$82 billion opportunity: Why Aussies aren’t doing more to slash this big household expense

Making homes more energy efficient has major financial benefits for households but one big barrier is holding people back, a new report has found.

Upfront costs are the biggest barrier to adopting energy-efficient features in the home, according to the PropTrack-Origin Australian Home Energy Report, released Wednesday.

More than half (58%) of homeowners said costs are the main challenge to improving home energy efficiency, despite research showing that Australians could save an average of $1033 each year by going all-electric.

Renters on the other hand felt disempowered by their lack of control over energy efficiency in their homes, citing this as their main challenge to adopting energy-efficient features. 

The report, based on insights from the realestate.com.au Residential Audience Pulse Survey, found 70% of respondents had changed their energy habits in the past year — the hottest on record — due to cost of living pressures.

Report author and REA Group senior economist Eleanor Creagh said both homeowners and renters were concerned about the environmental impact of greenhouse gas emissions, but were primarily motivated to make changes by the rising cost of living.

“While climate concerns are a priority, financial motivations drive most energy decisions,” she said.

“When it comes to concerns about climate change impacts, the hip pocket is where most feel it.”

Beyond costs, the report found a shortfall in understanding about energy efficiency and a perceived lack of grants and incentives as challenges to adopting energy-efficient features.

Only one in five (19%) of respondents felt that existing policies, grants, and incentives were sufficient to improve the energy efficiency of Australia’s homes.

The report found younger people were less likely to believe individual efforts can help reduce emissions, despite almost half (47%) of people under 35 stating they had experienced climate anxiety, compared with a third (34%) of those 35 and older.

Ms Creagh said a lack of understanding about energy efficiency, combined with concerns about upfront costs, was hindering the widespread adoption of sustainable upgrades. 

“Renters, younger Australians, and lower-income households face the greatest challenges, emphasising the need for targeted policies, education, and incentives.”

Energy-efficient upgrades: An $82 billion opportunity

Encouragingly, about 65% of households planned to make energy-efficient improvements to their homes in the next five years, but younger households were a little less likely.

Households planned to spend an average of $7,950 on energy efficiency improvements in the next five years, representing an $82 billion opportunity, the report found.

People who were building, renovating or planning to sell their home were more likely to spend more, indicating the perceived positive effect energy-efficient upgrades can have on home values.

Tasmanian households intended to spend the most ($9,600), while those in the NT were willing to spend the least ($3,700).

Solar power and efficient lighting were the most popular energy-efficient features, with a third of respondents stating they already had these installed in their homes.

Adoption of solar power was highest in South Australia, with 45% of households stating they had installed solar panels, compared with 29% in NSW and Victoria, which ranked lowest for solar adoption.

Big saving by going all-electric

Electrification — switching appliances powered by gas to electric alternatives — can significantly reduce energy bills while minimising greenhouse gas emissions, but the perceived cost is putting many consumers off, despite the big savings on offer.

Going all-electric would reduce the average household energy bill by $1033 annually, according to a 2023 report by the Climate Council. 

Further thermal efficiency upgrades such as wall and ceiling insulation, draught sealing and secondary glazing would save an extra $972, the same report found.

Just two out of five respondents to the realestate.com.au survey said they would be willing to switch to an all-electric home, and more than a quarter (28%) said they would not consider full electrification.

Ms Creagh said educating people on the benefits of improving the energy efficiency of their homes was crucial.

“It’s clear that people with a good understanding of energy efficiency are more likely to make upgrades to their home and alter their behaviour to reduce energy use,” she said. 

People who were keen on saving money by improving their home’s energy efficiency could start small, said Origin Energy retail executive general manager Jon Briskin.

“Changes to energy habits are a simple and affordable way for many households to get started on their energy efficiency journey,” he said.

“Small changes like checking the star ratings of appliances and upgrading to the most efficient model within budget, to using energy efficient LED globes, can help to reduce energy use and boost household budgets.”

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