Minimum energy efficiency standards would cut bills for Victorian renters
In June 2024 the Victorian government announced a proposal to expand minimum standards for rental properties. The proposal includes a range of requirements on energy and thermal efficiency that must be met by rental homes, including:
- Insulation in rental properties at an R5 standard (with exemptions)
- Simple draught sealing
- Air conditioning
- Replacement of fixed heaters at the end of life with efficient electric heaters
- Replacement of hot water systems at end of life with efficient electric models
Taken together, these measures appear likely to significantly improve energy efficiency and thermal comfort for many Victorian rental homes, while also phasing out new gas appliances for renters as part of the broader energy transition.
In responding to government consultation on the proposal, Renew conducted an analysis of what the measures might mean for a typical rental household in Victoria. Our analysis considered:
- Thermal efficiency
- Energy usage and bills
- Cost-benefit analysis at the household level
- Greenhouse gas emissions
- Indoor temperatures
Key findings include:
1. Insulation and sealing up draughts are the first step to a more comfortable home.
Ceiling insulation makes a critical difference to home comfort, temperatures, and provides the most important energy savings. R5 insulation cuts hundreds of dollars a year off energy bills and minimises unhealthy indoor temperatures and is an important complementary feature for homes using reverse cycle air conditioning for cooling. Ceiling insulation and draft sealing resulted in even cheaper cooling costs.
2. All-electric homes are cheaper for tenants to run
Using gas heating was found to result in significantly higher overall heating and cooling costs, even where cooling was added to a household. Replacing gas heaters with split cycle air conditioners lowers renters’ energy bills – both for heating in winter, and cooling in summer. Rental households replacing a gas wall furnace heater with a reverse cycle air conditioner at even a relatively low efficiency rating experienced lower bills for heating, and gained the additional benefit of an appliance that could also be used for cooling.
3. To lower costs for tenants and facilitate the energy transition away from gas, incentives and regulation would drive landlords away from gas connections in rental properties.
While replacing gas heating and hot water has a clear energy and cost benefit, cooking typically uses significantly less energy than other major fixed appliances. However, homes using gas stoves or ovens that remain connected to the gas network are liable for daily connection fees currently costing over $300 per year. As renters do not have agency over the choice of replacement appliances, without regulations requiring that old and/or dysfunctional gas appliances were replaced with energy efficient, electric appliances. many renters will be left paying connection costs into the future. Requiring landlords to take financial responsibility for gas connections fees, while usage costs would continue to be paid by tenants, would act as an incentive to move away from gas appliance in rental properties.