Is gas cheaper than electricity in Australia?

It depends on what you’re powering! Heating has the potential to be cheaper through electric appliances, but sometimes using gas (e.g. for cooking) is more efficient. While electricity charges are typically more expensive, the efficiency of your appliances can mean that gas is cheaper.

For example, while gas only makes up a part of your energy bill, it has cheaper usage charges (the price you pay for how much you consume) and supply charges (the cost to transport it to your home) than electricity. So, you could potentially save money by relying solely on gas for some appliances.

It’s worth noting that domestic and international pressures have pushed up gas prices, with prices expected to rise over 20% from 2022-24.¹ As gas prices increase, so does the cost of running gas appliances. Costs can also depend on what type of gas you use. Natural gas is cheaper but requires a connection to the gas mains pipeline, while LPG is more accessible but also more expensive to run appliances with.

Gas can only be used to power a few appliances that can cost more to purchase than their electric counterparts, so it’s good to consider which is right for you. Common gas appliances include:

Stove cook-tops and ovens

A gas oven is typically more expensive to purchase than an electric oven, but it can have lower energy usage costs overall. For this reason, it can be a good long-term purchase. However, unlike an electric stove-top that heats evenly, with a gas stove, you may waste energy if your stove sits near an open window or you use the wrong size pots and pans. Induction stovetops also use electricity. They’re heated by electromagnetic technology and are the most environmentally friendly and energy-efficient option, but also have the highest upfront cost.

Hot water systems

When it comes to gas vs electric hot water systems, the most common is the electric hot water system. It generally has the lowest upfront costs but is the most expensive to run. A gas system is more efficient and economical in heating, but the upfront cost will be higher. However, an electric heat-pump water heater outclasses gas systems in environmental benefits and lowering energy costs, especially when used in conjunction with a solar PV system.²

Heaters

Gas heaters can be a cheap way to heat specific rooms, as long as they’re running on natural gas and the room is properly sealed.³ Gas heating systems for the entire home (e.g. hydronic and ducted) can be an efficient way of heating a home quickly. They’re most efficient when run by natural gas and the house is zoned, so you only heat the rooms you’re using. A downside to gas heating is installation costs can be expensive, and air conditioning may still be required for the home’s cooling needs.

Clothes dryers

Clothes dryers are huge energy consumers, so getting an energy-efficient appliance can help save on your power bills. Gas dryers can heat quicker than electric dryers and therefore dry clothes faster; however, they have higher upfront costs and are harder to maintain. While electric dryers may be a bigger energy consumer, heat pump clothes dryers are typically the most energy-efficient option.⁴

Depending on the efficiency of all your appliances and your usage of them, the cost efficiency of gas or electricity appliances will differ from household to household.

Typically, gas appliances cost more to buy and install but have cheaper running costs than electrical appliances. However, some modern electric appliances, like split-system heating, are actually more efficient and cheaper to run than most gas systems.

Different models and brands use varying amounts of power, so it pays to keep in mind the energy efficiency rating of the gas or electric appliance you have or plan on installing. The more efficient the device, the less power you’ll use, and the lower your energy bill will be. There are also ways to reduce your gas bill, such as periodically turning the gas system off, maintaining it and adjusting the thermostat. Likewise, there are ways you can save on your electricity bills, such as taking advantage of off-peak tariffs and controlled loads.

You’ll need to weigh up whether gas is more affordable versus running purely electric appliances, and whether it’s worth the more expensive installation cost. If natural gas isn’t available in your area, you may still be able to power your gas appliances with LPG bottles, but they may need to be converted from natural gas to LPG. It’s also worth noting that some gas appliances will still have electrical running costs (e.g. fans on ovens) and not be run solely on gas.

Gas is less powerful than electricity, as you need more gas to reach the same output of electricity. It takes 3.6 megajoules (MJ) of gas to equal 1 kilowatt-hour (kWh) of electricity.⁵

Once you have a rough understanding of how much energy gas and electricity appliances use, it’s easier to work out (roughly) which would cost more, given that gas usage charges are typically cheaper than electricity in Australia. If you have mainly electric appliances, you can find out more about the cost of appliances with our guide to technology energy consumption.

Due to rising gas prices and modern electric heaters (like reverse cycle air-conditioners) becoming more energy-efficient,³ it may be cheaper to warm your home with an electric heater than a gas heater. However, this will differ depending on which appliance you choose and where you live.

Like gas, solar power can be costly to set up; however, having solar power means the running costs of electricity could become cheaper than gas in the long run. You may also be able to use any credits you get from your solar panels to help pay your electricity bill, which could lower the amount you spend on energy in general.

You can also combine solar energy with a gas or electric booster for specific appliances, mostly water heating systems, that will kick in if there isn’t enough sunshine to power the heater.

Gas is a fossil fuel; however, burning gas to generate electricity usually produces lower emissions than electricity generated from burning coal.⁶ Electricity sourced from green renewables like wind, hydro and solar is cleaner and more environmentally friendly than gas and coal-fired power.

A seasonal gas rate charges different amounts for gas usage depending on the season. For example, as gas is typically used for heating, the price you pay during the winter months (the ‘peak season’) will be higher. You’ll typically be charged a lower amount in the non-winter months, or ‘off-peak season’.

You may be charged for how much gas you use within a set period or at a fixed rate for peak and off-peak seasons. This type of gas tariff is common in Victoria.

Split system aircon units are electric appliances. They use a refrigerant gas inside the system, but the appliance does not require a gas connection, as air conditioners don’t need a continuous gas supply. It’s unlikely that your appliance will need re-gassing unless there’s a fault with the aircon unit.