Every second word from politicians and the media this election campaign seems to be about how Australia should double down on supposedly cheap gas. I’ve taken a deeper look at how much money Australian households could actually save by getting off gas, and the amount will make your head spin worse than a leaky stovetop.
There are currently over 5 million Australian homes with gas connections. The number that would be financially better off if they stopped using gas is, by my calculations, over 5 million.
If you have solar there’s nowhere you won’t eventually be better off, and batteries can make it even better. Without solar, the only place that’s a bit iffy is WA. But their state government there has locked in gas price rises for the next 4 years, so it’ll get less iffy over time. If you rent, it’s difficult to get off gas without landlord assistance, but so long as you’re not paying to upgrade your landlord’s property, you’ll also save money.
I’m only going to discuss savings on energy bills. But if you care about your family’s health — or you’re a bastard and only care about your own — you’ll also want to get off gas because it’s a major health hazard that would never be approved for home use if introduced today.
The Four Ways Getting Off Gas Saves Cash
Having your gas permanently disconnected or abolished saves money in 4 main ways:
- No more gas supply charges.
- It’s normally cheaper to run appliances off electricity — especially reverse-cycle air conditioning and heat pump hot water.
- Solar lowers the cost of electricity for households and batteries allow solar energy to be used at night.
- No need to pay for regular safety checks of gas appliances. (The 3 or 4 Australians who do this will save heaps.)
While you will need to pay for replacement electric appliances, for most households this investment will pay for itself within a time period that’s more than acceptable.
Total Savings From Getting Off Gas
How much you’ll save from giving up gas depends on where you are, how many gas-burning appliances you have, and how much you use them. While I can’t give a precise figure, I can give an estimate of how much a 2 to 3 person household will save by giving gas the boot. The kWh figures I’ve given below for each gassy capital are daily averages for end-use thermal energy, with colder locations using more energy for hot water and home heating.
Annual cost savings from electrifying home heating, hot water, and cooking are given first, followed by the supply charge and then the total for households that use gas for all three and give it all up.
| Solar Home | No Solar | |
|---|---|---|
| Home Heating 3kWh | $180 | $160 |
| Hot Water 4kWh | $215 | $115 |
| Cooking 0.5kWh | $55 | $45 |
| Supply Charge | $310 | $310 |
| Total Savings | $770 | $630 |
| Solar Home | No Solar | |
|---|---|---|
| Home Heating 2kWh | $155 | $130 |
| Hot Water 3kWh | $185 | $120 |
| Cooking 0.5kWh | $70 | $60 |
| Supply Charge | $255 | $255 |
| Total Savings | $665 | $565 |
| Solar Home | No Solar | |
|---|---|---|
| Home Heating 5kWh | $360 | $300 |
| Hot Water 5kWh | $260 | $195 |
| Cooking 0.5kWh | $70 | $60 |
| Supply Charge | $320 | $320 |
| Total Savings | $1,010 | $875 |
| Solar Home | No Solar | |
|---|---|---|
| Home Heating 5kWh | $160 | $135 |
| Hot Water 5kWh | $150 | $65 |
| Cooking 0.5kWh | $25 | $20 |
| Supply Charge | $360 | $360 |
| Total Savings | $695 | $580 |
| Solar Home | No Solar | |
|---|---|---|
| Home Heating 3kWh | $40 | $20 |
| Hot Water 4kWh | $80 | -$20 |
| Cooking 0.5kWh | -$5 | -$15 |
| Supply Charge | $90 | $90 |
| Total Savings | $205 | $75 |
| Solar Home | No Solar | |
|---|---|---|
| Home Heating 3kWh | $135 | $120 |
| Hot Water 4kWh | $165 | $80 |
| Cooking 0.5kWh | $40 | $25 |
| Supply Charge | $260 | $260 |
| Total Savings | $600 | $485 |
This estimate makes Canberra the capital with the greatest financial benefit from going all-electric. This is partly due to cold winters resulting in high gas consumption. The next best place to give up gas is Adelaide.
The capital with the lowest financial benefit from going off gas is Perth. A solar household will only save around $220 a year, while a non-solar household will only save around $75. If you currently have instant gas hot water and a gas connection in WA and no solar, I can understand if you think saving $75 a year isn’t worth the cost of investing in a heat pump hot water system. But the way to fix this is to get solar. Not only will you save money on your electricity bills, it will also make going off gas worthwhile.
