How much is each energy star really worth?

How much is each energy star really worth?

In this post, we’ll compare the energy cost savings for the same house finished to different energy star ratings.


Energy efficient house design: how much is each energy star worth?

For the purpose of this exercise, we chose to use a typical suburban three bedroom home with double garage.

3 Star three bedroom home with double garage

Such homes are typical of existing unrenovated freestanding homes and we used the following home characteristics to come up with our baseline home that rated at 3 Stars:

  • Wall construction method is Brick Veneer with no insulation
  • Ceiling insulation is minimal (R 1.0)
  • Sub-floor construction is Timber with no insulation
  • Windows are single glazed aluminium

Increase energy efficiency

Next we chose to increase the energy efficiency of the house one star at a time (without changing floorplan) by altering only 4 variables:

  • Wall construction method,
  • Ceiling insulation,
  • Subfloor construction, and
  • Windows

Energy Cost Calculator

Using the FirstRate energy rating assessment tool, we can ascertain the Total Energy Usage per year of the different Star Rated versions of the home.

Once we have the annual energy costs, we can factor in the effects of inflation to understand how much each Star rated house will cost in energy consumption over a period of 7 years.

As can be seen in the graph above, over a period of 7 years, compared to the same floorplan 3 Star house:

  • A 4.9 Star house will use 57% of the energy – a saving of around $10,000 in energy costs
  • A 6.3 Star house will use 39% of the energy – a saving of around $15,000 in energy costs
  • An 8.3 Star house will use 16% of the energy – a saving of around $20,000 in energy costs!

These figures are based on the assumption that Australian energy prices will simply rise with inflation at 3.5%.

Victoria earned a reprieve in July by the Australian Energy Regulator, however other states were not so lucky and were hit with electricity price increases from 5% in the Northern Territory to 13% in Queensland.

If energy prices do indeed soar beyond CPI, the energy efficiency of higher star rated houses will not only result in cost savings, but will lead to energy rating being a significant contributing factor to house values (providing house energy ratings to both buyers and renters is mandatory in the Australian Capital Territory).

Energy efficient house design: Conclusion

At the beginning of this article we posed the question:

How much is each energy star really worth?

When compared to a typical existing 3 Star suburban home, each additional star represents around a $5000 saving in energy costs over 7 years of home ownership.

(These figures are based on energy prices increasing with inflation at 3.5% pa.)