Saving money by improving your energy rating

by | Sep 5, 2022 | Budget, Performance

If you’re looking to save money on your energy bills, you should probably start by looking at your home’s energy efficiency rating. In this article, we’ll discuss what an energy rating is, how it can affect your bills and the average cost of different star ratings in different Victorian climates.


Energy ratings assess the heating and cooling load of a home. The higher the rating, the less heating and cooling is required, with 0 being the lowest, and 10 being the highest star rating. The National Construction Code (NCC) of Australia includes requirements for newly built homes concerning their energy efficiency. For the last decade, new homes had to achieve a minimum 6 star rating. Recently though, the building ministers have agreed to lift this standard to 7 stars, and this decision will come into effect by October 2023. You can learn more about that decision here. This is a great move to reduce carbon emissions, but will also see homeowners be able to cut off a considerable chunk off their energy bills – after all, a higher energy rating equals less demand for heating and cooling.


Now, we have seen a lot of numbers making the rounds about how much homeowners will be able to save due to this change. But we here at Outlier like to validate data ourselves, which is why we got out the good old calculator and checked the numbers. Below, you will find a detailed overview of how many $ you can actually save by getting a higher energy rating. But before we start, here is the foundation of our calculations:

  • We have used the maximum energy loads (thermal) corresponding to the star bands in each climate zone as provided by NatHERS, which is given in megajoules (MJ) per m² per year
  • We then equated the corresponding Kilowatt Hours (MJ ÷ 3.6 = KwH) and multiplied this number by the current median electricity price per KwH in Victoria as stated in the most recent Australian Energy Regulator report from November 2021
  • In the next step, we multiplied the price per m² by the average Victorian home size, which in May 2022 was 250.3m² stated by Architecture & Design

We did these calculations for both Melbourne and Ballarat, which are located in different climate zones. Also please note that these calculations are for fully electric homes, as we did not include gas in our pricing. And there you go! You now know how much money you are paying a year in an average sized Victorian home depending on your energy star rating. Infographic Melbourne 1024x134 Infographic Ballarat 1024x135 Let’s look at these numbers in more detail.

For everyone who can’t be bothered to read through all the numbers, jump down to our infographic that explains all the major findings from our research at a glance.


Theoretically, there shouldn’t be any newly built homes in the last 10 years that are performing with an energy efficiency of less than 6 stars, given that 6 stars was the mandatory industry standard for the last decade. However, according to NatHERS, 90% of homes going for a building approval were assessed using their energy rating software – but only about 80% of those houses achieved an energy rating of 6 stars. If we add all the existing housing stock into the mix that was built years and years ago and that are probably massively underperforming, chances are we have a very high number of homes in Australia that are performing with an energy efficiency of less than 6 stars. Here’s what that means in numbers: Infographic Melbourne 1 to 5 stars As you can see, the greater Melbourne region has a more forgiving climate, whereas people living in Ballarat will definitely feel the impact of hot and cold weather a lot more. A 1-star house in Melbourne will still cost $10,882 a year to heat and cool. Go up to 3 stars, and you can already cut these bills in half to $5,275, and at 5 stars, you will need $2,900. Infographic Ballarat 1 to 5 stars If you live in Ballarat, however, the impact of your energy rating is much greater. A 1-star home costs a whooping $17,014 a year to heat and cool. 3 Stars are still costing you $8,721 and even a 5-star house is still $5,003 every year.


Those were some pretty scary numbers – let’s move on to the current industry standard, which is 6 stars. In Melbourne, your average yearly cost for heating and cooling a 6-star home is $2,219, so already a 23% decrease in bills from a 5 star home. Infographic Melbourne 6 stars 1024x194 The same is true for Ballarat, where a 6-star home will cost you $3,835 a year, which also is 23% less than for a 5-star house in the same climate. Infographic Ballarat 6 stars 1024x197


How do the above numbers compare to the new 7-star standard that will be introduced by October 2023? If you think the increase from 5 to 6 stars was already pretty impressive, these numbers will probably surprise you even more. Infographic Melbourne 7 stars 1024x197 A Melbourne home that is performing with an energy efficiency equalling a 7-star energy rating only costs you $1,615 a year, which is 27% less than a 6 star home, and compared to a 5-star house, you can almost half your energy bills, with a cost decrease from 5 to 7 stars of 44%. Infographic Ballarat 7 stars 1024x178 These numbers are pretty comparable in Ballarat as well: A 7-star home here will cost you $2,783 a year, which is 27% less than a 6-star home and 44% less than a 5-star home in the region.


Now, even though the industry standard will only go to 7 stars, there are still a lot of people out there who want their home to be even more efficient. We actually frequently design homes that are rated in the high 8s ourselves – and those are not certified passive homes.

For a great insight on how energy ratings compare to Passivhaus performance, check out this article by Light House Architecture & Science. 

Infographic Melbourne 8 to 10 stars

Here’s how that translates in numbers:

An 8-star home in Melbourne will only cost you $1,051 a year, being a 34.9% price decrease from 7 stars, and a 52% decrease from 6 stars! Going up to 9 stars is even more drastic! A 9-star home in Melbourne costs $817 a year to heat and cool, being 53.8% more efficient than a 8-star home, 70% more than a 7-star home, and 78% more than a 6-star home. And looking at 10 stars, you barely have to pay anything for your heating and cooling anymore! In Melbourne, this means $38,94 a year, being 92% more efficient than a 9-star house – and we’ll spare you the comparisons to lower performing homes. It’s significant.


So, as you can see, there are a lot of reasons why you should consider a higher energy rating for your home design. This doesn’t even always mean that you will have to pay significantly more! There are lots of ways to improve a home’s performance, and a lot of small construction details can add up to make a massive difference. You can learn more about that in our article about hybrid homes. Lastly, if you wish to use this data for your own use, feel free to do so, as it is commonly available and we just curated it for our own use to understand the impact of energy ratings a bit better. We do kindly ask though that you include a link or shoutout whenever you refer to this page. Cheers!


We offer air tightness testing and insulation inspection to identify air leaks and thermal bridging in your home. For that, we use a blower door system to depressurize your home and locate all the gaps and holes in the floor, walls, and ceiling of your home. We then inspect the home using our thermal camera to identify thermal bridging issues and see where insulation might be missing.

Our thorough reports on your home’s air infiltration including gaps, holes, and missing insulation, enables you to then go ahead and seal the gaps as well as refit or install insulation to improve the energy efficiency of your house.  This leads to an overall more comfortable and healthy home, while reducing the operational cost of heating and cooling – and saving you a lot of money in the long run.

Interested? Send us a message to book a performance inspection for your home!


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