The 2023-24 Budget is a good first step to finally kick-start a wave of home upgrades to improve the energy performance and comfort of Australian homes.
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Energy efficiency is making a comeback and finally getting much-deserved attention and support. And rightly so – energy efficiency is a win-win for households and society: it makes homes comfier, cheaper to run and more resilient in a changing climate. Reducing energy demand will also save Australia costly investments in energy supply, transmission and distribution.
The Federal government’s announcements include funding to improve energy performance of homes.
The government has committed $1.3 billion to the Household Energy Upgrades Fund via the Clean Energy Finance Corporation (CEFC) to turbocharge financing options for households.
$36.7 million will be used to upgrade and expand the Nationwide House Energy Rating Scheme (NatHERS) to apply to existing buildings. Similar to the star ratings on dishwashers and other appliances, a NatHERS assessment can identify the weaknesses in your home that contribute to high energy bills and thermal discomfort. Understanding how your home performs will provide you with the necessary information to feel confident investing in measures to maximise your home’s efficiency.
With support from state and territory governments, $300 million will be used to support upgrades for social housing. This will provide support for 60,000 of the most vulnerable households, whilst also supporting the market to prepare for a bigger renovation wave.
The funding will not only support electrification of homes but also includes upgrading their thermal shell. This will support renovations so households can keep warm in winter and cool in summer, even before the air-con unit or heat pump switch has even been flicked on.
The details in the Budget aren’t quite clear yet for thermal shells. However, Treasurer Jim Chalmers’ Budget speech specifically mentioned thermal shell upgrade measures, such as double glazing, alongside technologies such as battery ready solar PV and modern appliances.
Your home is your doona – the fabric that makes up your home, including glazing and insulation, is just as important as the efficiency of the installed appliances and having rooftop solar.
And to decarbonise, we still need to shift away from gas, through electrification. As such, both thermal shell and appliance upgrades are key for households. Focusing on both rather than one or the other will result in maximum comfort while saving on bills.
Climateworks Centre’s Renovation Pathways project analysis shows that a large portion of existing homes in Australia can be renovated cost effectively to net zero. This can be done through a combination of thermal shell and appliance and electrification upgrades, complemented by solar energy. We have researched data across all States and Territories, and across different types of dwellings, including single storey detached homes, townhouses, and apartments. We have identified 16 types of homes which make-up approximately two-thirds of houses in Australia. Our early findings suggest that these common types of homes can make big savings and achieve net zero.
There are also early indications that energy performance upgrades are able to pay for themselves through energy savings. Households could expect to see energy consumption savings in the range of 55–65 per cent on average from thermal shell improvements and efficient and electrified appliances.
Additionally, households could save around $3000 per year after improving the thermal shell, switching from gas to efficient electric appliances, and installing solar PV. For homes with roofs that are overshadowed or face away from the sun, saving are between $1500 and $1900 per year, depending on their house type and the level of upgrades implemented. The levels of thermal shell upgrades include draught-proofing, installing double glazing, and insulating the roofs, external walls and ground floors. Ventilation is essential to include too, especially in wet spaces such as bathrooms and kitchens, highlighting the need to ‘insulate tight and ventilate right’ when upgrading.
In addition to reduced energy bills, households that invest in thermal shell upgrades can expect to reap wider benefits such as quieter homes, reduced condensation, and houses that feel much more comfortable to live in.
Even low-cost, low-intervention upgrades can make a big difference to comfort and energy bills. Deeper upgrades will make energy bills even cheaper from day one. The best time to do deeper upgrades is when households are already planning to make other changes to their homes, including maintenance or home extensions. Our research shows that thermal shell upgrades are considerably more cost effective when combined with other renovations, as additional savings can be made on labour and material costs. Additionally, there is reduced disruption to the household, since the tradies are already on site.
Energy efficiency is a vital part of our transition to net zero buildings. The recent 7 star NatHERS requirement for new buildings in the National Construction Code 2022 update was a step in the right direction, as was the Federal Budget, but there is still more to be done.
The funding for social housing is essential. However, there are other groups of vulnerable households who do not live in social housing, but also do not have the capacity to take up low interest loans. These households would greatly benefit from thermal shell upgrades and their resultant benefits to energy bills, health and comfort.
According to our modelling of cost-effective pathways to 1.5C and 2C, the building sector can reach zero carbon by 2035. For a net zero, resilient and healthy future for Australians, governments, banks, industry and households need to go all-in on electrification and energy efficiency.
The Household Energy Upgrades Fund is expected to help more than 110,000 households. This scale of upgrades can help set up the market so that thermal shell upgrades become the norm, rather than the exception.
By supporting homeowners and social housing providers to be early adopters of achieving net zero carbon in existing homes, the industry and trades can quickly scale up and make upgrades even more affordable for all homes.
The 2023 Budget is a good start to implementing energy efficient measures across Australia’s existing buildings. This recognition of support for thermal shell upgrades is a clear signal of support to households to invest in their homes, and provides banks with the confidence to support households who want to be net zero sooner rather than later.
To achieve Australia’s net zero targets and continue tackling the rising cost of living for millions of Australians, we will need a true step change. This new funding will have to be leveraged by private finance and expanded in upcoming Budgets to enable a greater number of households to achieve higher levels of energy performance.