Generating a profit on home-made electricity

The energy regulator Ofgem will guarantee families get a fair price for their power.

The move comes as more households invest in 'microgeneration units', effectively turning their homes into mini power stations.

Wind turbines, solar panels and boilers that generate electricity are all becoming more popular.

Planning rules are also being liberalized to make it easier for homes to have microgenerators installed.

But Ofgem is concerned that some power companies refuse to pay anything for the power that householders add to the national grid, while others offer as little as 3.5 pence for each hour a kilowatt of electricity is provided.

However, these same firms sell that electricity for 10 pence - a mark-up of 185 per cent.

Power companies are not legally obliged to pay for customers' excess electricity at present, but will have to do so within a year.

When this happens, Ofgem says householders should be guaranteed a fair price for their DIY power.

It also wants the 'big six" power companies British Gas, Powergen, npower, Scottish Southern, EDF, Scottish Power to make meters available to show families the volume and value of electricity they are supplying.

The watchdog said that unless firms take swift voluntary action, it will press for a change in the law to force through the new regime.

Chief executive Alistair Buchanan said: "Ofgem has been identifying issues that are preventing further growth of microgeneration.

"Suppliers need to compete against each other to raise their game and address these issues so they can respond to the growing numbers of customers that want to generate their own power.

"If they are unable to successfully do that, then new legislation could force us to set prices and terms for the sale of surplus electricity back to the networks." The Micropower Council represents companies selling home generating systems. Its chief executive, Dave Sowden, said Ofgem's plan would "help to ensure customers get paid appropriately for surplus electricity".

The government wants 20 per cent of the nation's energy to come from green resources by 2020. There are currently 80,000 British homes operating some kind of home power generation. This is tiny compared to countries such as Germany, Japan and the United States.

DIY power is, however, moving into the mass market here. BQ has started selling windmills for 1,500 British Pounds, while Currys offers solar panels.

How homes can become mini power stations:

Solar panels: Converts sunlight into electricity.

Nine panels for average home would generate 1.5-2kw.

Windmill: Wingspan 5ft 9in. Supplied and fitted for Pounds 1,500. Generates 1kw of electricity enough to run a TV, computer, fridge- freezer and several lights.

Combined heat and power boiler: Works as a normal gas boiler. Uses waste heat to make electricity via internal generator. Generates 1.1kw.

Hydro generator: A stream would power a fan turbine.

Existing models promise 2.5kw power from a 9mph stream.

Solar thermal hot water: Water or antifreeze runs through a roof- mounted panel.

Ground source heat pumps: Water runs through hundreds of yards of pipes buried in the ground, extracting heat in the process. Water is piped into the home, most often to provide underfloor heating.