Upgrading Australia’s worst-performing homes could save enough energy to power 4.5 million EVs

New Climateworks Centre analysis reveals that each Australian state and territory could dramatically reduce household energy consumption by upgrading its worst-performing homes. 

The energy saved would be enough to power 4.5 million EVs per year.

The analysis builds on our Enabling Australia’s home renovation wave report, which modelled the costs and benefits of improving low-performing homes’ energy performance through three upgrade packages – ‘quick-fix’, ‘modest’ and ‘climate-ready’ (more details on these packages below) – and recommended one of these packages for dwellings in each state and territory.

Residential buildings account for around 10 per cent of Australia’s emissions and 24 per cent of its electricity use. 

Many of Australia’s existing homes are inefficient, resulting in high energy bills and contributing to householders experiencing indoor temperatures outside WHO health recommendations.  

Upgrading 10 per cent of Australia’s housing stock, or just over 1 million homes, (a conservative estimate of Australia’s ‘low-performing’ homes) with the recommended package could lower household energy consumption by up to 9,136 gigawatt hours per year. 

We defined low-performing homes as having minimal ceiling insulation, gaps near windows and in walls that leak air, and gas heating – typical of homes built before energy efficiency standards were introduced in 2003.

Across Australia, upgrades to low-performing homes could help their residents collectively save more than $2.01 billion per year on energy bills. 

The measures would also result in Australia reducing annual emissions by 2.3 MtCO2e, the equivalent of removing 480,000 petrol cars from the road for a year.

The map below outlines the benefits of upgrading the worst-performing 10 per cent of homes in each state and territory:

In 2023, Climateworks collaborated with research partners CSIRO and Strategy. Policy. Research., using CSIRO’s national housing data portal to measure the costs and benefits of improving low-performing homes’ energy performance through three upgrade packages.

Our analysis showed that low-performing detached houses and townhouses have an estimated National Home Energy Rating System (NatHERS) rating between 2.3 and 2.9 stars (out of 10), while low-performing apartments have NatHERS ratings between 2.7 and 4.2 stars. 

Homes with ratings towards the lower end of the NatHERS rating system can feel too cold in winter and too hot in summer and are expensive to keep at a comfortable temperature.

Homes at the higher end can stay comfortable without much energy needed for heating or cooling. 

We applied the following upgrade packages to low-performing homes in our model:

• ‘Quick-fix’: ceiling insulation, draught sealing, heavy drapes and roller shutters combined with an efficient electric heat pump
• ‘Modest’: ‘Quick-fix’ plus floor insulation and an additional layer of glass or film on windows
• ‘Climate-ready’: ‘Quick-fix’ plus floor and wall insulation, high levels of draught sealing, double-glazed windows and a heat recovery ventilation system.

We found that households in states and territories with colder climates benefit the most from more comprehensive upgrades through greater bill savings and reduced emissions. 

Those in hotter and more tropical climates would find ‘quick-fix’ upgrades cost-effective over the lifetime of those upgrades, alongside electrifying appliances used for hot water and cooking.   

‘Quick-fix’ upgrades raised the NatHERS rating of previously low-performing detached houses and townhouses to between 3.4 and 5.1 stars, ‘modest’ to between 3.6 and 5.4 stars and ‘climate-ready’ to between 6.3 and 8.7 stars. 

Policy can enable renovation wave in low-performing homes

On average, ‘quick-fix’ upgrades are estimated to cost around $13,700 per dwelling. ‘Modest’ upgrades cost around $19,000, and ‘climate-ready’ around $37,100 per dwelling. 

Our research shows that, alongside the savings to householders already noted, home energy performance upgrades at the recommended level in each state and territory can provide an overall benefit to society. 

A Sustainability Victoria study showed that for every $1 spent on energy performance upgrades, more than $10 is saved in healthcare costs.

Despite the benefits, the upfront costs mean that many sections of the population cannot take advantage without government action. 

There is an opportunity for policy support to reduce the costs of improvements such as double-glazing or insulation.

For example, the Australian Capital Territory offers rebates to support homeowners in purchasing ceiling insulation, which can be combined with low-interest loans for purchasing hot water heat pumps and electric cooktops.

In the case of community housing, states and territories can lead by example by directly upgrading their housing portfolio to the recommended level.

For example, the Australian Government’s Social Housing Energy Performance Initiative provides co-funding with states and territories towards energy efficiency upgrades for over 60,000 properties, and has also committed an extra $500 million to retrofit a further 50,000 homes.

The energy performance of existing homes has already been a focus of policy-makers across the country, with the Australian Government announcing a framework for home energy ratings disclosure and an expansion of NatHERS to include existing homes.

The Victorian Government is also progressing measures to electrify residential buildings as part of its Gas Substitution Roadmap.

Climateworks’ Renovation Pathways research has consistently shown that policies to support a wave of energy efficiency upgrades are a win-win-win solution. 

Such policies simultaneously deliver on governments’ social, economic and environmental commitments, enhancing liveability for Australians.

More about our analysis

All data is based on upgrading homes from a base (‘low-performing’) scenario (as detailed in the Renovation Pathways Technical Report).

Data presented is a weighted average across detached houses, townhouses and apartments.

It is assumed at least 10 per cent of total dwellings (detached houses, townhouses and apartments) are ‘low-performing’. As noted above, we consider this to be a conservative estimate and a good place to start.

The number of total dwellings is based on ABS 2021 Census data.

National results in Table 1 and Table 2 below are the sum of upgrades for all states and territories.