In this study, we first analyse energy-efficiency measures in existing electrically heated houses in Sweden from a societal economic perspective. Measures to a house envelopes and to energy supply chains are evaluated through a system analysis approach and we include the external costs of climate change and the effect of different Swedish climatic zones. We find that in a typical house from the 1970s, conversion from electric heating is highly motivated since the mitigation cost of conversion is lower than the estimated external costs of emitted CO2. Both conversions and house envelope measures are more motivated in the northern part of the country, where there is a higher heat demand. A successful implementation of changes requires them to be attractive for consumers to adopt. We therefore secondly analyse the economic conditions for Swedish house owners to implement societal economic cost-efficient measures. We include the economic influence of an investment subsidy for heating system conversion, an income tax deduction for changing windows, customer electricity tax, real estate tax and of the cost of purchased energy from different energy suppliers. Apart from the economics, several other factors affect a house owner's decision to change heating systems. We therefore thirdly analyse house owners' perceptions of different heating supply alternatives based on the results of two comprehensive questionnaires. These different perspectives are combined in a discussion whether the studied policy instruments encourage house owners to implement changes in accordance with the energy-efficiency goals of decision makers. We find that the investment subsidy could be useful to break the lock-in effect of resistance heaters, which house owners seemed to experience. The electricity tax makes heating systems in line with national goals more competitive and efficiency measures to the house envelope more profitable. The reduction of the electricity tax in the northern part of the country has the opposite effect. Also, the increase in real estate tax when implementing energy-efficiency measures gives a contradictory message. The price differences between energy suppliers has a larger impact on the house owners' economic conditions than both subsidies and tax rate changes, and possibly also affect the house owner's attitudes towards various systems. (c) 2007 Elsevier Ltd. All rights reserved.