Is gas still cheaper than electricity?

Gas burner stovetop

Sue Hewitt

Posted February 18, 2020

The days of cheap and abundant gas are waning.

For decades Victorians have cooked, showered and warmed themselves cheaply with gas, but electric appliances are now the cheaper option.

Gas prices are high and supply is uncertain, with the Australian Energy Market Operator warning of winter gas shortages in 2023 unless new gas sources are found, reigniting the debate on Victoria’s ban on onshore gas exploration until June next year.

RACV’s senior product manager for energy Kieran Davies says historically gas had been an inexpensive choice for hot-water systems, heating and cooking but now electric appliances are more efficient, cheaper to run and can use rooftop solar power.

A simple example, he says, is heating. Efficient reverse-cycle split-systems are often cheaper to run for heating than gas, he says.

A barrier to changing to an electric hot-water service is that it requires planning, he says.

“When the hot-water service fails, you need to replace it straight away and if you haven’t planned for it, you can’t make an informed decision on a new electric system quickly,” he says.

Dean Lombard, a senior energy consultant at Renew, formerly the Alternative Technology Association, says his research reveals electricity is the ‘hip-pocket’ winner over gas.

Dean and his colleague Keiran Price analysed the economics of gas versus electricity in different households in 16 locations around Australia over 10 years.

Their calculations include the purchase and installation costs which is often higher for electric appliances, as well as maintenance costs, local climates and different locations’ power tariffs.

Dean says a new all-electric house with solar power saves $10,000 in energy costs over a decade.

He says changing from gas to electric can happen gradually by replacing worn-out gas appliances with electric until you can eventually cut off the gas completely, saving about $300 a year alone in gas supply charges.

Melburnians will on average save $200 a year using split-system electric heating over gas heating, while in colder areas like Ballarat and Bairnsdale, the savings increase because they use more heating energy, he says.

Solar panels on a home roof

Dean says split-systems are so efficient that for every unit of energy they draw in they put out between three and five units of heat. Split-systems now have ‘heat pumps’ that draw ambient heat from the air which means they can heat a room like gas-ducted heating and other electric technologies can, but at much lower costs.

When it comes to home MasterChefs, Dean says the heat produced by electric induction cook-tops is now more controllable and they use less energy than gas cookers. For regional Victorians without gas mains, electricity works out much cheaper than bottled gas.

Independent energy adviser Tim Forcey says gas supplies are declining. “The Australian Energy Market Operator has said that for the southern states of Victoria, Tasmania, NSW, Canberra and South Australia, no one knows where half the gas will come from in a few years,” he says.

He says more Victorians are looking for solar power and other electricity solutions for their homes. His Facebook page, ‘My Efficient Electric Home’, has 9000 members.

Energy consultant Richard Keech says gas has significant impact on the environment, not only through its emission but through ‘leakage’ of methane during its production.

Richard made the personal decision to disconnect from gas 10 years ago and wrote The Energy Freedom Home to help people save on energy use.

The book describes nine simple steps households can take to reduce bills, from something as simple as stopping draughts to installing solar power.

“If people make improvements to their house their efforts all add up to make a difference to the wider community,” he says.

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