Gas out, electricity in: Victoria will transition away from old heating in bid to lower power bills and cut emissions

Under new legislation introduced today, gas hot water systems will be phased out of Victorian homes from March 2027.

The regulations mean electrical systems will be required in new builds and gas systems will require replacing with electrical alternatives when they stop working.

From 2027, new Minimum Energy Efficiency Standards will apply to rental properties and public housing. These will make ceiling insulation mandatory and require gas heaters and hot water systems to be replaced with electrical systems if they break down.

The government said there would be no changes to gas cooking or heating for owner-occupiers.

“Families will pay less on their energy bills, industry will get the gas it needs – and Victorian jobs are protected,” Victorian premier Jacinta Allan said in a statement.

After the set date the gas hot water system will be able to be repaired if they break down or reinstalled if the building is being renovated.

The reforms will apply to all commercial buildings apart from industrial, manufacturing and agricultural buildings.

Environment Victoria CEO Jono La Nauze told the Gippsland Monitor it was “a very significant decision. There's a handful of jurisdictions around the world that have begun to phase out gas appliances in the way that Victoria started today”.

According to the government, Victoria has the highest rate of residential gas use in Australia, with around four in five homes connected to gas. The gas sector contributes 17 percent of the state's emissions.

La Nauze said plentiful supplies of gas in the Bass Strait made it a comparably cheap form of energy for Victorians.

“But the facts have changed,” he said. “Whether you live in a weatherboard in Warragul or a double brick in Bendigo or an apartment in Melbourne, it will be cheaper and cleaner for you to run your house on electricity.

“In Victoria, if you build an electric home from scratch, it'll be at least $1,500 a year cheaper to run compared to the same house with the same thermal efficiency, but with gas appliances. If you add solar on the roof, the savings double to $3,000.”

Benefits for renters

From 2027, once gas heaters and hot water systems in rentals are unable to be repaired they will need to be replaced with electrically powered alternatives.

Ceiling insulation will also become mandatory and rentals will undergo draught sealing at the start of each tenancy.

Electric cooling systems will also be required for rental living rooms under the new laws.

“This is ensuring that everyone benefits and no one's left behind,” La Nauze said.

Emissions reduction

The move to electricity is a key element in meeting Victoria's emissions reduction targets of 75 to 80 percent by 2035 and net zero by 2045.

“When you burn gas you are producing carbon dioxide,” says La Nauze. “As our existing gas supplies run out, if we don't switch our homes from gas to electric, we're going to end up drilling new holes in the earth.

“Whether that's under the 12 Apostles, or in somebody else's country, or in somebody else's state, that gas is going to come out of the ground; it's going to do damage as it's pulled out and it's going to do damage when we burn it.”