The Yarra Energy Foundation works directly with Melbourne households on home electrification. Most families they work with save around $1,400 a year through energy upgrades. But for households with solar, a fully electric home, and an electric vehicle, savings can reach $4,000 per year.
That $2,600 difference between the average outcome and the best outcome is not about having a bigger solar system or a more expensive battery. It is about the order in which upgrades happen, and what the solar system is working with when it finally goes on the roof.
Most solar content skips this entirely. It tells you to put panels on your roof and collect the savings. The households getting the best results did something before that, and understanding what and why the sequence matters is the point of this post.
The building your solar system is sitting on
Start here, because almost nobody does.
The average Australian house built before the early 2000s has an energy rating of 1.8 stars out of 10 under the NatHERS national energy rating system. That figure reflects a building stock designed before meaningful energy performance standards existed, where heat escapes through the ceiling in winter and floods through windows in summer, regardless of how hard the heating and cooling system runs to compensate.
The CSIRO estimates that sealing gaps and cracks around windows, doors, skirting boards, and other openings reduces heat loss by 15 to 25 per cent. Installing appropriate insulation in the roof, walls, and floors can save over 50 per cent on heating and cooling costs. Adding ceiling insulation where it is not already present saves around $454 a year in Victoria alone, according to state government modelling.
These are not glamorous numbers. Draught-proofing and insulation do not have a monitoring app. Nobody posts about their new ceiling batts on social media. But they change what every subsequent upgrade has to work against.
Here is the practical implication for solar: a leaky, poorly insulated house with a 6.6 kW solar system is running its heating and cooling harder, for longer, to achieve the same indoor temperature as a well-insulated equivalent. The panels are compensating for a building performance problem rather than powering a well-functioning home. The solar system is working against the house, not with it. Done in the right order, insulation and draught-proofing reduce the load the solar system needs to carry from its first day of operation.
Simple measures first. Draught-proofing is largely a DIY project. Ceiling insulation can be installed in a day. External shading on west-facing windows costs less than most people expect. These are the foundations. Everything that comes after them performs better because of them.
The appliances your solar cannot help with
After the building envelope, the biggest energy loads are in most Australian homes.
About half of all Australian households remain connected to gas for heating, cooking, or hot water. This matters for a solar household in a specific and often unacknowledged way. A solar system generates electricity. It cannot do anything for a gas hot water system, a gas ducted heater, or a gas cooktop. Those appliances run on a separate fuel entirely, one that costs money every time it is used and whose price is rising, and the solar panels on the roof have no bearing on any of it.
The practical consequence is that a solar household still on gas is only capturing part of the available savings. The panels are reducing the electricity bill. The gas bill continues largely unchanged. And in winter, when gas heating runs heaviest, the bills arrive together.
- Hot water is the most straightforward swap and the one with the clearest solar synergy. Replacing a gas or resistive electric hot water system with a heat pump saves around $400 a year in operating costs and requires no change in household behaviour. A heat pump timed to run at midday draws directly from solar generation, making it one of the highest-value uses of daytime solar output. Rebates are available across most states through the federal STC scheme, state-specific programs, and in Victoria through the Solar Victoria hot water rebate and the Victorian Energy Upgrades program.
- Space heating and cooling is the larger opportunity. Gas ducted heating is expensive to run and is, as the Yarra Energy Foundation puts it, only going to get more expensive. A reverse-cycle split system uses a fraction of the energy for equivalent heating output, and when timed correctly, can be pre-heated from midday solar before the evening peak. Moving from gas-ducted to reverse-cycle does require some behavioural adjustment: the focus shifts from heating the whole house to heating the room you are in. But the cost difference is significant. Existing all-electric homes in Victoria save approximately $1,900 a year compared to dual-fuel homes, or $2,230 with rooftop solar.
- Cooking is typically the final gas appliance to go. Disconnecting from gas entirely removes the daily supply charge, saving $350 to $400 a year before accounting for any difference in operating costs between gas and induction.
