The Best First Energy Upgrade in Every Australian State (It's Not the Same One)

Most advice about home energy upgrades starts the same way: get solar first. We wanted to know whether that actually holds across the country, so we ran the same typical 3-bedroom home through the calculator for every state, using local electricity rates, gas prices, feed-in tariffs and rebate schemes.

It does not hold. Victoria and Tasmania should switch their heating first. New South Wales, South Australia and Queensland should start with solar and a battery. Western Australia should replace its hot water system. And in the ACT, once you account for a petrol car that is due for replacement anyway, going electric is the way to start.

The results at a glance

Here is the full picture. Every figure below is the calculator's output for the same typical 3-bedroom home, priced with each state's actual energy rates and incentives.

Lifetime savings is the total undiscounted energy saving over the 15-year analysis period. Net profit is that saving minus total investment, discounted to today's dollars at an 8% rate. The two columns do not subtract cleanly because one is discounted and the other is not.

Three things jump out of that table before we even get to the states.

First, the spread is enormous. The same home earns a $5,719 net profit from energy upgrades in Queensland and $33,760 in the ACT. Where you live changes the answer by a factor of six.

Second, the number of upgrades that actually pay for themselves ranges from two in Queensland to seven in Tasmania and the ACT. A national "top 10 energy upgrades" list is giving at least half its readers advice that loses them money.

Third, solar is the best first move in only three of seven states. It is a good upgrade almost everywhere. It is not automatically the first one.

Victoria: switch the heating

For a typical Victorian home with gas ducted heating, switching to reverse cycle heating is the best first upgrade, and it is not close. Victoria pairs the biggest winter heating loads on the mainland with widespread gas heating and retail electricity at around 29c/kWh. A modern reverse cycle system delivers three or more units of heat per unit of electricity, while a gas ducted system burns money on both usage and the daily supply charge.

Six upgrades pay their way in Victoria, the most of any mainland state, because getting off gas unlocks a chain: heating first, then hot water, then the cooktop, and once the last gas appliance goes, the daily gas supply charge disappears forever. Victorian Energy Upgrades rebates take a meaningful bite out of the upfront costs along the way, including up to about $5,500 toward a ducted gas to reverse cycle switch.

New South Wales: solar and a battery

In New South Wales, solar with a battery is the best first upgrade for a typical home. NSW has the second-highest electricity rate in the table at 36c/kWh, decent sun, and federal STC rebates plus state incentives that pull the upfront cost down. Every kilowatt-hour you generate and use yourself avoids a 36c purchase, which is where the return really comes from. Four upgrades clear the hurdle for a net profit of $13,156.

Queensland: solar and a battery, and not much else

Queensland is the strictest market in the table. Solar with a battery is the best first upgrade, and only one other upgrade makes the cut. Our typical Queensland home is modelled as all-electric, which fits the state: only about one in ten QLD homes is connected to the mains gas network, the lowest of any mainland state, and subtropical winters mean almost no heating demand.

That single fact removes most of the list. The gas-switching chain that drives the southern states' results (heating, hot water, cooktop, then killing the supply charge) mostly does not apply, and there is little heating cost for insulation or draught sealing to save. At 28c/kWh the electricity rate is middling, so it does not rescue the marginal upgrades either. For most Queenslanders the lesson is the opposite of the southern states: put your panels up, then put your wallet away.

One caveat, because Queensland is genuinely unusual: it is an LPG state, not a mains-gas one. Bottled LPG outnumbers piped gas here, and roughly one in five QLD homes uses bottled LPG, mostly for cooking and hot water. LPG is expensive per unit of energy, so if that is your home the picture changes: switching the LPG cooktop to induction and LPG hot water to a heat pump become two of the highest-paying moves available, and the "only two upgrades pay" rule above is for the all-electric majority, not for you. Enter your gas details and the calculator will rank those switches for your home, or see our worked Brisbane LPG example.

South Australia: the strongest solar case in the country

South Australia pays the highest electricity rate in the country at around 43c/kWh, and that single number drives the whole result. Solar with a battery is the best first upgrade, and the savings per panel are the strongest in the nation because every self-consumed kilowatt-hour avoids a 43c purchase. Four upgrades pay their way for a net profit of $18,624, second only to the cold-climate jurisdictions. If you live in Adelaide and your roof is bare, the model's message is simple: you are leaving more money on the table than anyone else in Australia.