If you don’t own a roof or there’s some other reason you can’t get solar, then I still recommend giving up gas. While the savings for non-solar WA homes aren’t high, they’ll only increase as gas prices rise. If you pay for gas appliance inspections, you’ll also save money on not needing them. And if you don’t, you’ll gain the benefit of reduced fire and explosion risk. If you get rid of gas, especially gas stoves, you’ll also be removing a major health risk from your home.
Below, I’ll go into more detail about how I calculated the above figures, and in a future article I’ll explain how much less efficient gas appliances really are.
Replacing your gas hot water with a heat pump is one of the key steps to severing your costly gas connection.
Supply Charges By Capital
Supply charges are what you have to pay for a gas connection, regardless of how much gas you use — even if it’s none at all. To work out the annual cost of gas supply charges, I used the lowest-cost gas plan I could find with a quick search. While you may be able to find a cheaper plan, the figures I’ve used are likely to be around the best you can get. Annual gas supply charges are:
- Adelaide: $310
- Brisbane: $255
- Canberra: $320
- Melbourne: $360
- Perth: $90
- Sydney: $260
Most households that quit gas entirely will be around $300 a year better off purely though not having to pay supply charges. The exception is for gas connections in WA where supply charges are far lower than anywhere else. WA has the nation’s lowest gas prices because the state government there reserved a portion of production for domestic use when gas export facilities were opened. Something that wasn’t done on the east coast. Despite this, the WA government has allowed gas prices to rise and has locked in future price increases.
Gas Prices
In addition to supply charges, retailers also have the nerve to make you pay for gas used. In most states, they charge per megajoule (MJ) — a measure of the thermal energy released when gas is burned. In WA you pay per “unit”. Each of these is 3.6MJ, which is the amount of energy in 1 thermal kilowatt-hour (kWh). If an electric resistance heating element uses 1kWh of electricity, it will produce 1kWh of thermal heat. These elements are found in electric kettles, conventional electric hot water systems, and electric space heaters.
Here’s what you can expect to pay per MJ and per thermal kWh on a lower-cost gas plan:
- Adelaide: 5.6c/MJ 20.2c/kWh
- Brisbane: 6.2c/MJ 22.4c/kWh
- Canberra: 5.3c/MJ 19.2c/kWh
- Melbourne: 3.2c/MJ 11.7c/kWh
- Perth: 2.4c/MJ 8.6c/kWh (unit)
- Sydney: 4.6c/MJ 16.5/kWh
Melbourne and Perth have much lower gas prices than other cities, while it’s most expensive in Brisbane and Adelaide.
If you compare the cost of 1kWh of thermal heat from gas to 1kW from an electric heating element using grid electricity, gas looks pretty good. But the comparison is not that straightforward. One reason is — in most cases — gas is less energy efficient at heating than a basic electric heating element.
Savings With Solar
If only grid electricity is used, giving up gas makes good financial sense everywhere except WA. But if you have rooftop solar it makes sense throughout Australia, thanks to the low cost of solar power. If an appliance uses a kWh of solar electricity that otherwise would have been sent into the grid, all that’s lost is the solar feed-in tariff. Most feed-in tariffs are low these days. For most homes in WA they’re only 2c before 3pm.
Solar and home heating: If you don’t have a battery it’s difficult to run home heating off only solar. The 2 main reasons why are:
- it’s usually coldest when it’s dark and/or cloudy.
- Most Australian homes have horrible insulation.
If our homes were insulated like they are in Finland, those with large solar systems could probably heat them with close to 100% solar energy. A home well insulated by Australian standards might manage 50%. But I’ve assumed only 25% of home heating will be powered by solar.
Solar and heat pump hot water: Most heat pump hot water systems have a built-in timer, allowing them only operate during times solar output is likely to be high. Thanks to their low power draw, a reasonably large solar system can let them run almost entirely off solar energy. Conventional electric hot water systems can also be put on a timer, but because they draw more power, they’re more likely to also use grid electricity. I’ve assumed a solar home can run a heat pump hot water solar system off 80% solar energy.
Solar and induction cooking: The amount of cooking that can be powered by solar varies wildly between households. Some cook a main meal in the middle of the day while others barely cook a thing while the sun is up. Cooking also uses large amounts of power for short periods which makes it likely some grid energy will be used unless solar output is high. I’ve assumed only 20% of cooking is solar powered.
