The rapid acceleration of the global divestment movement has revealed the appetite average people have for helping transition to a more sustainable world. While media has been focused on the large institutions shifting investments to greener pastures (typically after consumer pressure), individuals too have been quietly switching their savings and superannuation over to more ethical institutions.

Another obvious place for action is the home, where we generally consume the most energy and water, and create the most carbon emissions. The importance of our homes in tackling climate change cannot be understated, with Australia’s housing now responsible for 13 per cent of the country’s greenhouse gas emissions.

Improving the sustainability of our housing stock will be critical for meeting Australia’s emissions reduction targets following COP21 in Paris. But whereas an action like divestment can be made with next to no upfront payment, upgrading our homes generally involves significant upfront costs, a barrier to action for many of us.

But there is assistance available, from government incentives to enterprising institutions offering discounted finance for green upgrades.

While the sustainable built environment sector is calling on governments to do more to ensure the sustainability of our residential building stock – including increasing standards and further incentivising upgrades – here’s a look at some of the help available now.

State-based schemes

Depending on where you live, state governments incentives may be an attractive option for households to get help improving the energy efficiency of their properties.

South Australia

South Australia’s Retailer Energy Efficiency Scheme stands out as a generous program that allows householders to benefit from energy-efficiency upgrades at no cost or at a discount from participating energy retailers.

Covered activities include installation of energy efficient lighting, water efficient shower heads, stand-by power controllers, insulation and energy efficient water heating.

It is also the first state incentive program to reintroduce discounts for ceiling insulation following the fallout from the federal Home Insulation Program.

Lucky Adelaide city residents can also take advantage of the Adelaide City Council’s Sustainable City Incentives Scheme, which provides up to:

  • $5000 for installing solar PV
  • $5000 for installing energy storage
  • $500 per electric vehicle charging controller
  • $5000 for apartment building energy efficiency upgrades
  • $1000 for changing out quartz halogen downlights to LED downlights
  • $120 for installing an energy monitoring system
  • $1000 to for solar hot water system
  • $500 for rain water tanks or $3000 for communal use rain water tanks in apartment buildings


The Victorian Energy Efficiency Target (VEET) scheme involves accredited businesses creating certificates, each representing one tonne of carbon abatement, when they help a householder make selected energy efficiency improvements to their premises. The money the business makes from selling its certificates can go towards a discount on the product installed. This discount is known as an Energy Saver Incentive.

Current activities for which a discount can be received include water heating, space heating and cooling, space conditioning, incandescent lighting replacement, shower roses, refrigerators/freezers, televisions, clothes dryers, pool pumps, standby power controllers and in-home displays.


Under the similar NSW Energy Savings Scheme, householders can get access to subsidised home efficiency upgrades including appliance sales and removals, and retrofitting activities including:

  • Draught-proofing external doors, windows and chimneys
  • Modifying single-glazed windows with film
  • Replacing thermally inefficient windows
  • Installing Secondary Window Glazing
  • Installing efficient Air Conditioning
  • Replacing inefficient pool pumps
  • Installing ultra low flow showerheads
  • Replacing Halogen Downlights
  • Replacing Outdoor Lighting
  • Replacing T8 or T12 fluorescent lighting


The ACT government’s Energy Efficiency Improvement Scheme compels electricity retailers to work with homes to reduce energy use. Households can directly participate in the EEIS by booking a free Energy Saving House Call, where an authorised installer will install free energy saving products, such as standby power controllers, energy efficient light bulbs and draught stoppers.

Financing options

With or without government help, there will still be a portion of costs needing to be covered.

If you can’t or do not want to finance these energy upgrades upfront, there are a range of options available, the pros and cons of which you should weigh up to make a decision right for your circumstances.

Home loans

If you’re considering an expensive investment like solar panels or battery storage,  or a deep retrofit, and don’t have the upfront capital available, refinancing or redrawing from your mortgage (if you have one) may be an attractive option.

Using your home loan, you borrow money from your financial institution to pay for the efficiency upgrades, with the upgrades being paid off over the term of the mortgage.

While there may be disadvantages to this method, including a longer contract period leading to more interest paid over the life of the loan, and the possibility of attracting refinancing fees, there are also a number of advantages. These include having access to the generally very low interest rates associated with home loans, and, if repayments are made above the minimum stipulated, the ability to reduce interest payments.

Another advantage is the potential to qualify for green home loan products, which may attract lower fees and interest rates.

In Australia, there are only few such examples of green home loans, including from Bendigo Bank and Hunter United.

The first to be offered in Australia is Bendigo Bank’s Generation Green home loan, which has been around since 2002, according to Joshua Pell, who is in charge of the bank’s environment and sustainability agenda.

The loan provides a discount on the standard lease terms, and also removes many of the upfront and ongoing fees.

“The Generation Green loan was established for people looking to reduce their impact,” he told The Fifth Estate. “Reducing our impact on the environment and helping others do the same is part of the bank’s commitment to building sustainable and prosperous communities.”

To qualify for the loan is not difficult, Pell says, and involves complying with minimum required environmental standards, as well as installing a selection of upgrades, such as double or triple glazing, solar hot water or heat pumps, water storage, roof and wall insulation, alternative energy supplies like solar, and grey and black water treatment systems.

