By Julianne Tice, Buildings Policy Advisor, Energy Efficiency Council
For many of us – particularly those in Victoria – two years of stay-at-home orders has seen us spending too much time in cold, uncomfortable, and in some cases dangerously unhealthy homes, followed by bill shock at the end of winter. Concern over energy bills has only increased with Russia’s invasion of Ukraine and its impact on global gas and electricity prices. So what can be done to relieve price impacts for consumers?
When it comes to energy bills, total cost matters far more than the price per unit of energy consumed. While it’s true that total bills increase if prices rise and consumption stays the same, energy management practices can help reduce bills even as prices increase.
Most homes in Australia are rated at less than three stars out of a possible ten under the National House Energy Rating Scheme (NatHERS). To put this in perspective, a 2015 study found that upgrading pre-2005 Victorian homes with an average NatHERS rating of 1.8 stars up to five stars could potentially reduce total energy use by 45.2 per cent – a seemingly small increase with massive savings implications.
Opportunities to reduce consumption: quick fixes
Home energy management refers not just to how efficient the actual building structure (called the ‘building envelope’) and fixed appliances (i.e. heating, cooling and hot water) are, but also how energy is consumed. For example, excessive heating in winter will lead to higher energy bills regardless of how efficient the heater is – but an efficient home that reduces the need to run the heater at all will lead to lower bills.
Consumers can take a range of actions to reduce their bills. Some are quick and easy, and some require a larger time or financial commitment. Actions to reduce energy consumption that consumers can take right now – without making any alterations to their home or buying any fancy equipment – include:
1. Using the highly efficient heater that already exists in many homes: a reverse cycle air conditioner. Though some householders use auxiliary plug-in heaters, hitting the button with the sun symbol provides much cheaper heating
2. Seal up holes and cracks in floors and walls with caulk or spray foam. Homes in Australia tend to be very leaky, causing outdoor air to infiltrate and making indoor living spaces uncomfortable. Sealing cracks and gaps can markedly reduce the need for heating and cooling
3. Keep indoor temperatures within the recommended range: 18-20° in winter and 22-24° in summer. In winter, each degree households increase heating can increase consumption by up to ten per cent
4. Replace incandescent or halogen light bulbs with LEDs, which use 80 per cent less electricity and last much longer than older bulbs. Households in Victoria and New South Wales can access incentives for these upgrades right now
5. Maximise self-consumption of household solar PV. Households with PV can program appliances to take advantage of ‘free’ solar energy during the day, rather than export it for a comparatively tiny feed-in tariff
Retrofits are needed
While consumers find it easiest to manage their immediate energy usage, a greater number of solutions are available in the short and medium term, but which involve additional effort and financial commitment. The most important thing needed in homes to help consumers avoid rising energy costs is to improve the quality of the existing housing stock through retrofits. This includes:
• Improving insulation levels and draught proofing. Australian homes are typically under-insulated, and uncomfortable as a result. Installing insulation in a roof space, in walls and under floors might be invasive, but the savings in terms of bills, and particularly comfort, are huge
• Replacing gas and electric resistive heating and hot water systems with efficient electric appliances. Heat pump hot water systems and reverse cycle air conditioners are super-efficient and can provide cheap heating and hot water, even on very cold days
• Consider electrifying the home. Research shows all-electric houses can save householders thousands of dollars
Countries already feeling the pain of the energy crisis are creating incentives to encourage these actions. In the United States, President Biden invoked an order to boost the production of heat pumps and insulation.
The European Union has introduced the REPowerEU Plan to reduce its reliance on Russian fossil fuels, recognising that ‘energy savings are the quickest and cheapest way to address the current energy crisis, and reduce bills’. And the United Kingdom introduced grants to encourage heat pump installation earlier this year.
Incentives, public and private investment, and information campaigns are all needed to encourage households to take up these improvements. But government policy can take things a step further by introducing measures to help each home reach its full potential in health, affordability and comfort. These include:
• Minimum energy efficiency standards in rental homes help ensure tenants – not just homeowners – benefit from energy efficiency
• Mandatory disclosure of home energy efficiency ratings, which help make energy efficiency visible and supports homeowner choice
• A long-term electrification plan, which would provide certainty for investors and ensure households who remain on the gas network don’t face disproportionate costs
• Continually improving building codes to make new homes zero emissions-ready will ensure they are built to the highest possible standards
Australian houses have an energy problem, and it’s time to stage an intervention. While we will need to help households manage coming bill shocks, simply offering direct financial relief will not solve the underlying issue of Australian homes requiring too much energy.
By becoming smarter with how households use energy – and helping buildings to not waste energy – there’s a chance for consumers to reduce their energy costs even as prices rise.