Homes with solar panels can save the most money by getting off gas.
Reduced Maintenance & Safety Check Costs
If you ask people who do safety checks on gas appliances, they’ll generally say you should have them done every 2 years. In Victoria, it’s a requirement for rental properties to have a biannual inspection. However, apart from Victorian landlords, I don’t know anyone who actually does this. Instead, most people do nothing until they start asking each other, “Hey, can you smell gas?”
Fortunately, because we have strict regulations on making gas smell really bad, people almost never ask, “Hey! Will you stop lying unconscious on the ground and tell me if you can smell gas?”
If you’re one of the 4 or 5 people in Australia who have their gas appliances checked every 2 years then going off gas will save you plenty of money. But if you’re one of the many people who never do a thing until there’s an obvious problem, then you’re not going to save money by not having something you never have done not done. But there’s still a cost to not having regular gas appliance inspections. It’s an extremely small but still extremely real chance that one day your home will decide to explode.
Cheaper Insurance
It’s also possible to save money on home insurance by giving up gas. This is because your home is safer without it. But it may be easier to get a lower rate from another company than to directly negotiate a lower rate with your current insurer.
Bottled Gas
In addition to over 5 million homes with gas connections, there’s around 1.5 million homes using bottled LPG, often only used for cooking. I won’t go into bottled gas except to say it’s even more expensive than piped natural gas. If you’re only cooking with it, get an induction stove instead. You’ll save money and have a better cooking experience.
Do Not Make This Key Mistake
When supply charges are included, gas is so expensive even those who have just bought a new gas appliance are normally better off giving it up. So if nothing else, please allow me to bang one piece of advice into your brain…
Don’t buy new gas appliances!
There’s no point in paying for new gas gear when the sooner you give it up the sooner you’ll start saving. When old appliances need replacing it should always be gas out and electric in. If you’re not going to get off gas immediately you still need to prepare for the future.
Because it no longer pays, the number of homes kicking gas to the gutter will only increase. If we get a national battery incentive this will supercharge the process, as a gas connection makes zero sense with a home battery. Once enough people go all electric, domestic gas lines will be shut down because there won’t be enough users to cover costs. So even if you don’t want to give up gas, eventually gas will give up you.
How To Get Off Gas
You may find that while the parts of your brain dedicated to long-term planning can clearly see you’ll be better off going off gas, some of the the short-term parts may still throw a tizzy over the cost of replacing gas appliances with modern electric ones. So it’s a good thing there’s assistance available in several states and a territory. The ACT, NSW, SA, TAS, and VIC all provide help in the form of grants and/or zero interest loans to purchase heat pump hot water systems or other efficient electric appliances. You can find outlines of these schemes and links to more information on this page.
Of course, if that still doesn’t motivate you enough, you can just disconnect from gas and then scramble to get electric appliances. If you do it at the start of summer you may not even feel the need for a hot water system until autumn rolls around.
If you do go ahead and quit gas, just make sure to do it the right way, or your savings might be eaten up by the fees the gas companies try to hit you with on the way out — read my guide on how to keep exit fees to a minimum.
About Ronald Brakels
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New housing estate in warnambool provides 40amp conection to residential properties and encourages gas connection as they want to recoup the cost of the new gas pipeline for additional cost the electricity supply can be upgraded seems to fly in the face of current thinking.
Hi Kevin,
That’s ludicrous when you consider an EV charger will want 32a by itself.
Good job many of them have “sharing” functions that will throttle off the EV when other demands are made.
The gas industry is madly advertising cooking now, even though it’s only 2% of gas use, because they want you to make an emotional connection to your stove using food.
They’ve successfully hidden the indoor air quality problems for 50 odd years.
“an EV charger will want 32a by itself.”
And, for the victims of the WA SWIS grid and the hostility of the WA state parliament to household rooftop PV systems, whence single phase PV inverters are limited to 20A, the official WA state government policy is “Stick BEV’s”.
An interesting observation with your comment
“The gas industry is madly advertising cooking now,”, is that, having been using a K-Mart plugin two element benchtop cooktop for the last couple or few years, after our gas stove was condemned (leaking – and, I can still smell gas in the kitchen occasionally – I believe that the smell is from mercaptans), when the larger element failed, I bought a K-Mart $52 plugin induction cooktop, and, I think it cooks faster than a wok element on a gas stove.
