How Insulation Affects Your Solar Savings

The hidden cost of poor insulation for solar homes

Australia has some of the highest rooftop solar adoption in the world, with over 40% of homes now generating their own electricity. But a poorly insulated home undermines those savings by consuming far more energy on heating and cooling than it needs to.

Using official NatHERS (Nationwide House Energy Rating Scheme) climate zone data and real electricity rates from the AER, we calculated exactly how much poor insulation costs homeowners in every major Australian city, even when they have a 6.6kW solar system installed.

The difference between a 2-star (poorly insulated, pre-1990s) home and a 6-star (NCC minimum since 2023) home ranges from $326/year in mild Sydney to over $2,000/year in Canberra. That is money spent heating and cooling the sky.

Bill savings from insulation, by city

This table shows the annual electricity bill difference between a poorly insulated 2-star home and a well-insulated 6-star home, both with a standard 6.6kW rooftop solar system. All figures use local electricity rates and feed-in tariffs.

Based on a 150m² home with 6.6kW solar. Electricity rates from AER CDR data. NatHERS 2022 star band thresholds. Assumes average equipment efficiency (heating COP 2.0, cooling COP 3.0). Actual savings depend on home design, occupant behaviour, and heating/cooling equipment.

Heating cities vs cooling cities

Australia spans climate zones from tropical Darwin to alpine Cabramurra. The insulation impact plays out very differently depending on whether your home needs more heating (winter) or more cooling (summer).

Heating and cooling loads by city

This chart shows the annual heating and cooling electricity consumption for a poorly insulated 2-star home in each city. The bar length represents total consumption. Cities are sorted by total load.

Electrical consumption for a 150m² home at 2-star NatHERS rating. Heating assumes average COP 2.0 (mix of resistive and heat pump). Cooling assumes COP 3.0 (split system AC).

How insulation changes your solar self-consumption

Solar self-consumption is the percentage of your solar generation that your home uses directly, rather than exporting to the grid. A well-insulated home with a 6.6kW system typically self-consumes around 30% of its generation, exporting the rest at the feed-in tariff rate.

A poorly insulated home consumes more of its solar generation on heating and cooling. This sounds beneficial (self-consumed solar is worth more than exported solar), but the total electricity bill is still higher because the extra consumption far outweighs the better self-consumption ratio.

What this means for homeowners

If you are considering solar, insulation should be part of the conversation. A $3,000-$5,000 insulation upgrade can save $300-$2,000 per year in electricity costs, delivering a payback period of 2-10 years depending on your climate zone. Combined with solar, insulation maximises the return on both investments.

For homes that already have solar: if your bills are higher than expected, poor insulation may be the reason. The numbers in this analysis assume average equipment efficiency. If you are using resistive heaters (bar heaters, old ducted electric) rather than heat pumps, your actual heating costs could be double what we have estimated.

The data is suburb-specific. You can check the insulation impact for your exact suburb on any of our suburb solar data pages.

Methodology

This analysis combines three data sources:

1. NatHERS 2022 Star Bands provide the thermal load thresholds (MJ/m²/year) for each climate zone at each star rating. We use the 2-star threshold as the poorly insulated benchmark and the 6-star threshold (NCC minimum since October 2023) as the well-insulated benchmark.
2. ABCB Heating and Cooling Load Limits Report provides the heating/cooling split ratios for each climate zone. We apply these ratios to the star band totals to estimate heating vs cooling consumption separately.
3. AER CDR electricity rates from energy retailers give us the actual usage rates and feed-in tariffs for each region. These are used to calculate dollar costs.

Thermal loads are converted to electrical consumption using equipment efficiency factors: COP 2.0 for heating (weighted average of resistive and heat pump systems across Australian households) and COP 3.0 for cooling (standard split system air conditioner). The reference dwelling is 150m², which is below the Australian average of 186m² for existing homes, making our estimates conservative.

Solar overlap fractions account for the timing mismatch between solar generation and energy use: 50% of cooling load overlaps with solar hours (air conditioning runs during hot, sunny days), while only 15% of heating load overlaps (most heating runs at night and early morning).

Use this data

Journalists, researchers, and energy professionals are welcome to reference and embed this data. Suburb-level insulation impact data is available on every suburb page, each with its own embeddable chart. Please credit Why Solar and link back when using the data.