Understanding Energy Ratings: Save Money on Your AC Bills

Choosing an energy-efficient air conditioner isn't just good for the environment—it directly impacts your wallet. The difference between a 2-star and 6-star rated unit can mean hundreds of dollars saved on electricity bills every year. In this guide, we'll decode Australia's energy rating system and show you exactly how to use it to make smart purchasing decisions.

The Australian Energy Rating System Explained

In Australia, all air conditioners must display an Energy Rating Label at the point of sale. This label is your quick reference for comparing energy efficiency between different models and brands. But understanding what those stars really mean requires a closer look.

Reading the Energy Rating Label

The standard energy rating label includes several key pieces of information:

Star rating (cooling): Shows efficiency when the unit is cooling your home
Star rating (heating): Shows efficiency when using reverse-cycle heating
Capacity output: The cooling/heating power in kilowatts (kW)
Energy consumption: Estimated annual energy use in kilowatt-hours (kWh)

⭐ What the Stars Mean

More stars = better efficiency. A 6-star air conditioner produces the same cooling effect using significantly less electricity than a 2-star unit. The scale now extends to 10 stars for super-efficient models, with 6+ stars indicating excellent efficiency.

The Zoned Energy Rating Label (ZERL)

Since 2019, Australia has been transitioning to the Zoned Energy Rating Label, which provides more accurate efficiency information based on different climate zones across the country. The ZERL recognises that an air conditioner's efficiency varies depending on whether you're in tropical Darwin or temperate Melbourne.

The three climate zones are:

Hot zone: Northern Australia (Darwin, Cairns, Townsville)
Average zone: Most of coastal eastern Australia (Sydney, Brisbane, Perth)
Cold zone: Southern and elevated areas (Melbourne, Hobart, Canberra, Adelaide)

When comparing units, check the star rating for your specific climate zone for the most relevant efficiency comparison.

How Energy Efficiency Affects Running Costs

Let's put some real numbers behind energy efficiency to show why it matters for your household budget.

Calculating Your Running Costs

To estimate annual running costs, you need three pieces of information:

The unit's annual energy consumption (from the label, in kWh)
Your electricity rate (check your bill, typically $0.25-0.35 per kWh in Australia)
Your expected usage pattern (the label assumes standard conditions)

The basic formula is:

Annual Cost = Energy Consumption (kWh) × Electricity Rate ($/kWh)

Real-World Example

Consider two 2.5kW split systems for a bedroom:

2-star unit: Uses 850 kWh/year → $255/year @ $0.30/kWh
6-star unit: Uses 450 kWh/year → $135/year @ $0.30/kWh

Annual savings: $120
Over 10 years: $1,200+ in savings (more with rising electricity prices)

Upfront Cost vs Long-Term Savings

Higher efficiency units typically cost more upfront, but the savings accumulate over time. Here's how to think about the investment:

A 6-star unit might cost $300-500 more than a comparable 3-star model
Annual savings of $100-150 are common between high and low efficiency units
Break-even typically occurs within 2-4 years
After break-even, you're pocketing pure savings for the life of the unit
Air conditioners last 10-15 years, meaning significant total savings

The higher your electricity rate and the more you use your AC, the faster an efficient unit pays for itself.

Inverter Technology: The Efficiency Game-Changer

Beyond star ratings, inverter technology is the single biggest factor in air conditioner efficiency. Understanding how it works explains why modern inverter units dramatically outperform older designs.

Inverter vs Non-Inverter Operation

Non-inverter (fixed speed) units operate like a light switch—they're either fully on or completely off. When your room reaches the set temperature, the compressor stops. When the temperature rises, it starts again at full power. This constant cycling:

Uses more energy (starting a compressor draws significant power)
Creates temperature fluctuations as the room heats and cools repeatedly
Causes more wear on components

Inverter units can vary their compressor speed. Instead of cycling on and off, they slow down when approaching the set temperature and maintain a steady, low-power operation to keep conditions stable. This means:

30-50% less energy consumption than non-inverter equivalents
More consistent, comfortable temperatures
Quieter operation at low speeds
Less wear and longer system life

💡 Pro Tip

Today, virtually all major brand split systems use inverter technology. If you're looking at a suspiciously cheap unit without inverter technology, consider whether the energy costs will make it more expensive in the long run.

Other Factors Affecting Energy Consumption

While choosing an efficient unit is important, how you use and maintain your air conditioner also significantly impacts energy consumption.

Right-Sizing Your Air Conditioner

An incorrectly sized unit wastes energy regardless of its star rating:

Undersized units run constantly trying to reach the set temperature, consuming excess energy without ever achieving comfort
Oversized units cycle on and off too frequently, never running efficiently and failing to properly dehumidify the air

See our sizing guide to ensure you're choosing the right capacity for your space.

Temperature Settings

Every degree cooler you set your thermostat increases energy consumption by approximately 5-10%. Setting your AC to 24°C instead of 21°C can reduce your cooling costs by 15-30%.

Maintenance Matters

A poorly maintained air conditioner loses efficiency over time:

Dirty filters restrict airflow, forcing the system to work harder
Blocked outdoor units can't release heat effectively
Low refrigerant levels reduce cooling capacity

Regular maintenance keeps your system operating at peak efficiency.

Making Smart Efficiency Choices

When shopping for an air conditioner, balance these factors:

Compare like with like: Only compare star ratings between units of similar capacity
Check both cooling and heating ratings: If you'll use both functions, consider both star ratings
Use the ZERL if available: Check ratings for your specific climate zone
Factor in your usage: Heavy users benefit more from high efficiency
Calculate the payback period: Determine how long until energy savings offset any extra cost
Consider future electricity prices: Energy costs historically trend upward, making efficiency more valuable over time

An energy-efficient air conditioner is an investment that pays dividends every time you turn it on. By understanding the energy rating system and factoring efficiency into your purchase decision, you'll enjoy lower bills, better performance, and reduced environmental impact for years to come.

Ready to compare options? Use our product comparison tool to filter by energy rating and find efficient units within your budget.