Our homes are a huge part of our lives.

On average, people spend around two-thirds of their lives in their homes.

Our homes reflect our priorities, our personalities, and our lifestyles. They contribute to both our physical and psychological comfort and safety.

How well they deliver on these elements can greatly affect our health and wellbeing.

Homes are where family and friendship memories are made, and since the COVID-19 pandemic, people have spent more time in their homes than ever before.

Homes contribute more than 10 per cent of Australia’s total carbon emissions.

Most homes that will be standing across Australia in 2050 have already been built and already exist today.

Making existing homes more energy efficient is therefore a key priority for the Australian Government.

Inefficient home design with gaps around windows and doors, and between building materials, allows outside air to leak in and out of homes.

It causes people to turn their heaters up in winter and air conditioning up in summer, resulting in expensive energy bills.

Without addressing this issue, Australia risks overspending on energy grid transmission upgrades.

Controlling this risk is important as the grid infrastructure will already need to accommodate additional demand as residents install electric appliances and switch off gas.

The country also risks missing out on the benefits that well-insulated homes provide occupants such as better health and wellbeing.

Climateworks Centre’s Renovation Pathways research program identifies ways governments and the private sector can enable home energy performance upgrades in a coordinated manner.

The program shows a widespread ‘renovation wave’ can be cost-effective, with considerable societal benefits from lower energy system costs and improved health outcomes.

Our findings indicate ‘quick-fix’ and ‘modest’ thermal upgrades are largely cost-effective for households to undertake, even if not bundled with other home renovations.

The key to catalysing a renovation wave will be to remove barriers to uptake, particularly for renters, those living in social and affordable housing, and low-income households.

Upgrading houses to the ‘climate-ready’ renovation level, which includes higher levels of insulation, double glazing, and heavy drape curtains and airtightness, would achieve significant emissions reductions, but households need policy support to make these renovations cost-effective.

Effective and supportive government policy has led Australia to be a global leader in rooftop solar. Australia now has an opportunity to support household upgrades to be ‘climate-ready’ and prepare occupants for more frequent extreme temperatures.

Starting a renovation wave now is the opportunity for governments to deliver on their social, economic and environmental commitments all at once.

Summary of findings

  • The 16 archetypes selected for analysis cover about 80 per cent of single-storey detached homes and townhouses and over 50 per cent of apartments. This means that Renovation Pathways’ findings are relevant for the majority of existing homes across Australia. Renovating all homes will reduce emissions at scale. The findings in this report can guide policy to effectively target every home by archetype, both nationally and in each state and territory.
  • The median private benefit-cost ratio (BCR) for apartments, houses, and townhouses is greater than one for the ‘quick-fix’ and ‘modest’ thermal upgrades, indicating that these are cost-effective for over half of households.
  • For the ‘climate-ready’ thermal upgrades, the median BCR for all home types is less than the cost-effectiveness threshold at present, meaning that on average this level of renovation will not be cost- effective for households without financial support.
  • With ‘quick-fix’ and ‘climate-ready’ thermal upgrades plus full electrification of appliances, households could save an average of between $1,690 and $2,002 each year, respectively. This equates to average savings of 43–51 per cent on total domestic energy bills per home. For the three home types selected for analysis – apartments, houses and townhouses – ‘climate-ready’ thermal upgrades paired with full electrification provides the greatest bill savings.
  • Australian homeowners who invest in ‘quick-fix’ and ‘modest’ thermal upgrades, full electrification of appliances and rooftop solar could have annual net savings on average of between $909 and $1,578 from the first year. These net savings factor in interest payments for loans or mortgages at a standard mortgage rate of 8 per cent.
  • ‘Quick-fix’ and ‘climate-ready’ thermal upgrades would reduce annual peak demand by 1.4–3.5 kW per home, this is equivalent to a 30–77 per cent reduction in peak household demand. ‘Climate-ready’ thermal upgrades yield the greatest reduction in annual peak demand across all home types, due to a marked reduction in heating and cooling space conditioning.
  • The average societal BCR is greater than the private BCR across all home types for ‘climate-ready’ upgrades, demonstrating the importance of policy intervention, as households may not be motivated to strive for ‘climate-ready’ or higher levels of energy efficiency such as all-electric and 7 NatHERS stars based on private benefits alone, despite wider benefits to society.
  • Limitations to rooftop solar access emphasises the need for all existing homes to pursue ‘climate-ready’ upgrades and full electrification of appliances in addition to rooftop solar for the greatest likelihood of reaching net zero.
  • Improving the energy performance of Australian homes can positively impact the health of people in Australia – through protecting against extreme temperatures, preventing poor respiratory health through electrification of appliances, reducing energy poverty through efficiency and decreasing costs and pressure on the healthcare system.

Download the report
ISBN: 978 0 9941725 6 3

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