The true cost of switching your home from gas to electricity

From slashing your power bills and reducing your carbon footprint to increasing your home's value, there are many reasons to consider going all-electric.

The numbers are compelling. According to the Victorian government's Energy Victoria website, converting an existing home with solar panels from gas to electricity can cut your energy bills by $1700 a year.

That's in addition to around $1000 in savings from, for example, a 6.6kW solar system, all while reducing your greenhouse gas emissions.

It can also boost your home's value. With sustainable features such as electric appliances, solar panels and double glazing increasingly sought after by buyers wanting a home that's cheaper to run and kinder on the environment, going all-electric can help add $112,000 to the selling price, according to May's Domain Sustainability in Property Report.

Which gas appliances can be swapped out for electric?

The main elements you'll change when transitioning from gas to electricity are your heating, hot water system and cooktop. You might also add a solar power system, energy-efficient LED lighting and a smart charger for your electric vehicle to your set-up.

An electric reverse-cycle split system, which uses a heat pump, not only heats your home in winter but cools it in summer, providing year-round comfort.

It is 300% to 600% efficient, meaning it takes one unit of electric energy and turns it into three to six times as much heating or cooling energy, while being affordable to run, particularly when you combine it with a solar system.

A properly sized system will rapidly heat or cool your home in the same way as a ducted gas system but without the carbon dioxide emissions of gas. Split systems can be sized to suit individual rooms or open-plan areas up to 80 square metres.

If you have multiple outlets or opt for a ducted system that delivers heating and cooling through vents in your ceiling, you can zone the system to only heat or cool the rooms you're using, providing further savings.

Electric heat pump hot water systems are considered one of the most energy-efficient solutions on the market.

Gas and electric hot water systems generate heat by burning fuel or using heating elements, both of which can be inefficient and costly to run.

A heat pump, on the other hand, works by extracting heat from the air outside, which is then transferred to an insulated water tank. It consumes around 60% to 75% less electricity than a conventional electric hot water system as it only uses electricity to power the evaporator fan and compressor.

Heat pump hot water systems can be a single integrated unit installed outside or a split system, where the storage tank is located either inside or outside.

The fan and compressor can be noisy, so they should be installed away from bedrooms, living areas and neighbours. They also need to be in an area with good airflow.

Induction cooktops offer a number of benefits that even die-hard fans of gas cooking can't ignore. Not only are they around three times more energy-efficient than gas, which drives down bills, but they're healthier as they emit none of the harmful contaminants of gas.

They work by creating an electro-magnetic field via a glass surface that almost instantly turns the pot or pan into a heating element, which means less energy wasted and a cooler kitchen. Induction cooktops heat with more precision than gas, do it quicker and wipe clean with a single swipe.

How much will you save by going solar?

Investing in a solar system, if you haven't done so already, is worth doing as it allows you to use free energy from the sun to power all the electric appliances in your home.

To get the best bang for your buck, go big, advises Anthony Kurta, managing director at Solar Run. "Don't make the mistake of undersizing your system - go for the largest one you can fit. The price difference between a 6.6kW and a 13kW solar system is negligible."

Quality matters, too.

"A well-designed system obtained through the right retailer will save you the biggest amount of money. The design of the solar system and the robustness of its parts are important," says Kurta.

It's also wise to add a battery to store surplus power to use at night.

"Feed-in tariffs (FiTs) are so low that there's often no point selling your clean energy back to the grid," says Kurta.

"Directing it back to the battery is better because you can use it when the sun is not out and your power usage is at its peak. Retailers have a time-of-use tariff system.

"During the day, the price of electricity is cheap. To make their money back, they charge more at night, so the peak is going to get higher, and the only way to save money is with a battery.

"With the likes of [the energy retailer] Amber for Batteries, you can access wholesale electricity prices. This way, you escape the hiked night-time retail prices.

"When the grid desperately needs energy, such as during power outages accompanying storms and floods, they will pay higher prices, which is when you can sell your electricity back to them. One powerless windy day in Victoria, a Solar Run customer made $590 in 24 hours by selling the solar power in his batteries," he says.

How much does it cost to go all-electric?

Trent Jones, the founder and chief executive of All Electric Homes, says that by switching your home from dual-fuel to all-electric, you can expect a reduction of approximately 80% in your power bill.

But what can you expect to outlay in the first instance?

While costs vary, a heat pump hot water system generally costs about $2000, a split-system reverse-cycle air-conditioning system about $5000, and an induction cooktop about $3000, before any government rebates are applied, says Anthony Kurta.

"The return on investment (ROI) for heat pumps is approximately two years and around three to four years for heating and cooling.

"People assume there's no ROI for a cooktop, but what you save is $1 a day in connection fees, which is $365 a year. If you put the numbers together, the ROI for an all-electric home is five to six years," he says.

At that point in time, with the right upgrades, a solar system big enough to power them and a backup battery, you could find yourself cashflow positive rather than facing the sting of a monthly power bill, says Jones.

What grants, rebates and loans are available?

You may be eligible for government rebates that reduce the upfront costs of electrifying your home. For more information, go to energy.gov.au/rebates.

You might also be able to access green finance for sustainable home upgrades such as rooftop solar, batteries and heat-pump hot water systems through the federal government's Household Energy Upgrades Fund, which is being delivered by the Clean Energy Finance Corporation (CEFC) in partnership with co-financiers, including banks and non-bank lenders.

Case study: Annual power bills slashed from $3800 to $700

Robyn Paterson, who shares her three-bedroom home in Frankston, Victoria, with her daughter and grandson, electrified her home with All Electric Homes in May 2024.

"My daughter and I had been wanting to go all-electric for some time as a way to save on power bills and find a more economical way to run the energy inputs on my home," says Robyn.

With government rebates, Paterson paid around $13,000 to transition from gas-ducted heating, gas instant water and a gas cooktop to a reverse-cycle split system air-conditioner, a heat pump hot water system and an induction cooktop, backed by a 6.6kW solar power system.

With her previous dual-fuel set-up, Robyn was paying around $3800 a year for gas and electricity. Based on her previous and current energy usage, Trent Jones, from All Electric Homes, estimates her total annual power bill will now be around $700.

"The ease of switching over is what surprised me most," says Paterson. "From quote to installation took around two weeks, and installation took two days." 
The efficiency of the new system has impressed her, too.

"With gas, it used to take several minutes to get hot water through to all the taps. Now it's much faster and we don't waste as much water, which is another saving."

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