Now install solar
The counterintuitive reveal: solar comes third, not first.
A household that insulates, draught-proofs, and switches to electric appliances before installing solar has reduced its baseline energy consumption to the point where a correctly-sized solar system can cover a much larger proportion of it. The load profile has changed. The timing of consumption has changed. The relationship between what the panels generate and what the home actually needs has been optimised before the panels go on.
A household that installs solar first, on an uninsulated house with gas hot water and ducted gas heating, is generating solar electricity for a home that cannot fully use it. The daytime surplus exports at 3 to 5 cents per kilowatt-hour. The gas bills continue regardless. The evening electricity demand draws from the grid at 30 to 35 cents per kilowatt-hour. The solar system is doing some work, but it is not doing the work it could be doing.
There is also a sizing implication. The right solar system for a fully electrified home is different from the right solar system for a dual-fuel home of the same floor area. An electrified home has higher electricity consumption, but more of that consumption happens during the day, when a heat pump is running, or an induction cooktop is being used. The self-consumption profile is more favourable. A system sized for the electrified home performs better across its lifespan than one sized for the home as it was when the installer first visited.
Then the battery
A battery makes most financial sense once the home has been electrified and solar has been installed and sized appropriately. At that point, the battery fills the gap between when solar generation ends, roughly 3 to 4pm in winter, and when the household’s evening electricity demand eases, usually around 9pm. In Victoria, that is the period when time-of-use tariffs apply peak rates. In NSW and South Australia, similar dynamics apply.
In a home that still has significant gas loads, the battery’s financial case is smaller. Some of the evening demand is being met by gas rather than electricity, which reduces the volume of stored solar energy the battery needs to supply. The battery is most valuable when the home is running entirely on electricity, and the evening peak is the only remaining gap between solar generation and household demand.
The federal battery rebate, currently offering around 30 per cent off the upfront cost of an eligible system, is the most significant financial factor in the battery decision right now. It tapers every six months under the restructured program introduced in May 2026. Acting this year captures more value than waiting until next year, but only if the earlier steps in the sequence are already in place.
And eventually the EV
The households saving $4,000 a year typically have an electric vehicle in addition to solar, a battery, and a fully electrified home. The EV adds a large, schedulable load that can absorb midday solar surplus, reducing exports at low feed-in tariff rates and charging the vehicle essentially for free on clear days.
David and Ruth Hudspeth, the Melbourne couple profiled in The Guardian in June 2026, describe their summer experience this way: the home battery fills to 100 per cent by midday, and if they need more after that, the car gets plugged in. As retirees at home during the day, that timing is straightforward to take advantage of. For working households, a scheduled charger set to start at 10am achieves the same outcome automatically.
The EV is not the first step. It is the last one. But it is the step that completes the picture and accounts for the difference between a household saving $1,400 a year and one saving $4,000.
The sequence, plainly stated
The households achieving the largest energy savings in Australia are not the ones that installed the biggest solar system or the most expensive battery. They are the ones who approached home energy as a system with a sequence rather than a collection of independent decisions.
The sequence is:
- Fix the building first. Insulate the ceiling, seal the draughts, shade the west-facing windows. These are the lowest-cost, highest-return steps in the entire process, and they make every subsequent upgrade more effective.
- Electrify the loads. Replace gas hot water with a heat pump. Replace gas heating with reverse-cycle. Replace gas cooking with induction when the time comes. Disconnect from gas entirely when you can.
- Install solar sized for the electrified home, not the home you have right now.
- Add a battery once the home is electrified and solar is in place.
- Add an EV when the circumstances suit.
None of this has to happen at once. The Hudspeth renovation took several years. The Yarra Energy Foundation describes the process as a marathon, not a sprint. What matters is knowing the order, so each decision reinforces the ones that follow it rather than working against them.
