The economics of 6 to 10 star homes in Victoria

With the rise of rooftop solar photovoltaic (PV) systems, high efficiency electric technology to supply space and water heating loads, and improvements in passive solar building design and construction, there is increasing evidence that substantial energy and financial savings can be achieved in the residential building sector at low cost.

Yet greenfield and infill residential developments of Class 1 buildings in Victoria involve homes built to the minimum 6 Star energy rating requirement and continue to be established as “dual fuel” – i.e. are supplied with both reticulated gas and grid electricity, with the former typically supplying the space heating, water heating and cooking loads.

The purpose of this project has been to undertake an economic analysis of the value of:

  • building homes to higher levels of energy efficiency;
  • all-electric homes, in comparison with dual fuel homes (given its Victorian focus); and
  • solar photovoltaic (PV) technology.

In line with this objective, the project modelled a range of household types, sizes and locations within Victoria.

The key findings are:

  • Whether analysed by payback time or NPV, new 7 to 8-Star all-electric homes with solar PV are highly economically attractive as compared with new 6-Star dual fuel homes in Victoria
  • Solar PV makes a significant difference to the economics of higher efficiency and/or all-electric homes, when compared against dual fuel homes
  • The value of higher building efficiency (in isolation from solar PV or appliance mix) is of less significance than solar PV, and also reduces in line with greater efficiency/higher Star ratings