Homes that ditch gas for electric heating can recoup extra costs in as little as 10 weeks

Last month, when Victorian energy minister Lily D’Ambrosio introduced legislation to pave the way for the staged phase-out of gas in homes, the gas lobby howled that it was taking away consumer choice and imposing “massive extra costs on many households.”

But a major new report has found that, for households in Victoria, switching to electric reverse cycle split system heating is either cheaper up front than reinstalling gas or pays back the difference in bill savings in as little as 10 weeks.

That is, if a household does as the government and other electrification advocates suggest, and replaces a gas appliance with an efficient electric alternative at the end of the gas appliance’s life, then it might cost around $400 more – at least, in the case of space heating.

The savings, meanwhile, are significant. And not just for some households in the state, according to the research by Renew and Environment Victoria, but “in every energy scenario tested.”

“With the current Victorian Energy Upgrade incentives in place, the cost of installing electric powered split systems will have paid themselves off many times over in all regions tested including SE and NW Melbourne, Gippsland, Bendigo and Geelong.”

For a pre-1991 (1.6-star) home, the report estimates the up-front cost to replace ducted gas heating with three split-systems at $430 (the cost over and above the cost of a new gas system), while the savings for a home in Moorabbin – the inner south east – are estimated at $1578 a year.

In the regions, the estimated returns are even better – $1972 a year in Geelong and $1747 a year in East Sale, in Gippsland. This means the money invested the air conditioning system is paid off in 10 weeks, while in the inner city locations the return on investment comes within 15 weeks.

As an added bonus, the same investment provides cooling in the summer – no small thing, considering that, according to the report, almost half of Victorian homes (44%) currenlty use gas ducted heating but have no cooling.

This rather shocking statistic gives some insight into the major task ahead in getting gas out of Victorian homes, where it is more deeply embedded than in any other state in Australia.

Another statistic from the report notes that more than a quarter (27%) of Victorian homes already have reverse-cycle split-systems but aren’t using them for space heating.

By simply switching to using the split-system for heat, instead of gas, these homes can slash their annual energy bills by between half and two thirds with no upfront cost.

What all of this tells us is that getting off gas in homes is well and truly a no-brainer for those who can afford it, and a policy must-do for governments looking for easy ways to lower the cost of living for low-income households.

“Gas space heating is an old technology that accounts for a massive 71% of residential gas use in Victoria. It’s an incredible waste, wildly expensive and a disaster for the climate,” says Kat Lucas-Healey, senior climate and energy adviser for Environment Victoria.

“Renew’s analysis shows that whatever your budget, there is an efficient electric option that will leave you much better off.

“Local gas supplies are running dry and our electricity system is rapidly transitioning to renewables. Switching homes to efficient electric appliances is a win for our wallets and the climate, while gas only gets more expensive.”