whereas this is”
Decarbonising homes is now a national priority, with multiple policies and funding streams. The government has set up funds, such as the £5bn Warm Homes Fund, to help social housing landlords decarbonise their homes. Recently, the Future Homes Standard (FHS) confirmed that all new homes will require a heat pump and most must include a form of renewable technology.
Fuel poverty is a long-standing concern, but the cost of energy became one that no one could ignore in 2022, when the start of the Ukraine war led to a huge spike in gas costs. The Iran war, which has drastically restricted oil and gas exports from the region, is expected to lead to a new spike this year.
This isn’t something that Ms Wates now has to worry about. Like everyone else, she receives a bill every month showing how much energy she is using – but the total she has to pay is £0.
We ask Ms Wates what will happen in five years’ time, when there is no longer a guarantee and she will have to pay for the amount of energy she consumes.
She responds: “At the moment, I’m saving money… and at least now I know what my usage is throughout the year so I can budget better.”
“We should be moving away from oil and gas,” she adds. “It’s not sustainable, whereas this is.”
The technology
In the Octopus-Hill partnership, the energy provider sets what the required technology is to achieve the Zero Bills tariff, while the builder develops the homes. The cost of the additional technology, which Clarion has put at approximately between £10,000 and £15,000 a home, is split between the housing association, Octopus and Hill.
“We look at how the home is going to be built, called a SAP [Standard Assessment Procedure] calculation, and we will take that and look at the heating and hot water consumption, and that will help us determine how much solar the home needs to generate in order to meet the zero-bill criteria,” explains Hannah McCarthy, head of partnership – new homes at Octopus.
“We need it to generate more than the home is expected to consume. So that’s looking at heating, hot water but also… your kettle, your Xbox, your TV etc.
“We will say how much solar they [the developer] need to achieve on that home, and each individual property is given a target, [and] they’ll work out whether they can achieve it or not. And if they can, like the ones here, we can accredit them zero bills based on the amount of solar, have they picked the right battery and the heat pump that works with it all.”
Octopus has approved eligibility for more than 6,000 homes through partnerships with developers, providing affordable and private rent, as well as private market sale and shared ownership properties. This includes residents already living in homes, homes being built and homes that are due to be completed soon.
Zero-bills homes are predominantly new builds. However last year, Octopus announced that it had kicked off a series of trials for a zero-bills retrofit product. So far, it has retrofitted 36 homes to the Zero Bills tariff.
How does the technology work?
“The heat pump will heat the home and the hot water, [while] the solar panels generate the energy from the sunshine. That [energy] can be stored in the battery and used to power the home,” Ms McCarthy explains.
“When there’s loads of wind energy, [which] is really green and cheap, but actually sometimes the grid can’t take in anymore because there’s so much abundance of wind energy, for example, [so] we can actually take some strain off the grid and fill up the batteries.
“So, they’re good storage units for when the grid needs us to take in energy, but we can also therefore send it back when the grid really needs support.”
The house builder pays for the technology to be fitted, and the material costs for the kit have fallen from around £20,000 to under £10,000 in the past three years. In new build homes, the net additional cost is lower as solar panels can replace tiles on the roof and a heat pump replaces the gas boiler.
The new FHS requires new builds to use of some of this technology, therefore we can expect homes to have renewable technology such as heat pumps and solar panels as standard when this comes in, just to meet building regulations. But what differentiates these homes is that they have more solar panels and a battery.
However, there’s a caveat to the Zero Bills tariff – it has a fair use allowance based on the home’s total energy consumption over a year. This is around double the expected consumption of an average home, measured through the home’s smart meter.
Although more energy is imported in the summer and exported in the winter, zero bills are guaranteed all year round. This is because over the course of the year, this is balanced out.
One challenge, Ms McCarthy says, is the roof space on an individual home, which may limit the number of solar panels installed.
“You may not be able to get the amount of solar on that’s required,” she explains. “Same if you’re going above two storeys… that can be a bit of a challenge. That’s probably the biggest challenge of Zero Bills – just the sheer amount of solar we do need.”
“As long as the equipment is still operational after the guarantee length, we’re very much anticipating that the tariff will continue”
But Ms McCarthy adds that solar panel technology is getting better with higher wattage, so a single panel can produce more energy than before.
The idea for the development in Essex came about in 2022, construction started in 2023, and the portion of homes for sale started coming on to the market in 2024. The scheme is also one of Octopus’ earlier projects, with newer projects now guaranteeing up to 10 years of no energy bills.
“We looked at modelling [and] started off as five years and that was what our modelling suggests we could get comfortable with, given there’s so much uncertainty and we don’t know what energy bills are going to do in the future or energy prices,” Ms McCarthy says.
“We then actually extended that to a 10-year guarantee. But as long as the equipment is still operational after the guarantee length, we’re very much anticipating that the tariff will continue.”
The developer’s costs
The homes can be great for residents, including social tenants, to help them save on their energy bills. But are these properties viable to develop?
