How home owners can save $6000 a year and stay cool

Spending an extra $25,000 on improving a house’s energy efficiency rating during construction can save its owners nearly $6000 a year, new modelling suggests.

Home owners who paid the extra upfront costs would save $300,000 over the life of the loan, and could stay comfortably cool or warm throughout the year without any added costs.

An eight-star home, which includes solar generation, energy storage and an electric car, can be $6000 a year cheaper to run than other homes.Credit: The Cape

Owners of existing homes can get similar results for the same spend, the report’s authors say, but warn the difficulty of retrofitting can add extra costs.

Modelling commissioned by The Cape Paterson eco-development in Victoria’s east, The Cape Bill-buster Study, showed running a 7-star NatHERS (Nationwide House Energy Rating Scheme) rated home, the new Australian standard, would cost $7175 to run per year. The modelling assumed the 7-star home was hooked up to gas and its owners owned a non-electric car. The cost of running a car was included in the final figure.

Eight-star Cape homes were used as the example of an efficient home. They were completely electric, sealed and fitted with solar panels and batteries. The modelling assumed the owners had an electric car, which could also be used as energy storage – as is the case for many home owners in the Cape Paterson community.

The Cape resident John Godfrey said it made hot summers easier to bear. “It’s just basically very comfortable to live in. Once it gets warm in the winter it stays warm, and it doesn’t heat up in summer,” he said.

The Cape residents say they’re comfortable in their homes year-round and pay little to run their homes. Credit: The Cape

“We run the heater on very few days in winter, and in summer, unless it’s stinking hot, we don’t have to turn on the air-con, and we certainly don’t run it all day.”

The research found the cost of running the home and electric vehicle was $1190 for a year, a difference of $5985. Over a 25-year mortgage and assuming the savings grew over time, a homeowner could save $293,681.

When compared to a 4-star home – a better rating than the majority of Australian homes – the owner of an 8-star home with solar generation and electric car would save $380,975 over the life of their loan.

Godfrey said the findings of the report matched his experience. “You could almost flippantly say, what bills? We have one car and it’s all-electric. We do about 25,000 kilometres a year. We pay about 500 bucks a year on utilities and running the car.”

The Cape developer Brendan Condon said the scale of the potential savings should be attractive to potential home builders.

“At the moment in the cost-of-living crisis, everyone is doing it tough,” he said. “If you could live in a super bill-busting house, if you could save $6000 to $7000 per year, that’s a big deal for all households across Australia.

“[Even] in country Victoria, with people driving a bit more, people are seeing savings of $6000 per year. It makes really strong economic sense.”

The $25,000 spend did not include the extra cost of buying an electric car, but Condon said EVs and conventional cars were expected to reach price parity in 2025, and therefore didn’t ask report author Richard Keech to factor in any extra costs.

Condon said it was possible to get similar benefits by retrofitting existing homes, but costs could blow out if home owners wanted to bring their home to the same standard as the example houses.

It was much harder to fully draught-seal an existing house, as an airtight membrane needed to be installed to prevent air leakage and improve heating and cooling efficiency. He said this could be prohibitively expensive with existing homes.

“Upgrading the building fabric itself from 4-to 8-star is variable. Retrofitting a poorly built home can be very expensive.”

Keech, an energy efficiency consultant at New Energy Thinking, said home owners may not be aware that adding an electric car to a home would compound the benefit of solar power and other efficiency measures.

“The EV means you can get a lot more economic benefit from your solar if you can charge at home,” he said. “You can use the PV to power your home during the day from the sun, and adding a battery as well means you can effectively get your use of grid energy all the way down.”

Keech said while finding an extra $25,000 could be challenging, he felt it would be worth it for most home owners.

“There’s this trade-off between running costs and capital costs, which makes a lot of sense. If people spend that extra on an EV and a more efficient house, the savings more than pay themselves back,” he said. “Our assumptions are conservative, so the savings are real and conservative.”