Householders will be offered a brand new boiler that can also power lighting, home appliances and other electric devices from next year.
The boiler, produced by energy company Flow, may look ordinary, but a generator inside it converts heat into up to £500 worth of electricity a year per home.
But the technology also costs thousands of pounds to install and run. Here energy experts give their verdict on the new boiler, which is due to go on sale in February.
Which households will save money?
Not every home will save £500 with the boiler, which contains a generator powered by a liquid that circulates inside.
Once the liquid heats up, the vapour produced powers a mini-generator, which in turn produces electricity.
As a result, the boiler has to keep burning gas for this “free” energy to be generated. This means that homes where the boiler is on intermittently may not necessarily benefit.
Only homes with the highest gas consumption will save on energy costs, according to figures produced for Telegraph Money. Homes must use at least 32,000 kilowatt hours (kWh) of gas each year – twice the amount used by the average home – to produce the £500 saving, according to Flow Energy.
This is the kind of consumption clocked up by a family of five who are at home all day. This “high consumption” household will generally have heating and appliances on all day, and use the washing machine daily.
By contrast, the “typical” energy user consumes just 13,500 kWh of gas per year. An example would be a three-bedroom property where the family are home for some of the day.
Martin Ellis of uSwitch, a price comparison service, said the new technology was interesting but not suitable for every home. “It is worth noting that the boiler is unable to store electricity, so it will only produce electricity when the heating is switched on,” he said. “But it could save a significant amount of energy for big properties so it would be interesting to see it in action.”
How much is the boiler – and how do I buy one?
From February 2015, 20,000 boilers will be available. Householders can either buy one upfront or use hirepurchase by becoming a Flow Energy customer.
Flow customers pay £1,800 to install the boiler and sign up for a five-year credit agreement of £3,000.
By signing the credit plan, customers agree to pay £50 a month, but as long as they are on a Flow Energy tariff the firm pays this sum. But if they switch providers they will be liable for the repayments.
Buying the boiler outright costs £1,800 for installation, but the cost of the boiler itself has not been disclosed, although it will be significantly more than an ordinary boiler to reflect the new technology.
Flow Energy said its tariff would be competitive, undercutting variable-rate tariffs offered by the big six energy firms. Currently, E.On offers the cheapest deal at £1,169 a year for dual fuel.
However, variable tariffs are significantly more expensive than fixed tariffs – with £200 between the E.On tariff and the cheapest fixed deal – so Flow customers may be overpaying compared with the cheapest tariffs.
Also, while Flow customers are within the five-year repayment plan, the energy firm pockets any money paid to customers via the “feedin-tariff”, an incentive paid by the Government. As much as £300 from the £500 yearly saving is projected to come from this subsidy payment.
Jeff Howell, The Telegraph’s home troubleshooter, said the boiler was “unknown technology” that should be approached with caution.
“Don’t be a guinea pig unless you are enthusiastic about being green,” he said. “This is untried on a large scale. I would want to wait and see if two or three thousand people have used it, and find out how it performs and if it’s reliable.”
Mr Howell added that new boilers tended to require expensive repairs after five years. “My advice to anybody is to stick with the heating system you have got, unless you can repay any installation costs over five years through energy savings.”