Octopus approached the developer with the idea for the Essex project, says Andrew Day, sustainability director at Hill. When asked if it costs more to build these homes than regular homes, he says it does.
“I don’t think I’m able to tell you the difference,” Mr Day responds, adding that Hill has pivoted to air source heat pumps since 2021.
“Given the FHS, and heat pumps, is a new regulation from March 2026, with one-year lead-in and a further one-year transitional arrangement, the sector baseline costs will not be known until then… whereas Hill pivoted away from gas from 2021, so have built in the costs much earlier than the FHS,” he explains.
“We’re just doing some numbers at the moment, but in 2025, 53% of the homes we delivered either had an individual heat pump or were connected to a communal heat pump system.”
“We decided to go early in that regard,” Mr Day adds, referring to the FHS. “We are actually preparing ourselves [and] this is one of those schemes.”
Currently, Hill doesn’t have any other similar developments in the pipeline. However, the developer is “open-minded” and is having partners bid for opportunities. During bidding for a new business, Hill is proposing zero bills for low-storey housing typologies and schemes.
Despite the extra costs and challenges around fitting the required number of solar panels on a given surface area, Mr Day says that the project has been “really positive” and that it has helped the developer “future-proof [itself] for the FHS”.
“If we can show a premium for great place-making, good-quality homes, zero bills and other sustainability aspects, then that’s good from an asset perspective, from a capital investment and from an operational investment as well,” he explains.
The housing association
So, if these homes cost more to develop, why and how did Clarion acquire some of them?
Richard Cook, chief development officer at Clarion, says the project was a “real-life innovational experiment”. After Clarion stopped adding gas boilers in homes under its new build programme around five years ago and in the lead-up to the FHS, the housing association was exploring ways to implement new technologies. And that’s when the opportunity came up.
“What we’ve got to be doing is learning, because our residents in the social housing sector are generally the people who are the most challenged by the cost of living crisis,” Mr Cook explains.
“So, anything we can learn around reducing energy bills in the future by technology retrofit is going to be advantageous to us as an organisation, because our houses get upgraded, but [it’s] advantageous to our residents as well.”
But one challenge would be the costs. Mr Cook confirms that neither social housing tenants nor shared owners are required to pay an extra charge to cover the costs. Shared owners purchase their homes at market value in the usual way. The costs associated with the zero-bills technology, including solar and battery systems, were shared equally across the partnership between Clarion, Octopus and Hill.
He explains that shared ownership and social rent homes bear separate challenges. “The shared ownership side of it, if it generates more income through valuations, that offsets the cost of doing it,” Mr Cook says, adding that the outcome is still unclear.
“But in affordable rent, the whole sector is in the conundrum that we get no more income, even for building more energy-efficient houses, or we just build energy-efficient houses now because that’s the standard that we build to.”
What will happen in five years’ time? Mr Cook says he expects that the technology will continue to work for longer than that.
“But if you didn’t have a solar panel and a battery, that tenant will be living in the lovely new affordable home with all the thermal insulation and all the advantages of being in a double-glazed, new warm home,” he explains.
“They’ll have an electric bill, but it probably would have been half what it would have been if they’d lived in the existing home that we have in our portfolio.
“So, if all the technology switched off after five years, they’d still have a lovely, high-quality home built to the highest standards.”
Clarion’s aspirations around innovation don’t stop there. To subsidise the costs of these homes for social rent, Mr Cook says the housing association is exploring similar ways to replicate Octopus’ Zero Bills tariff, which he describes as an “energy production facility and storage facility”.
“Part of what we’ve already learned here – we’re already putting into the strategic part of our retrofit programme – is a lot of workaround. Is there a way where we can install and upgrade while also taking an income out of that?” Mr Cook says, adding that Clarion is in the early stages [of figuring this out].
“Octopus has already got the model… it can invest money in solar and battery storage, give somebody a free bill for five years, because it can sell that electricity back to the grid for the next 30 [years].”
Octopus isn’t the only one developing a project like the Zero Bills tariff. House builder Barratt Redrow has its own partnerships on net zero affordable homes that have no bills. Schemes include:
- Corby Glen in Lincolnshire, the first British Gas no-bills partnership development, which will see 10 homeowners not pay energy bills for two years. This does not include social housing.
- Cosmeston in the Vale of Glamorgan, which includes 50% affordable homes and is being delivered in partnership with the Welsh government.
- Tutbury Park in Staffordshire, an FHS development where a third of homes are affordable. A portion of these homes will be no bills with British Gas. Details are expected soon.
Could projects like these be the future of social housing?
Clarion is exploring similar projects, Mr Cook responds. “We’re always looking at this and as costs come down, as the technology improves, there’s more of an opportunity for people to do more of this,” he says.
“I think my answer [would be] we would never stop trying to innovate. We never stopped learning [at] Clarion [and] I think that’s really important for us.”
*Not her real name
Richard Cook will be speaking at Housing 2026 on a session entitled ‘Tall buildings in London: developing, managing and getting the resident experience right’, on 23 June. Find out more and book your pass here.
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