Hecs for the home: households warm to the idea of a loan scheme to leap from gas to electricity

When Elsa Evers bought her home an hour’s drive south of Sydney, she and her partner began future-proofing it by adding solar panels and disconnecting the gas to get off fossil fuels and warm their leaky, chilly house.

Four years on, though, Evers is facing mounting obstacles to that goal, not least higher interest rates and rising costs for her three children .

“When you live in these beautiful cottages, you’re like, hang on, we may as well be outside,” she says of her home in the coastal town of Austinmer.

“We would love to have some more insulation, but again, we haven’t had the money for floor or wall insulation yet,” Evers says, adding that heat pumps for temperature control and hot water, an induction cooktop and other energy thrifty appliances were all on her wishlist.

“The upfront costs of getting those appliances is quite a barrier.”

On the other side of the continent, that problem is familiar to Perth resident Thomas Badman, even if domestic discomfort stems from excessive warmth.

“We don’t really build houses here – we kind of build tents with how efficient they are,” Badman jokes. His double-brick house came with single-glazed windows and no insulation. “It would be colder outside in the evenings in summer than it was inside.”

He, too, has solar panels and aimed to replace a gas hot water system with heat pumps but found the $3,500 bill too large to absorb just now. He calculates his 5kW solar panel would pay itself off in four years but the heat pump would take twice as long.

A Senate inquiry launched by New South Wales Liberal Andrew Bragg aims to unlock the benefits – financial and for carbon emissions – of residential electrification. Many of the 230-plus submissions deal with the opportunities, including from improved energy efficiency, and how to fund the switch.

Related: Australia needs ‘substantial increase’ in large-scale renewables projects to meet decarbonisation targets

The non-profit group Rewiring Australia, for instance, has called for a government-backed loan program modelled on the Higher Education Contribution Scheme (Hecs). They believe it could save average households up to $5,000 annually by the end of the decade.

As with Hecs, borrowers would only repay loans while their incomes remain above pre-set levels. The low-risk debt could be scaled up to electrify 1m homes over a decade, cut energy demand at a time when investment in large-scale renewable energy plants is barely a trickle, and be extended to many low-income households.

Dan Cass, a co-founder with prominent advocate Saul Griffith of Rewiring Australia, notes a Grattan Institute study found 4m households across NSW and Victoria had less than $15,000 in liquid assets, hindering full electrification.

“Hecs-style loans for household electrification would be repaid through income tax ,” Cass says. “This would put more money in the pockets of people who really need it while simultaneously allowing the nation to put its foot on the clean-energy pedal.”

Bruce Chapman, an emeritus professor at the Australian National University who designed the Hecs scheme in 1989, says the idea of so-called income-contingent loans had “got a lot of legs over the past six months”.

Chapman, who was consulted by Rewiring Australia on their “Hecs for Households” plan, says itis “a bit unfair” poorer households often can’t afford solar panels. Commercial lending arrangements are also typically out of reach.

Evers and Badman see merit in the scheme.

“[I]f something like that was available, we would be the first to put up our hand to make use of it,” Evers says. “We’re not here for handouts [and a Hecs-type loan] would make our home more energy efficient a lot easier”.

Badman says it “does sound like it would be practical and at least help everyone in the picture”. Western Australia lacks many of the incentives offered out east.

Guardian Australian has sought comment from the Albanese government.

Alan Pears, a senior industry fellow at the RMIT, says a Hecs-type scheme could have merit, particularly if it aids households to use less energy.

Pears, who lodged his own submission to the inquiry, highlights the popular Facebook site, My efficient electric home. Its 100,000-plus followers underscores the interest not just in getting off gas but how to do in a smart way.

He says too little attention is paid to reducing energy demand even though many investments would pay off in terms of savings within three years.

Pears advocated making multiple changes – from LED lights to the installation of heat pumps and solar panels – in a “blitz” to save overall costs and maximise gains.

Such a “one-stop shop” was the approach in Ireland, for instance, where home-retrofit programs are the most generous and effective anywhere, he says.

Josephine Maguire, national coordinator of the Better Energy Homes program at the Sustainable Energy Authority of Ireland, says Ireland has set aside €8bn euros (A$13.2bn) to upgrade half a million homes by 2030.

By 2025, the tally will reach 185,000 before the program is scaled up to 70,000 annually for the rest of the decade.

Half of the funds will pay for full upgrades for households deemed to be in “fuel poverty”, with the rest helping to lower loan interest rates for those better placed to repay them.

“Money is one of the significant barriers – not the only one – but a necessary barrier to remove,” she says.

Those selling or renting out homes in Ireland also have to display their energy efficiency ratings – a standard agreed by Australian governments by 2009 but yet to be introduced, Pears says. Commercial buildings, by contrastmust make their ratings public.

Evers says such a measure is long overdue.

“You buy a washing machine and they give you a star rating of how water or energy efficient it is,” she says. “Why, when you buy a house, don’t they give you a star rating of how efficient the home [is] so you know what you’re buying into?”