For decades, gas just wasn’t a big thing here in Brisbane, if you lived in a really old suburb and had town gas, people still used it. But it was pretty rare for anyone to bother with gas in a new build. It added thousands to the cost and frankly was a pain in the ar$e to deal with, as the builders usually left you on your own to get it installed.
But the last 10 years or so they have been putting reticulated gas into new estates, and really pushing bottled gas for new builds.
The amusing thing is that local social media is now inundated with people asking where they can get cheaper bottled gas deliveries from, most of the prices people say they are paying – is considerably more per litre than it costs to get my gas bottled filled at the local camping shop, so gas is hardly a cheap option.
Hi Andrew,
The gas industry isn’t stup!d, they’re just immoral. In SA they have been getting developers to lay pipes and then putting encumbrances on the sale of land that the dwelling must have gas hot water or space heater.
The thing is that it’s all LPG coming from a big bottle at the end of the street, delivered by the same trucks that would otherwise fill the dwindling number of LPG bowsers at petrol stations.
The scam is that they wanted regulatory approval to put another $40 million dollars onto gas bills and extend the mains gas to Mount Barker, where all these new houses would be ready to accept the fossil methane instead of LPG.
However the approval hasn’t come & there’s little news about what happens next… other than thousands of new homes are now hooked on gas.
It doesn’t matter how cheap gas is apart from the health angle and if you’ve got solar FREE will still be cheaper than a little !!
We plumbed in 8.5kg LPG bottlesfor a hob but since getting some batteries we have been using a little portable induction hob.
With shorter days approaching I thought we should start using up some of those spare LPG bottles.
The experience of getting my oats to boil with gas vs induction has finally convinced me that induction is the bomb. So quick.
A realistic look at the changeover costs would be helpful.
Those with central/ducted gas heating are in for a rude shock.
Stoves are not cheap to replace and a lot of homes have inadequate electricity supplies to support going all electric, so factor in costs of electrical supply upgrades and probably a main circuit board upgrade as well.
With water heating often homes with continual flow gas water heaters have no provision for locating a heat pump hot water storage system. Gas units are popular because of how little space they use while you do NOT want to swap to instant electric water heating.
The changeover costs will be well beyond the reach of many.
I cannot see that it is an obvious saving for me.
I live in a 2 person house in Sydney and have AGL gas used for instantaneous hot water and a cooktop.
My gas bills are around $620 per year of which $220 is for supply.
The rest is usage at a rate of $3.515c per MJ (not 4.6 as in your table above) and 2.612c for the usage above 1926 MJ per quarter. (GST not included).
Our usage seems to be 2000-2700MJ per quarter.
If I replaced that with a new cooktop and a new heater I would be up for many thousands in additional capital costs plus I would now have to pay for electricity.
If I ignore the cooktop usage and consult a site such as climatechoices.act.gov.au, I am told a heat pump is the most efficient way to heat water and will cost 4.7 kWh per day or 1715 kWh per year. At the rates I pay to Powershop for my electricity that comes to $462 so my savings are less than $200 per year. That means my payback period is 20 years or more !
Not concerned about the health affects of burning gas in your house?
Not at all concerned.
In any case it is only a small amount of cooktop use in a large kitchen/dining room.
The oven is electric.
The heating is a ducted reverse-cycle aircon.
The gas hot water box is outdoors.
It’s true that there is a fairly hefty capital cost to switching but the NSW govt currently offers rebates on heat pump hot water systems and home batteries (I think that is from Nov 1). You can look at that a couple of ways
1. How long will it take to recoup my investment?
2. Do adding these things (solar, home battery, heat pump) add to the capital value of my home? (usually the answer is yes, which surprises a lot of people)
In your case, you’ve rightly said that 1 is just not worth it (at today’s rates) but can you justify it with 2? If so and you’re also saving money then the only remaining questions are can you afford it and do you want to do it?
But I read that heat pumps are more complex, make noise, have more failures, are more complex to service. Also it is a storage-based technology so there is the possibility of running out of hot water. Their life-span is quoted as 13-15 years, whereas our instantaneous gas HWS has functioned for 21 years and seems in little danger of failing any time soon. And a replacement (Rinnai 26) installed in NSW is quoted as $1600 vs $3000 for the heat pump (Rheem AmbiPower 280e).