“These infrastructure items actually reduce costs for households, but they’re also an investment into creating a sustainable household as well,” he says. “So we always saw it as being able to support the people who are trying to lessen their impact and create a more sustainable household.”

While Pell sees the market for sustainable homes getting larger, take-up of green-focused finance has not been high, and for some banks it has been much lower than expected.

In fact, for Bank Australia (formerly bankmecu), it was partly why they decided to discontinue their goGreen home loan option in August 2015, which was available for those wanting to buy or build a home rated 7 NatHERS stars or more.

For the 2011-12 period, the bank saw just seven of these home loans taken up. According to Martyn Norman, head of lending at Bank Australia, there was not a “strong take up” of the product, though the organisation also wanted to simplify its offerings, following its brand change.

“We recently simplified our home loan products to make it clearer for our customers, and while we don’t offer discounts, we have sustainability features built into all our loans,” Norman says.

“All home loan customers can apply for Bank Australia’s eco-repayment pause (a three-month break in repayments) for environmental upgrades to their homes.”

However, banks like Bendigo and Bank Australia are ones that have committed to the divestment action, so having home loans, green or not, with an ethical bank is in its own way a sustainable option.

Personal loans

In Australia, credit is currently fairly cheap, so there are myriad attractive personal loan options available. Depending on the interest rate, and the period in which you are able to pay off the upgrades, this option may be more attractive than attaching the upgrade costs to your home loan.

Green personal loans, which must be used to finance sustainable home upgrades, are an option that may be attractive, with institutions such as Community First Credit Union, Bendigo Bank and Victoria Teachers Mutual Bank providing discounts on standard loan rates to fund home upgrades, including solar hot water systems, solar panels, insulation, high star-rated airconditioners, rainwater tanks, efficient glazing, grey water treatment system, energy efficient appliances, heat pumps and LED lighting.

The repayments can be offset by potentially cheaper energy bills, and can be spread out over a long period, typically from one up to 10 years, though a longer period can mean more interest and fees over the lifetime of the loan.

Again though, green personal loans are atypical offerings in the Australian financial market.

Why is the market undeveloped?

But why is there a lack of appetite, both from consumers and financial institutions?

Joan Ko, a senior sustainability consultant at Arup, asked those questions in 2013, looking at different schemes around the world for a report on delivering and funding housing retrofits.

“We though it might be because the money wasn’t available,” Ko told The Fifth Estate.

“But even if money is made available, uptake is still very low.”

She has some solutions, however.

Regarding incentivising consumers, two similar case studies from the US are instructive on what can make a difference, Ko says.

Uptake of a program in Portland was much higher than a similar one in San Francisco. The difference was the Portland program allowed other renovations to occur at the same time energy efficiency and sustainability upgrades were being made. So you could get your LED lights and insulation, but also, say, get a marble bench top for the kitchen or timber floorboards.

“In the end what we concluded was that the funding of energy efficiency with other renovations and upgrades can be a hook into the Australian market,” Ko says.

It makes sense, too. Just think of how popular shows like The Block and Backyard Blitz are. So let’s throw in the kitchen sink with our energy efficiency upgrades.

For financing, Ko says the key to getting scale is through leveraged private finance, with the government providing security or credit worthiness for retrofit loans.

To create scale, we need to reduce the risks for private investment through things like loan loss reserve funds, which are available in case of defaults and help reduce interest rates, and tools like repayment charges through council, which occurs for commercial buildings under Environmental Upgrade Agreements.

There are some barriers that need attention though, Ko says.

Number one is the paperwork to get the finance. This can be a huge disincentive when paybacks are typically small. Standardising and streamlining this paperwork can help, something that has been achieved in Germany, she says.

“The banks there say, ‘We know the payback is there. Just go and do it.’”

Another barrier is that people generally don’t trust the savings they are told they will get.

“It’s hard for people to rely on or imagine the future,” Ko says.

But if you bundled in renewable energy with other upgrades, paybacks are more understandable. People see the money from feeding energy back, and the savings from reduced energy bills.

Finally, another barrier is the lack of people doing it, she says. People don’t come across it; their friends aren’t doing it.

Incentivising loans through bundling and de-risking private investment are the way forward, Ko says.

International examples

Internationally, there are some success stories, most prominent of which is the German state-owned development bank KfW, whose Energy-Efficient Refurbishment program offers grants of up to €30,000 (AU47,885) or discounted loans of up to €100,000 (AU$159,616) for people investing to make an older residential building more energy-efficient or those purchasing a newly refurbished home.

The program, according to the 2013 Arup report, has proved “very popular” in the German housing market, and at that time had seen more that €40 billion (AU$63.9 billion) committed.

Along with tight regulations, the program has helped Germany to have some of the most efficient residential housing stock in the world.

The Arup report found that public sector involvement was key to a successful home financing project.

However, proper design is also critical. Case in point is the UK’s troubled and now discontinued Green Deals program.

