Will saving energy at home also save you money?

HOMEOWNERS WHO install energy-saving measures such as loft insulation and solar panels might save the planet, but they will probably not save any money - at least, not in the short term.

A study by the Royal Institute of Chartered Surveyors (RICS) shows that solar panels to heat water could cost £5000 to install in the typical three-bedroom terraced house. But they would knock only £24 a year off the average energy bill, which means it could take about 208 years to get a return on the investment.

Jill Craig of RICS says: "The government needs to do a lot more than just introduce a fridge-style' energy rating system to encourage people to take up energy-saving measures into their homes. RICS has been calling on the government to reduce the level of VAT applied to all energy-saving measures and to provide an attractive grant programme to aid real change. If this government is really serious about combating climate change, it has to turn its big talk into even bigger actions."

RICS looked at eight measures that are recommended for a "greener" home. The cost of all eight, including insulation, condensing boilers and double glazing, would be £23,547. But they would cut the typical fuel bill by only £486 and so would take 48 years to recoup.

It would, for example, take 124 years to earn a return on an investment of more than £9000 in double glazing. If you installed underfloor insulation, you would have to wait 54 years to cover the cost with lower energy bills. Even loft insulation would take 13 years to generate savings in utility bills, according to the study.

"People on average spend 16 years living in one property, making most of the energy-saving measures financially unattractive propositions," says RICS.

But the Energy Saving Trust (EST) disputes the findings. Keith Marsh of the EST says: "We disagree with many of the installation costs stated by RICS, partly because they make no allowance for grants and offers that are available. There are also many straightforward things that people can do straight away - such as turning down the thermostat and switching to low-energy lightbulbs."

The government has been criticised for recently capping the grants that are available under the Department for Business, Enterprise and Regulatory Reform's Low Carbon Buildings programme. The programme was set up in April 2006 and offers grants to people who want to generate their own power from renewable sources. But the DTI recently cut the grants available for wind turbines and solar photovoltaics (PVs) - another system that generates electricity. The maximum grant you can now get for a wind turbine is £2500, down from £15,000. The grants for PV panels have halved to £2500.

A wind turbine can cost about £12,500 to install; in some cases the price can be as high as £25,000. If you can apply for a maximum grant of only £2500, you are going to be left with a hefty bill.

A typical domestic photovoltaic system costs between £10,000 and £18,000. The panels can also generate up to half the average family's supply of electricity, saving up to £125 on the annual bill. But it would still take years to recoup the costs, even with a possible grant of £2500.

Households in Scotland might be eligible for more help with funding. The Scottish Community and Householder Renewables Initiative can award a grant of 30% of the cost of installing renewable measures up to a limit of £4000. But you cannot apply for a grant under the Scottish initiative if you have already applied for a grant from the Low Carbon Buildings Programme.

If you decide it's too pricey to generate your own power, you can still do your bit for the environment by cutting the emissions from your home.

The energy we use to heat, light and power our homes is responsible for producing 27% of the UK's CO2 emissions. So we can make a difference if we make sure we use our energy efficiently.

Insulation does not make the headlines in the same way as solar or wind power, but it's just about the best way to cut the emissions from your home. Every household in the UK creates around six tonnes of carbon dioxide every year. If you insulate your loft and walls you could save around two tonnes of CO2 a year, which is a reduction of one third.

Start at the top of your house, with the roof. You should then check your walls. If your house was built between 1930 and 1980, it will probably have cavity walls, and they will probably need to be insulated. This is not as messy as it sounds - an insulating material is simply pumped into the gap between the walls. RICS estimates the cost at £728 but calculates that you would save £145 a year on your bills. So you could recoup your capital in five years.

Double glazing keeps more of the heat in your home, so you could knock about £75 a year off the average bill. But it's expensive. You could fork out £9327 for a three-bedroom house, according to RICS, so don't expect to recoup your money any time soon.

Secondary glazing is cheaper - an extra layer of glass if fitted inside your existing frame.

You could save another tonne of CO2 a year if you fit a condensing boiler. It's not cheap - they cost about £2000 to fit, but they can cut your energy bill by about £52 a year. If a new boiler is a bit pricey, make sure you've lagged your old boiler. A standard jacket costs a mere £10.

If you need to update any other appliances, look out for goods that carry the Energy Saving logo. They don't always cost much more, but they might save you money on your bills.

And don't forget energy saving lightbulbs. They cost about £3.50 each and use up to four times less electricity than a standard 60W bulb. They also last about 12 times longer.

You can get a free energy audit for your home by contacting the Energy Saving Trust at www.est.org.uk. The website also has lots of useful energy-saving tips and information about grants.