7 star energy efficiency building standards common questions

The minimum standards for thermal comfort of new homes will be increasing from 6 to 7 stars out of 10 (NatHERS ratings), under changes to the National Construction Code 2022 (NCC 2022).

In addition, a new Whole of Home annual energy use budget will be introduced for fixed appliances (heating and cooling, hot water systems, lighting, pool and spa pumps) with the potential to offset with rooftop solar.

There will also be new readiness provisions that will make it easier to install:

• electric vehicle (EV) charging
• solar PV systems
• batteries in apartment buildings and some non-residential buildings to reduce the cost of future retrofitting.

The new energy efficiency provisions under NCC 2022 are available now to allow the construction industry to make necessary adjustments and bring new projects in line with the uplifted standards. During the transition period, homes will be permitted to be built to either NCC 2019 or the new improved NCC 2022 standards.

The new standards have a mandatory commencement date of 1 May 2024.

The new 7 star standard is the minimum standard that new homes should be built to. This means that homeowners can already build to a higher star rating if they choose to do so.

7 star homes are:

• cheaper to heat and cool
• more comfortable to live in
• more resilient to extreme weather.

Households can expect to save hundreds of dollars a year on energy bills.

Lowering the amount of energy that a house needs to run will:

• reduce greenhouse gas emissions
• reduce the pressure on our electrical grid and
• support the transition to a net zero emissions future.

Energy efficiency standards in Victoria must continue to evolve to meet

• the needs of our rapidly transitioning grid
• the impacts of climate change
• our commitment to a net-zero future.

Victoria has set a target of net zero emissions by 2045 with ambitious but achievable targets to reduce the state’s greenhouse gas emissions from 2005 levels by 28 to 33% by 2025 and 50% by 2030.

Improving the energy efficiency of Victorian buildings, which are long-lived assets, will save households money and help reduce our emissions and address climate change.

Victoria is committed to raising efficiency standards for new homes as part of the updates to the National Construction Code 2022. Changes to the National Construction Code are needed now to support the transition to a net zero emissions economy.

The Trajectory for Low Energy Buildings, which the Victorian Government agreed to in 2019, outlines a national roadmap to increase the energy efficiency of buildings, including changes to the National Construction Code 2022.

If a smart design is considered early in the process of a new home build, achieving 7 stars can be done without significant additional costs or changes in materials or construction.

Many homes are already being built to 7 star standards proving that efficient homes can be delivered at an affordable cost, particularly by focusing on careful building design and taking advantage of a home’s orientation to the sun.

Any additional upfront costs of construction required to meet the new 7 star standards when compared to a 6 star home are expected to be minimal, particularly in the context of energy cost savings made over the multi-decade lifetime of the home and an average 30-year mortgage.

Analysis for the NCC conducted in 2021 shows the estimated additional cost of materials required for a single-storey four-bedroom house to meet the proposed 7 star standard would be around $3,310. This would add approximately $150 per year to a 30-year mortgage. However, when combined with predicted annual energy bill savings of at least $300 per year, the analysis indicates homeowners could save a minimum of $150 net per year.

Victorian Government modelling for the Gas Substitution Roadmap shows that this saving can be increased even further when combined with all-electric efficient appliances and rooftop solar panels.

Other independent research also demonstrates savings to the consumer.

A recent analysis by Renew’s ‘Households better off’ report found even higher savings – $1,056 for an all-electric home in Melbourne and slightly less for a dual fuel home.

The Climate Council’s report Tents to Castles: Building energy efficient, cost-saving Aussie homes has found living in a 7 Star, all-electric house in any capital city in Australia would save occupants an average of $450 per year on heating and cooling costs compared to the current building standard of 6 Stars.

To help reduce consumer cost impacts, the Victorian government is funding rebates under the Solar Homes Program.

Rebates and loans are available to reduce the upfront cost of:

• solar panels (PV)
• solar hot water
• solar batteries

New rebates are available for reverse cycle air-conditioners, whole of home heating systems and heat pump water heaters through the Victorian Energy Upgrades Program.

In most cases, the new standards can be met through relatively simple and low-cost changes, particularly if the design is considered early in the process of a new home build. Key differences between a 6 star and 7 star home may include:

• better design and orientation to the sun to take advantage of opportunities to passively heat the home in winter while shading it in summer
• improved ceiling, wall or under-floor insulation to suit the Victorian climate
• high performance glazing (windows) to better insulate the home from heat loss in winter and heat gain in summer.

During the early roll out of these new standards, some volume builders may need to adjust their standard designs to a 7 star rating until they become commonplace. You may find that a design you like needs minor modifications to help you achieve the minimum 7 star rating.

The orientation of a building on a site can influence your star rating. Homeowners can work with their designer or builder early in the process to take advantage of their site’s orientation and local climate.

Orientation is the position of your home in relation to the path of the sun and the prevailing wind in your region.

