The Australian government has launched a $1 billion Household Energy Upgrade Fund to help households manage costs during the ongoing cost-of-living crisis.

As part of this initiative, the Albanese government has invested $160 million to promote energy-efficient upgrades through affordable green loans.

Research from Westpac indicates a strong interest among Australians in sustainable upgrades, particularly as many plan home renovations in the next five years.

Australia's housing stock is notably inefficient, ranking 58th out of 63 countries for per capita energy use, underscoring the need for these upgrades.

Energy Minister Chris Bowen emphasized that this collaboration aims to provide more opportunities for Australians to benefit from energy transitions while alleviating cost pressures.

Eligible applicants can borrow between $4,000 and $50,000 for various green upgrades, but must have an existing Westpac home or investment loan of at least $150,000.

The loans will feature a competitive variable interest rate of 4.49%, significantly lower than Westpac's standard rate of 6.44% for home loans.

Government estimates suggest that borrowers could save approximately $3,475 in interest over a 10-year period with a $30,000 loan under this scheme.

The initiative aims to assist around 110,000 households in securing low-cost loans for energy-efficient improvements, including solar panels and insulation.

Westpac is positioned to fund up to $320 million in loans as part of this energy upgrade initiative.

Earlier this year, the government allocated $60 million to lender Plenti to facilitate cheaper financing options for energy efficiency upgrades.