A large percentage of South Africa's population is at present housed in low-cost dwellings. Furthermore, more than 2 million new houses must be built over the next 10 years to alleviate the current housing shortage. Unfortunately the existing houses are very energy inefficient and if nothing is done now, the new houses will surely also be inefficient. It would have a tremendous impact on the inhabitant's disposable income, health as well as their environment if these low-cost houses could be made energy efficient. This prompted the authors to investigate retrofit options to improve the energy efficiency of existing houses and to evaluate energy efficiency design concepts for new houses. The energy efficiency of the improvements was evaluated by means of computer simulations. Ceiling insulation was found to be the best retrofit for the typical formal low-cost house. By retrofitting existing formal low-cost houses with insulation integrated ceilings the Gauteng region could save $12 million in electricity costs per year and $0.79 billion in peak demand electricity supply. If the proposed new houses are supplied with insulation integrated ceilings the Gauteng region could save approximately $2 million in electricity costs per year and $224 million in peak demand electricity supply.