Officially launched in 2013, the program provided loans for energy saving measures that would lead to reduced energy costs for homeowners. The loan was paid back through energy bills and was attached to the property, rather than an individual. However, an upfront assessment cost of up to £150 and a relatively high interest rates meant that only four green deals had gone ahead by June that year, though 38,259 Green Deal assessments had been completed.

In 2014, the government launched the Green Deal Home Improvement Fund, which saw cash back of up to £4000 for home energy efficiency upgrades, which saw a dramatic increase in popularity. This was scrapped following the 2015 election of Conservative Government in 2015, with UK energy secretary Amber Rudd citing poor take-up and workmanship. Just £114 million (AU$233m) of the £540m dedicated ($AU1104m) had been utilised.

Special finance options for solar

Other financing methods are available to fund solar panel installation, including payment plans through installers and power purchase agreements or solar leasing.

What’s suitable depends on your circumstances though.

Nigel Morris, chief executive of RoofJuice Australia, previously Sungevity, whose background goes right back to Australia’s early days in the rooftop solar industry, says finding definitive answers on finance options for solar is like asking how long is a piece of string.

You can offer to pay cash (which is the cheapest because it does not have an interest component) you can pay over a term typically 5-7-years, or you can lease.

Leasing can appeal because it takes out the headache of maintaining or repairing the panels or inverters if something goes wrong. Responsibility for maintenance is with the company installing the system.

Some companies offer an interest-free period but Morris warns it would be a mistake to take this at face value.

“Everyone gets hung up on the interest rate but there is so much more to it than the interest rate,” he says. “There is the term of the agreement – you can have a high interest rate but a short term and be better off.”

The alternative is a low interest rate and a long term, which could mean significantly higher overall costs.

“For instance the lowest interest you can have is a housing loan. It’s the cheapest money you can get, at 4-5 per cent. But if you’re paying it back over 20 years, when you add up the cumulative interest it means it’s the highest cost.”

The personal loan comes in handy if you have some “head room” or equity in your home loan, because you’ve paid off a significant part of it – in which case, the bank can’t object to what you spend your equity on.

What doesn’t exist, he stresses, is the idea of “no interest”. If a product is offered with no interest you can be absolutely assured the interest is built into the cost, he says. Somewhere. Cheap finance could be attached to an inflated system cost, or the deal could come with exorbitant monthly fees or establishment costs.

It’s also possible to get personal tax deductions through depreciation, he says, depending on how the deal is structured.

“There are so many different finance products out there. Macquarie Bank have four or five different products,” he says.

A power purchase agreement or PPA is effectively a solar deal stretched over the longer term, around 10-20 years.

You’re charged for the energy generated by the system, which is likely set at a rate much lower than grid energy. The payments you make should be lower than the savings you make on your energy bills, meaning you come out on top.

It also means the customer doesn’t have to worry about maintaining the product if things go wrong.

“If the system doesn’t work they don’t get charged. Customers love that and some are happy to pay a premium for it.”

And there may be an option to get ownership of the product at the end of the deal.

However, as you’re charged for the energy generated by the panels, you could be charged whether you’re using that energy or not. Beware, jet setters!

So what’s best?

But to get a clear picture of the offerings between products? Forget it.

“I’ve tried on many occasions to get the financial products guys to spell out the pros and cons. But I never got an answer,” Morris says.

“They don’t necessarily want to be stacked up against each other; they want to keep their cards close to their chest so competitors don’t see what they do.”

The NSW Office of Environment and Heritage has compiled a solar finance guide listing the pros and cons of available options. Do your research, and choose the option that suits your personal circumstances.

Need for change

One thing is clear. Governments in Australia need to step in to raise the bar on residential housing sustainability and promote the benefits of efficient homes. In January 2016, the Australian Sustainable Built Environment Council put out a call for a nationally consistent framework for residential ratings, which it says would help to improve the sustainability of new and existing homes. It recommends a three-pronged approach involving minimum regulatory performance standards in new buildings; benchmarks for market comparison of best practice sustainability performance; and communication messages explaining the value of sustainability features to renovators and homebuyers.

“The industry is clear,” ASBEC president Ken Maher said. “We need governments to work with us to implement a nationally harmonised sustainability ratings framework for houses.”

For consumers, a nationally consistent framework promises to be a big help, with sustainability information able to be provided at the point that homes are sold or rented. This data could then be collected to help agents make the case for sustainability features in terms of reductions in running costs and increases in property value.

An edited version of this article first appeared in Sanctuary Magazine.

Join the Conversation


Your email address will not be published.

  1. A very neat fit with the financing of green retrofit of Australian housing would be the “Fee and Dividend” method of carbon pricing as proposed by Dr James Hansen and by Citizens Climate Lobby in USA,
    and other countries. Also supported by The fee collected for releasing carbon goes into a trust and is distributed evenly to all citizens. This provides the citizens with either an offset to the costs or the money for a permanent saving solution.

  2. Why is ‘greening the home’ treated as though it is synonymous with renewable energy and energy efficiency as though that’s all there is? What about the materiality of homes and the really really low hanging fruit that is achievable using existing product rating schemes that help consumers and professionals alike rank and choose products before purchase?