Western Australia: fix the hot water

Western Australia is the surprise of the table. The best first upgrade for a typical WA home is switching gas hot water to a heat pump. WA has the lowest feed-in tariff in the country, around 3c/kWh, which weakens the classic solar story: exports earn almost nothing, so solar pays back more slowly unless you can soak up your own generation. A heat pump hot water system does exactly that soaking, and it replaces one of the biggest gas loads in a state where most homes still run gas hot water. Solar and a battery still pay in WA, but they come third in the order, not first. Four upgrades pay their way in the west.

Tasmania: switch the heating, then keep going

Tasmania has the cheapest electricity in the table at 27c/kWh and by far the biggest heating load, and that combination rewrites the rulebook. Reverse cycle heating is the best first upgrade, and a remarkable seven upgrades pay for themselves, the equal most in the country. The lifetime savings figure of $109,099 is the largest of any state, because in a Hobart winter almost everything that reduces or cheapens heating earns its keep. Tasmania is the one place in Australia where the old "efficiency first" advice comes closest to holding.

ACT: everything pays, and the car leads the order

The ACT produces the most profitable result in the country: a $33,760 net profit on a $32,014 investment, with all seven modelled upgrades clearing the hurdle. That headline is driven by the ACT's electrification incentives, chiefly a $5,000 rebate for disconnecting gas and low-interest Sustainable Household Scheme loans, layered on cold-climate heating loads that make the gas-to-electric switches pay hard. It is the most supportive policy environment for getting off gas in the country, and it shows up as the longest, most profitable upgrade list in the table.

The quirk is what sits at the top of the order: the electric vehicle. That result rests on an assumption worth being explicit about. The model assumes your petrol car is already near the end of its life and would be replaced anyway, so it only counts the price premium of choosing electric over another petrol car, roughly $9,000, not the full sticker price. Under that assumption the EV has a small but positive return and, because there is nothing to wait for, it slots in first. If your current car is only a few years old, the EV's savings are deferred, its return drops, and it falls down the order behind the gas switches. So read the ACT result as "everything here pays, and if you are about to replace the car anyway, make it electric," not "buy a car to save energy."

Why one national answer does not exist

Four local variables drive every result in the table, and they vary more between states than most national guides admit.

Electricity rates set the value of every kilowatt-hour saved or generated, and they range from 27c in Tasmania to 43c in South Australia. Climate sets the heating load, which decides whether heating upgrades and insulation have anything worth saving. Gas prices and supply charges decide how much there is to gain from electrifying, and whether the daily charge is worth chasing to zero, assuming the home has gas at all. And state rebate schemes, from Victorian Energy Upgrades to the ACT's electrification incentives, move individual upgrades up and down the rankings by thousands of dollars.

A calculator that does not know your postcode cannot weigh any of that. Which is why we built one that does.

Run your own numbers

The figures above are for a typical 3-bedroom home in each state. Your home is not typical. Your rates, roof, appliances, car age and rebate eligibility all shift the answer. The calculator works out the optimal sequence for your postcode, takes about a minute, and shows every assumption it makes.

A note on the Northern Territory: our model does not yet cover NT rates and rebates, so it is absent from this analysis. It is on the roadmap.

Frequently asked questions

What is the best first energy upgrade in Australia?

There is no single national answer. For a typical 3-bedroom home, our modelling recommends reverse cycle heating first in Victoria and Tasmania, solar with a battery first in NSW, Queensland and South Australia, and heat pump hot water first in Western Australia. In the ACT, replacing a petrol car that is due for replacement with an electric one leads the order, with the gas switches close behind.

Is solar worth it in every state?

Solar pays for itself in most Australian states, but it is the best first upgrade in only three of seven. In Western Australia the country's lowest feed-in tariff weakens the return, and in cold-climate states the heating switch beats it.

Why does insulation rank so low?

In warm states there is not enough heating and cooling cost for insulation to save. In cold states it can be worthwhile, but once heating is switched to an efficient reverse cycle system, the remaining heating bill is often too small for insulation to pay back at a reasonable hurdle rate.

How were these numbers calculated?

Every state uses the same typical 3-bedroom home profile, priced with that state's AER and Canstar Blue energy rates, SolarChoice equipment costs, and federal and state rebates, discounted to today's dollars at an 8% rate over 15 years. Full details are on our methodology page.

Where these numbers come from

Electricity and gas rates from AER monitoring reports and Canstar Blue. Equipment costs from SolarChoice and installer surveys. Rebate details from published federal and state government programs. Full data source list on the data sources page.