Minimum energy-efficiency standards could form the foundation of a national plan to cut tenants’ energy bills in half, potentially saving households a combined $107 billion by 2050, according to a new report released today.The report highlights that renters make up more than 30 per cent of all Australian households, yet they are being left behind as owner-occupiers increasingly adopt rooftop solar, batteries and other modern energy-saving technologies.

The main reason, the report explains, is that most landlords have little incentive to upgrade their rental properties, even though these improvements would reduce tenants’ energy costs. This long-standing “split incentive” problem occurs because landlords pay for upgrades while tenants reap the benefits through lower bills. The report, How to halve renters’ energy bills, was authored by Jay Gordon, Energy Finance Analyst for Australian Electricity at IEEFA.To understand the potential savings, the report analysed over 100,000 scenarios covering different types of households across every Australian state and territory.

The modelling shows that the savings generated from upgrading rental properties would steadily increase over time and eventually outweigh the upfront costs for landlords.The study examined several cost-effective energy-efficiency measures: installing rooftop solar, replacing old gas or inefficient electric appliances with modern electric alternatives, improving insulation and applying draught-proofing.

According to Jay Gordon, most rented homes could achieve a 50 per cent reduction in energy bills by applying a combination of these upgrades. In total, these improvements could generate real cumulative savings of AU$107 billion by 2050.While homeowners are starting to adopt energy-efficient upgrades, similar progress has not been made in the rental market. Government programs designed to encourage landlords to install solar panels or insulation have had limited impact.

As a result, rental properties continue to lag behind, contributing to rising cost-of-living pressures and exposing tenants to greater health risks during extreme weather conditions. The situation is made even more difficult because many renters live in apartments, and renters often have less bargaining power than landlords.Previous government attempts to boost energy performance in rental properties—through targeted incentives or concessional loans—have not achieved meaningful results.

These initiatives focused mainly on lowering the upfront cost of upgrades, which has not been enough to drive large-scale action.The report calls for a coordinated national approach that would introduce minimum energy-efficiency standards for rental homes. These standards could require that when gas or outdated electric appliances fail, they must be replaced with efficient electric alternatives. For broader improvements such as insulation, draught-proofing or solar installations, landlords could be given a range of options to choose from to meet the required standard.

The report suggests pairing the standards with well-designed financial products and both state and federal incentives to ensure smooth implementation.Jay Gordon notes that the federal government should also explore tax-based incentives to encourage landlords to upgrade rental properties. Possible measures include tightening the rules around negative gearing, placing conditions on deductions for appliance upgrades or offering instant asset write-offs or accelerated depreciation for energy-efficiency investments.

The analysis shows that upgrading rental properties would deliver a net present value of AU$24.8 billion by 2050, with every state and territory achieving a positive outcome. If landlords were able to spread the upfront expenses over a 15-year loan at a mortgage-like interest rate, the improvements would be cash-flow positive from the very beginning.Gordon emphasises that the long-term financial gains far outweigh the initial investment costs.

Even if some of the upgrade costs were passed on to tenants, governments could still ensure renters benefit from lower bills immediately.The report also highlights broader system-wide advantages. Energy-efficient rental properties reduce strain on electricity networks by lowering peak demand in both summer and winter. In states like Victoria, where gas appliances are still common, upgrading rentals would provide substantial gas savings and help redirect gas supplies to industries that depend on them.

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