And an induction cooktop, sio we can get off gas completely, would add $1195 (Bosch series 4, 60cm) installed, if it would fit attractively into our existing benchtop, which is questionable.
You are underestimating the value many communities place on having gas for cooking. It’s still heavily promoted.
2700MJ per quarter is ~30MJ/day which with a HP with a COP of 4 is only 2.1 kWh /day, not 4.7kWh/day. I was in pretty much exactly your situation, converted and my monitoring shows 1.5-2.5kWh/day which depends on whether I have a BIG, HOT BATH. So theory = practice. I have solar at 10c/kWh sunk cost, so 15c-25c/day for hot water and no connection cost.
Think what you like, my sunk cost of under $100 and bill of basically $0 is hard to beat.
And the $2200 connection cost over 10 years would be the capital premium between instant gas and HPHW, except the gas industry is going to jack it up to pay for deserters like me.
You’ve been gaslit …
Had electricity and gas bills of $2,800 in 2019. 6 years later, and with a small solar system (6.4kW) & an electrified house we’ve got no gas bills and our electricity bills are less than $700 a year.
Did you take into account that (in Perth anyway) TOU cost during peak time is about 52c/kwh vs the 8c odd you mentioned using gas. Its cheaper at midday and would only be cheaper in the evening if you have a battery.
The savings are based on a flat tariff and if a household on a time-of-use tariff has typical electricity consumption it works out similar to flat tariff. But those on time-of-use tariffs can shift consumption to times outside peaks and lower the costs of running appliances off electricity. This is particularly effective for hot water in WA as it can be set to switch on from 9am-3pm during the daytime “super off-peak” period. If you have solar, you may want it to start a bit later so it will take greater advantage of even cheaper solar generation.
A full four or six “burner” induction cook top, installed, is expensive. But do you need it? A single hob plug in unit is $49 at Ikea, and works well without exceeding 10A. If you need a second, put it on a different breaker circuit.
https://www.ikea.com/au/en/p/tillreda-portable-induction-hob-1-zone-white-40493509/
That’s a good technique for getting by for people who want a full stove but who need to accumulate the savings from going off gas for a while to afford one.
After our gas stove was condemned, a week or so before Christmas, a few years ago, I got a plugin two solid element benchtop cooktop from K-Mart – about $30, and, a plugin benchtop oven (about 45 litres), from K-Mart – unfortunately, K-Mart no longer sells the oven. The oven has done well, and, is big enough for substantial roasts, and, cooks as good as (but, without the gas fumes) a gas oven, and, can use (as I have used it) both top and bottom elements together.
The solid element hotplates lasted for a couple of years at a time (at about $30 each,that’s okay), I have had the larger element on the second hotplate, fail, and, so, to get hotter cooking, I bought a single element K-Mart induction cooktop (https://www.kmart.com.au/product/induction-cooker-black-43324170/) for $52, and, that cooks at least as fast as a gas wok burner (the gas stoves that I have had, have had wok burners).
Bunnings have plugin benchtop ovens, and, thus, together, benchtop stoves for less than $300. Luxury
Looking at the figures above, I wonder if they’re accurate for Melbourne – especially for heating?
The Victorian Government has put out figures of existing homes saving $2,000 per year by electrifying or an extra $740 with solar. The savings for new homes is $880 or $1,820 with solar. This is more than triple the savings mentioned by Ronald.
Per my above comment we saved $2100 off our bills, but we were relatively efficient to start with..
Src: https://www.energy.vic.gov.au/households/save-with-all-electric-home
The average Victorian home apparently uses nearly 50,000 MJ of gas per year, which is an enormous amount. An average of nearly 38 kWh of thermal energy per day. But this figure includes really large users and doesn’t represent a typical household. I wanted to show even a household of two pensioners with modest gas use can benefit by giving it up. I could have made this clearer in the post.
Thanks Ronald. There’s a good website out of ACT “Make the switch” which has a calculator where you can see how much savings you’d make based off your use.
Unfortunately whilst you can update usage and replacement cost range you can’t update any of the assumptions around gas price/power prices/solar etc. I wonder if SolarQuotes can do something similar but better given how good the Solar & Battery Calculators are?
Google “calculate the switch” if you want to see how it works.
While a number of commentators have mentioned the low 40Amp service to new builds, which seem to perversely support the continued use of gas,..the other benefit is that it also encourages the use of customer installed batteries, as this will cover the surge shortfall of the smaller grid connected cable.