Energy efficiency upgrades will be offered to about 800 low income households, following the announcement of a $6 million initiative by the Victorian government.

The Making Home Energy More Affordable program will include appliance replacement, home renovations and solar panel installation, with bill savings estimated at $500 a year, based on a “typical” $4500 retrofit including draught proofing, ceiling insulation and a heater upgrade.

The program will also provide access to low and no-interest loans.

“While power prices are set by the retailers, we’re providing support to help Victorian households take control of their energy use,” Victorian energy, environment and climate change minister Lily D’Ambrosio said.

A media statement said the government would be partnering with community organisations to deliver the best outcomes for low-income households.

The program announcement fills a gap left when the federal government’s Low Income Energy Efficiency Program funding was stopped.

The news was welcomed by Environment Victoria, which said it was encouraging the state government was stepping in to address the gap.

“These retrofits will significantly improve the lives of vulnerable Victorian families, making their homes safer, more comfortable and cheaper to live in,” Environment Victoria efficiency campaigner Anne Martinelli said.

Ms Martinelli said the government also needed to work on improving of the housing stock more generally.

“As things stand, with our homes averaging less than two stars in terms of efficiency performance, Victorians are being locked into a future of unnecessarily high energy bills and the health risks of living in dangerously hot homes during the longer, hotter heatwaves that climate change will bring,” she said.

“We are looking to the Victorian government for leadership on sensible policy reforms such as better standards for new and rental homes to drive the broad-scale improvement we need if our homes are to meet the challenges of the future.”

Ms Martinelli said decisive action made sense as efficiency improvements would save money as well as contribute to the government’s recently announced 2020 emissions reduction target of 15-20 per cent based on 2005 levels.

The Energy Efficiency Council also welcomed the move, saying it could improve health outcomes as well as reduce carbon and bills.

“Over 3000 Australians a year die during periods of hot and cold weather,” EEC chief executive Luke Menzel said. “Upgrading these homes will make them safer and more comfortable during periods when temperatures are very high or very low.”

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