How much will you save by ditching gas?

As Australia transitions towards renewable energy sources, there's also a transformation going on in kitchens, living rooms, bathrooms and bedrooms across the country: household electrification.

According to recent research by the Australia Institute, there is a strong appetite among homeowners to shift away from gas to electric appliances, with 55% of those surveyed feeling positive about the move towards electrification compared with 13% who felt negatively.

Dayne Thompson, chief executive of EnergyFit Homes, says he's come across more people interested in transforming their homes as the national conversation around electrification has grown. Most of them are motivated to move away from gas for two major reasons.

"I would say that the cost of energy bills and the environment are the two main drivers. Environment for the older generation because we actually have a lot of retirees who want to make sure that they're doing their part, and then cost for the younger generation. That's what we typically find."

But how much does electrifying a home cost - is it worth it from a savings perspective? And what else should households consider before getting started?

Benefits of electrification

Carl Tidemann, a senior researcher at the Climate Council and one of the authors of a 2022 report analysing the running costs of gas and electric appliances, says there are a number of ways homeowners may benefit from a move away from gas.

"There are some pretty major health benefits, particularly with cooking or if you've got gas heating that's unflued - although, thankfully, I think it's becoming less common - because burning anything in the home isn't great for indoor air pollution.

"And, of course, there's the climate benefit. Because we're in a renewable transition, it depends on the state you're in and the grid emissions intensity of your electricity, so the emissions savings can be questionable.

"But in our analysis, we looked at the emissions saved over 10 years assuming a rate of decarbonisation in the grid, so you're also saving emissions over time compared with gas."

Beyond the potential environmental and health benefits, Tidemann says modern electric appliances are just cheaper to run, although it does depend on location, climate and what the household is paying for electricity and gas.

For example, the Climate Council found that a household in Perth would save $514 each year on its energy bills by switching from gas to low-priced electric appliances and by not having to pay gas supply charges. At the other end of the scale, a household in Hobart could potentially save $1594 each year.

"The conversion of electricity by heat pumps and induction is higher than the usage of electricity as compared to gas," says Tidemann.

"And even though gas is quite cheap, you're using so much more of it that transitioning those appliances across will save you potentially hundreds - or a bit over $1000 a year - depending on your home."

Electric heating and cooking

Heaters, hot water systems, stovetops and ovens tend to be the main appliances that households switch over from gas to electric, says Thompson. But depending on the appliance, it might not always be cost-effective to switch them immediately.

"By far and away the biggest use of gas in households is for heating homes, which is why reverse-cycle or heat pump air conditioners would typically be the first thing [to do]. Switching over to a reverse-cycle heater is really affordable, and they work well in cold climates now - which was always the concern years ago."

Hot water makes up the next biggest chunk of gas use in Australia. "If you've got a gas storage hot water system, it's probably worth looking at replacing that today, no matter how old it is, because the electric systems pay back much quicker," says Thompson.

"If you've got an instantaneous gas hot water system, though, it might not be affordable for you to switch that over to electric today because they are actually fairly energy efficient. So that's one where you might wait until it breaks down before replacing it."

Then there are stovetops and ovens. While the equation may be simple when it comes to switching heating and hot water systems from gas to electric, at least from a cost perspective, Thompson says it can be trickier with kitchen appliances.

"Is it affordable to convert gas cooking to electric? Quite often it is because if everything else is fully electric, then if you can convert your gas stovetop to an electric stovetop, then you can get rid of that annual fixed charge for staying connected to the gas network.

"The problem comes if your cooktop's built into your oven - it's an all-in-one - because replacing your whole oven and cooktop to get those savings isn't always affordable."

Given the potential energy bill savings up for grabs, not to mention the environmental and health benefits, moving from gas to electric appliances may sound like a tempting proposition. But electrification can come with a substantial upfront price tag.

Tidemann says there are plenty of factors that will determine the cost involved, including the type of appliances being replaced, the quality of the replacements and any electrical work that will need to be done to accommodate them.

"We calculated the heating and cooling load of average size homes in the capital cities - which was roughly 200 sq m - and then looked at appliance costs and also included potential electrical upgrades that can sometimes be needed," he says.

"Going from nothing to full electrification - so a split system in the lounge room and then two in bedrooms, or two in other areas of the home, an induction cooktop and a medium range heat pump hot water system - was over $7000 for the cheapest option."

The Climate Council also crunched the numbers on a second scenario with more expensive appliances, including three median-priced reverse-cycle air conditioners, a median-priced induction cooktop and a hot water system using solar with electric boost, which came in at $14,936.

Given the upfront costs on the one hand, and the potential energy bill savings on the other, how much time would it take for a suite of upgrades to pay for themselves?

For an upgrade using lower-cost appliances and an outlay of $7818, Climate Council researchers calculated the payback period ranges from as little as five years for a household in Hobart to 15 years for one in Perth.

For the $14,936 scenario using more expensive appliances, the payback timeframe ranged from eight years in Hobart to 19 years in Perth.

Solar and other considerations

Before starting the process, Thompson recommends that households get their electrical circuits checked by an electrician to get an accurate picture of the costs involved and to ensure that they can support new appliances.

"Australian households often have an electric oven and a gas cooktop, so the electrical circuit that goes to the kitchen is only capable of running the oven," he says.

"Often, it's a 15amp fuse, but you might need a 30amp fuse. So that's just one extra cost to be aware of if you do upgrade your gas cooktop to induction."

Most importantly, though, Thompson says that households looking to electricity seriously need to think about installing a solar system if they haven't already. "I think electrifying is great and it's a great way to reduce your emissions, but if you're going to electrify, make sure you have solar or get solar. That's where you're getting the real value out of it.

"You're making sure that you can generate your own electricity which, with solar, is so cheap. And if all your appliances are electric, you get to use that energy. Instead of sending it back into the grid and getting a couple of cents for it, you actually get to use it."

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