Want to slash your winter heating costs by 75 per cent? Ditch gas and go electric

As the cold weather sets in in Victoria, a new report has found that households in the chilly southern state can save hundreds of dollars – or up to 75% – on their winter heating bills by switching from gas to electric.

The report by Environment Victoria, based on modelling by Renew, compares the costs and emissions of gas and heat-pump electric heating in a state where roughly 80 per cent of households have an active gas connection – and where home heating accounts for almost two-thirds of household gas use.

Renew’s analysis simulates the gas and electricity use based on the amount of energy needed to heat a living space of 50m2 in a typical non-solar rental home in a range of Victorian locations, including Frankston, Moorabbin, the Latrobe Valley, Ballarat, Geelong and Bendigo.

Electricity tariffs were calculated using the Victorian Default Offer – factoring in the 25% price hike for July and August – while gas tariffs were calculated using June standing offers from Origin Energy, including tiered prices according to the amount of gas used.

Renew’s modelling assumed an ideal indoor temperature of 21°C, with the heater programmed to turn on when the thermostat fell below 18°C.

The analysis shows that an average home – and in this case ‘average’ means not very well insulated – in Melbourne’s south-east using gas for heating over the winter months of June, July and August can expect to pay a total of around $716 to keep warm.

The cost of heating the same space using efficient, electric reverse cycle heating slashes that to just $169 – a massive 75 per cent reduction. And Renew notes the savings are even greater when you throw in insulation.

In Geelong, for example, the report puts the cost of winter gas ducted heating at more than $700 with no insulation, compared to $85 with insulation and efficient, electric reverse cycle air conditioning – an 88 per cent saving.

As Environment Victoria climate campaign manager Sarah Rogan notes, it’s an enormous saving at a time when any kind of saving is sorely needed.

“Victorian households are struggling under devastating cost of living increases – while massive, polluting gas companies continue to reap record profits,” Rogan said in a statement on Wednesday.

“Household electrification is key to reducing Victoria’s carbon emissions and household energy bills.”

But as Rogan also notes, households – and particularly rental homes – will need some policy help making the switch, both of the carrot and stick variety.

“We can’t shiver through another winter without a plan to help all Victorian households off gas,” she says.

“The Victorian government needs to step up now with incentives for households to switch off their polluting and expensive gas heaters and switch on efficient electric heat pumps.”

At this stage in Victoria, the government offers a range of subsidies to cover the cost of switching appliances from gas to electric, including heating.

It is also in the process of updating its Gas Substitution Roadmap, which Environment Victoria and other advocates for electrification hope might include the introduction of some firm targets and dates and even firmer actions.

Whether or not the Andrews government has the political to introduce an ACT-like ban on gas connections to new buildings, however, remains to be seen.

“Gas is an expensive and polluting fuel. Amidst a cost and climate crisis it makes no sense to keep connecting new homes to the gas network,” Rogan says.

“There is a solution within reach, we just need the right policies in place for Victorians to benefit from insulated electric homes.”