Good orientation is usually about whether the living areas of your home face north. This is because north-facing rooms receive sun for the longest period of the day in winter and are easily shaded by the eaves of the roof in summer.

Further information is available on Orientation | YourHome and Energy Smart Housing Manual | Sustainability Victoria.

While good orientation can help to cost-effectively meet a 7 star thermal rating, it is not a mandatory requirement. There is flexibility to achieve the new standard through a range of approaches on blocks of varying size and orientation.

Good design that factors in the local climate and appropriate thermal building materials are important factors, particularly for apartments or volume estates where orientation is more variable.

High performance glazing refers to window features that reduce unwanted heat gain or heat loss. Making your home more comfortable to live in and reducing heating and cooling costs.

High performance options include:

• double or triple glazing
• low emissivity (low-e) glass
• thermally broken window frames.

Homeowners can seek glazing advice and discuss options with their designer or builder.

More information on glazing thermal performance on the Australian Government Your Home website: Glazing | YourHome and Energy Smart Housing Manual | Sustainability Victoria.

Double glazing will not be mandatory. However, most homes will require high performance glazing to some degree.

Homes with better orientation may be able to reach 7 stars with a limited amount of single glazing.

The new energy efficiency provisions for NCC 2022 allow for flexibility across design, materials and orientation and do not place any specific restrictions on window size.

The style of window, type of glazing, window coverings and external shading are ways that windows can be made to be more energy efficient without compromising on size.

There will be a transition period before the mandatory introduction of the new minimum 7 star standard for new homes.

The changes will not be compulsory for homes that have a building permit issued before 1 May 2024.

The changes will also not apply if a building surveyor certifies that the building design process was already well underway before this date.

During the transition to the new 7 star minimum standards, changes that increase the energy efficiency of a 6 star display home model to achieve a 7 star home, should be specifically identified in the building contract.

When changes to meet the new standards need to be made prior to the start of the building process, an amendment to an existing planning permit to improve energy efficiency standards can be undertaken. Households can seek support from their local Council Planning services.

More information about the new energy efficiency standards and pathways to progress a building project that is already underway can be found in VBA Practice Note EE-05 Transitional Requirements for NCC 2022.

Just like under the 6 star standard, 7 stars is the minimum efficiency requirement that new homes need to be built to. Homeowners can therefore build to a higher energy star rating if they choose to.

Many homes are already being designed and built to 7 stars, demonstrating that energy efficient homes can be delivered at an affordable cost.

Further information about building or renovating a home for energy efficiency is available at building or renovating a home for energy efficiency | Sustainability Victoria.

Speak to your designer or builder to discuss how to improve the energy efficiency of your home build.

The new 7 star standard is the minimum standard that new homes should be built to. Meaning that homeowners can choose to build to a higher star rating. Homes are rated out of 10 using the Nationwide House Energy Rating Scheme (NatHERS). There are certainly opportunities to go over and above a 7 star rating.

Homes with higher efficiency ratings use less energy and are cheaper to run over their lifetime. Some may have a higher upfront cost.

Further information about building or renovating a home for energy efficiency is available at Building or renovating a home for energy efficiency | Sustainability Victoria.

Your Home is also an excellent resource and includes some 7 star home designs that are freely available.

You may be interested in an energy efficient custom design and build, in which case there are many specialised designers and builders that you can talk to about what might be suitable for your site and budget.

There is a vibrant global movement in green home design and construction, including sustainable and net zero energy homes.

The Victorian Government’s Gas Substitution Roadmap is helping our State navigate the path to net zero emissions while cutting energy bills.

New all-electric homes are cheaper to heat, cool and run – and can save households with rooftop solar around $1,800 per year on their energy bills. Without solar panels, this saving is around $740.

Sustainability Victoria has information on how to electrify your home for consumers.

Solar photovoltaics (PV) will not become mandatory under the new minimum 7 star standards.

The Whole of Home budget is met through a flexible combination of:

• energy efficiency of fixed appliances (including cooling, heating, hot water, lighting, pool and spa pumps) and
• building thermal performance that is better than the minimum 7 star requirement (the highest rating is 10).

The installation of on-site renewables for example solar photovoltaic (PV) systems, can be used to offset any remaining energy use to meet the tailored Whole of Home budget.

Volume builders may need to make some adjustments to their standard plans for future volume projects to meet the new requirements. However, applying improved design and orientation applied effectively, can make a significant contribution to meeting 7 stars without significant additional upfront costs.  A level of customisation of volume builders’ standard plans may be required in some cases by exception, but not as standard.

Increases in materials costs are affecting the construction industry internationally and are not unique to Australia. Some of these supply issues were in place prior to COVID-19 and were further exacerbated by pandemic impacts.

Achieving a 7 star rating can be cost-effectively reached through a considered combination of design and orientation, rather than simply replacing existing designs with higher-performing or additional materials.

