Introducing minimum standards for energy-efficiency features at rental properties could unlock $107 billion in energy bill savings by 2050, according to a new report from the Institute for Energy Economics and Financial Analysis (IEEFA).
The report argues that millions of renters remain excluded from the benefits of rooftop solar, insulation and efficient electric appliances, despite Australia’s world-leading uptake of distributed energy technologies.
IEEFA estimates that most rental properties could cut household energy bills by up to 50 per cent through a combination of insulation, electrification and rooftop solar.
More than 30 per cent of Australian households rent. However, rental properties continue to lag behind owner-occupied homes in energy performance.
According to IEEFA, the primary barrier is the long-standing ‘split incentive.’ Landlords pay for upgrades, while tenants receive the savings through lower energy bills.
“More than 30 per cent of Australian households rent and are generally locked out of home energy upgrades,” said Jay Gordon, Finance Analyst at IEEFA Energy.
Incentives have delivered limited results
Governments have introduced a range of rebates and incentive programs to encourage energy upgrades in rental housing. However, IEEFA found uptake has remained limited.
The report argues that reducing upfront costs alone does not address the underlying investment barrier. As a result, voluntary programs have struggled to drive widespread adoption.
Instead, IEEFA is calling for minimum energy-efficiency standards across the rental sector.
Under this approach, landlords would be required to meet baseline performance standards while retaining flexibility in how upgrades are delivered.
Eligible measures could include insulation, draughtproofing, rooftop solar, battery storage and replacing gas appliances with efficient electric alternatives.
Policy momentum builds
Several jurisdictions have already moved to strengthen rental energy standards.
The Australian Capital Territory has introduced minimum insulation requirements for rental properties. Victoria is progressively implementing standards covering heating, cooling, insulation and draught sealing. New South Wales is currently consulting on similar reforms.
IEEFA’s modelling found that rental upgrades remain financially beneficial even when costs are financed over 15 years using typical investor loan rates.
Nationally, the report estimates a net present value benefit of $24.8 billion by 2050.
The benefits extend beyond individual households.
The analysis found that upgrading rental properties would reduce peak electricity demand in most regions and significantly lower gas consumption. In Victoria, increased winter electricity demand from electrification would be outweighed by larger reductions in gas use.
IEEFA concludes that minimum standards may be the most effective mechanism for accelerating energy upgrades across Australia’s rental housing stock. As renters account for a growing share of households, the report argues stronger policy intervention will be required to close the rental energy gap and deliver lower energy costs at scale.
To read the IEEFA’s full report, How to halve renters’ energy bills, download the PDF.
