Australians could cut power bills by 90% if they made their homes more energy efficient, report finds

11 07 2025 | 16:05Graham Readfearn / THE GUARDIAN

Debate on how to generate energy ‘important but misses the point’, analyst says, when you can get such savings by using solar, batteries and efficient appliances

The debate over where Australia gets its energy from has played out like a “comic-book death battle between coal and renewables” in recent years, according to Luke Menzel, the chief executive officer of the Energy Efficiency Council.

Discussions over coal versus renewables, the role of gas and the speed of infrastructure rollout to bring renewables online had been “important”, Menzel said. “But there’s a whole other conversation we need to be having. And that’s about how we are using energy.”

Menzel and other energy experts say political noise has often overshadowed the role of energy efficiency in Australian homes and how to cut rising household bills.

The latest of several reports to make the case for boosting energy efficiency is from the Institute for Energy Economics and Financial Analysis (IEEFA).

IEEFA found Australian households could cut their power bills by more than 90% by implementing a range of energy efficiency measures.

Released on Wednesday, the report calculated potential savings of between 82% and 94% if households installed solar and a home battery and used efficient appliances – such as heat pumps, air-conditioners and electric induction cooktops.

The report said with federal and state government policies to incentivise home energy efficiency, a goal of halving household energy bills in a decade is achievable.

“We’ve seen over the last few years that energy prices and cost of living has become an emerging concern, but the debate has been around one-off rebates or debates on how to generate power,” Jay Gordon, an energy finance analyst at IEEFA, said.

“That’s important, but it misses the point when you see these 80% to 90% cost reductions.”

Last month, energy experts congratulated the Victorian government for a suite of measures to improve home energy efficiency, including a ban on gas heating and hot water systems in new homes from January 2027.

The Albanese government’s new $2.3bn home battery program, which officially kicked off last week, provided discounts of about 30% on batteries.

Wednesday’s IEEFA report projected that households could make savings of between 82% and 94% if they:

  • Installed an 8kw rooftop solar system and a 10kwh battery

  • Used reverse-cycle air conditioning instead of gas or electric heaters

  • Swapped gas or old electric water heaters for heat pumps

  • Replaced gas cooktops with electric induction

The IEEFA modelling did not take into account the further gains that Gordon said can be made by improving the thermal efficiency of homes: how well they can hold heat in the winter or keep heat out in summer.

More thermally efficient homes give households the option to use more daytime energy from solar to either preheat or pre-cool their homes ahead of the evening peak.

Menzel said though technologies such as heat pumps and solar are well established, policies to encourage their take-up are a challenge.

“With electrification and efficiency you’re talking about a much broader range of product types and interventions that look different in different parts of the economy,” he said.

“It’s a heavier lift, but it’s where we need to go.”

Australian homes use about a quarter of the country’s electricity, and account for more than 10% of greenhouse gas emissions. Cutting gas use in homes could also ease the supply pressures in the east coast, Menzel said.

Two reports in 2023 and 2024 from the independent Climateworks Centre, based at Monash University, have made the case for a “renovation wave” across homes in Australia, especially those built before 2003 when minimum energy efficiency rules were introduced to national building codes.

Steps such as upgrading windows, adding insulation to walls, ceilings and floors, and upgrading appliances could save up to $2,200 a year on a household bill, the centre’s research has claimed.

Dr Gill Armstrong, the centre’s buildings program manager, said: “They’re tried and tested. It’s low-hanging fruit, but it’s also the one area where we can move fast for households to get the benefit of lower bills.

“There’s a growing awareness that homes can be improved quite quickly. It’s a no-brainer for the federal government.”

 

Cover photo:  Among the energy efficiency measures recommended in a new report is replacing gas cooktops with electric induction. Photograph: Westend61/Getty Images

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