Further information for the industry on understanding the uplift from 6 to 7 stars, with practical tips and advice are included in Sustainability Victoria online resources.

Homebuyers are already looking for these improvements with a growing demand for energy efficient homes. According to the June 2022 Domain Sustainability in Property Report, homes with energy-efficient features

• are sold at price premium
• have greater buyer interest
• sell quicker
• have lower running costs.

While good orientation can help to cost-effectively meet a 7 star thermal rating, it is not a mandatory requirement.

There is flexibility to achieve the NatHERS rating through a range of approaches on blocks of varying size and orientation. Good design that factors in the local climate and appropriate thermal building materials are important factors, particularly for apartments or volume estates where orientation is more variable.

The Sustainability Victoria 7 Star Upgrade Analysis provides 10 case study examples of existing designs and the cost impacts of best and worst orientations.

Learn more about Sustainability Victoria’s 7 Star Homes program.

The Australian Glass and Window Association includes information on its website to help the industry understand energy efficient windows and the appropriate selection for climate.

You can also contact a NatHERS assessor or Environmentally Sustainable Design Consultant.

The increased energy efficiency provisions will not restrict existing ventilation for example natural ventilation or air extraction requirements under NCC 2022. Building elements that will assist in meeting 7 stars, such as improved insulation and double-glazing, are expected to reduce condensation risk.

Provisions to address condensation and ventilation were introduced to the NCC in 2019 and the ABCB released a handbook in 2021 to support the application of condensation provisions. Under the new NCC 2022, condensation provisions will be further improved, including:

• enhanced exhaust systems for ventilation
• the use of permeable materials in walls
• requirements that will reduce thermal bridging.

There are no changes to building sealing or air tightness requirements.

The ABCB is progressively introducing requirements in the NCC to mitigate the risk of condensation in residential buildings, with work undertaken in conjunction with the energy efficiency changes. Initial condensation provisions set in NCC 2019 are being followed by further measures in NCC 2022, and further refinements and measures are anticipated for NCC 2025.

Further resources will be available in the VBA Practitioner Resource Hub – Building.

Victoria varies the energy efficiency standards in NCC 2019 to set additional requirements for all new Class 1 buildings, which are commonly met by installing either a solar water heater or a rainwater tank connected to toilets.

This variation has been removed from NCC 2022 to avoid conflicts with the new Whole of Home energy usage requirements. Standards in the Plumbing Regulations 2018 for solar water heaters in new Class 1 homes will also be updated to align with NCC 2022, addressing a barrier to installing efficient electric water heaters.

During the transition period, application of the energy efficiency variation and related standards in the Plumbing Regulations depends on which version of the NCC is used:

• If homes are built to comply with energy efficiency requirements under NCC 2019, then new Class 1 homes must comply with the variation, which typically means installing either a solar water heater or rainwater tank installed in accordance with the Plumbing Regulations.
• For practitioners who choose to comply with NCC 2022, the Victorian variation and related standards in the Plumbing Regulations will not apply. That is, it won’t be necessary to install either a solar water heater or rainwater tank on new Class 1 homes).

Further information can be found in the Practice Note EE-05 Transitional Requirements for NCC 2022 and the revised Practice Note SH-01 Solar Water Heaters.

Class 1 homes built to NCC 2019 must have either a solar water heater or rainwater tank installed to meet Victoria’s variation to energy efficiency requirements. Although this variation has been removed from NCC 2022, both the Victorian variation and related standards in the Plumbing Regulations remain in effect for homes built to comply with NCC 2019.

If a solar water heater is being installed to comply with Victoria’s variation and reticulated gas is available, standards in the Plumbing Regulations 2018 require the use of a gas boosted system and prohibit the connection of heat pump water heaters to mains electricity.

There are several options to build an all-electric home in Victoria under NCC 2019, and specifically to install efficient electric water heaters in new Class 1 homes, including:

• install a rainwater tank that is connected to the toilet, or
• follow a Performance Solution process, or
• make an application to the Building Appeals Board.

Under Section 43 of the Domestic Building Contracts Act 1995, where domestic building work does not match the display home from which it was based, the contract must specifically identify how the construction of the home will differ from that of the display home.

During the transition to the new standards, a builder can specifically identify the changes to a display model in the building contract (refer to Section 17.4(a) on page 46 of the ‘Building contract for new homes’ available from Consumer Affairs Victoria Changes should be carefully identified in the contract, with any associated cost, so the purchaser is aware of the changes to the base contract before the contract is signed.

Builders, particularly those with display homes, may consider preparing a standard information sheet with their promotional material, outlining the updates to energy efficiency that their consumers will receive in their new home.

7 star display homes have been built as part of the Victorian Government-funded Sustainability Victoria 7 Star Homes Program to assist the transition to increased standards, representing what consumers will receive. It is anticipated that consumers will be able to view these display homes during the transition period to the new standards.