Analysis by the Climateworks Centre suggests that upgrading Australia’s worst-performing homes could deliver big cuts to electricity use, with major benefits for residents, governments and the energy system. In NSW, where many homes were built before insulation and efficiency standards came into force, targeted upgrades could reduce household energy consumption and ease pressure on the electricity grid—particularly during extreme weather.
Residential buildings currently account for nearly a quarter of Australia’s electricity use and around 10 per cent of its emissions. According to the analysis, improving just 10 per cent of homes—around one million dwellings nationally—would lower household energy use by 9,136 gigawatt hours a year. That’s enough to power 4.5 million electric vehicles annually.
These “low-performing” homes typically have minimal ceiling insulation, unsealed gaps in walls and windows, and rely on gas heating. Such homes often feel too hot in summer and too cold in winter, with high energy bills and poor indoor comfort.
The Climateworks Centre modelled three levels of energy upgrade packages:
- Quick-fix: draught sealing, ceiling insulation, heavy curtains, and efficient electric heating.
- Modest: the above plus floor insulation and extra window glazing or film.
- Climate-ready: all previous measures plus wall insulation, high draught-proofing, double-glazing, and heat recovery ventilation.
In colder states like NSW, more comprehensive upgrades bring greater comfort and cost savings. The recommended upgrade for NSW homes would raise average energy ratings from between 2.3 and 2.9 stars to up to 8.7 stars on the National Home Energy Rating System (NatHERS), depending on the package used.
Households in upgraded homes could collectively save more than $2 billion annually on energy bills. The emissions cut—about 2.3 million tonnes of CO₂ equivalent—is similar to taking 480,000 petrol cars off the road for a year.
But the upfront cost is a barrier. Climateworks estimates the average cost per home is $13,700 for a quick-fix, $19,000 for modest, and $37,100 for climate-ready upgrades. Without policy support, many households may not be able to afford these improvements.
“There is an opportunity for policy support to reduce the costs of improvements such as double-glazing or insulation,” the report notes.
Government programs already offer some support. In the ACT, for example, homeowners can access rebates and low-interest loans for insulation and electric appliances. Nationally, the federal government’s Social Housing Energy Performance Initiative is co-funding upgrades to over 60,000 public housing properties, with a commitment to retrofit 50,000 more.
The analysis points to the wider public benefit of these upgrades. A separate study by Sustainability Victoria found that for every dollar spent on improving energy performance, over $10 was saved in healthcare costs—likely due to improved indoor temperatures and air quality.
Climateworks worked with CSIRO and research group Strategy. Policy. Research. to analyse housing data and model upgrade outcomes using CSIRO’s national housing data portal.
“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,” the report states.
And when it comes to energy planning, reducing demand can be as useful as increasing supply. The study suggests that making existing homes more efficient is one way to avoid building new infrastructure just to meet peaks in electricity demand.
