The Gas Heating Myth
For decades, the advice was simple: "Gas is cheaper for heating."
That advice is now dangerously out of date.
The Problem
Gas prices have risen dramatically. Meanwhile, reverse cycle air conditioners have become 300-600% efficient. The economics have completely flipped — even a 1-star reverse cycle system is now cheaper to run than a 6-star gas ducted heater.
According to Sustainability Victoria, households can save up to 72% annually by switching from gas ducted heating to reverse cycle.
Why Gas Is Now Expensive
- Gas prices have doubled since 2020 in many areas
- Gas heaters lose 50% of energy through exhausts and ductwork
- Gas efficiency is capped — even the best systems are 90-95% efficient at most
- Reverse cycle is 300-600% efficient — 1kWh in = 3-6kWh of heat out
Real Running Costs Compared
Here's what heating actually costs for a typical Melbourne 220m² home over winter:
| System | Annual Cost | vs Gas |
|---|---|---|
| Ducted gas heating | $1,000 - $1,250 | Baseline |
| Ducted reverse cycle (grid) | $350 - $500 | Save 50-65% |
| Multi-split reverse cycle (grid) | $300 - $450 | Save 55-70% |
| Reverse cycle + solar + battery (optimised) | $50 - $100 | Save 90%+ |
Key insight: The comparison isn't just "gas vs electric" — it's "gas vs electric optimised with solar and battery." That's where the real savings are.
The Hidden Bonus: Ditch the Gas Connection
If heating is your only (or last) gas appliance, switching to reverse cycle lets you disconnect from gas entirely. That eliminates the daily supply charge — typically $300-400/year — on top of your running cost savings. Combined with a heat pump hot water system, going all-electric can save you $700+/year in supply charges alone before you even count the efficiency gains.
The $0 Heating Opportunity
This is the BatteryIQ difference. We don't just tell you "reverse cycle is cheaper." We show you how to run heating for essentially $0.
How It Works
- 1. Solar generates during the day — excess goes to battery (not exported at just 1-6c)
- 2. Battery stores for evening — when heating is most needed
- 3. Smart scheduling — pre-heat home during solar generation
- 4. Tariff optimisation — battery charges overnight at 8c if needed
Winter Reality Check
"But solar doesn't work in winter!"
True, it produces less. But:
- A 6.6kW system still generates 10-15kWh on a cloudy Melbourne winter day
- A reverse cycle heat pump uses 1-2kW to produce 3-6kW of heat
- You need less solar than you think to cover heating
- With the right energy plan, you can fully charge your battery overnight for $0 using free off-peak windows
- Even without free windows, off-peak rates (8c vs 40c peak) make a huge difference
The Math
| Item | Value |
|---|---|
| Gas heating cost eliminated | $1,000 - $1,250/year |
| Reverse cycle running cost (grid) | $350 - $500/year |
| Reverse cycle running cost (solar + battery) | $50 - $100/year |
| Net annual savings | $950 - $1,150/year |
Victorian Rebates (Up to $10,000)
Victoria has the best gas heating replacement rebates in Australia through the Victorian Energy Upgrades (VEU) program.
Available Rebates
| Replacement Type | Rebate Amount |
|---|---|
| Gas ducted → Ducted reverse cycle | $1,000 - $8,000 |
| Gas ducted → Multi-head split system | $1,000 - $7,000 |
| Maximum available (large systems) | Up to $10,290 |
Upfront Discount
The rebate is applied as an upfront discount — no waiting for cashback. You pay the reduced price at installation.
Eligibility
- Victorian resident — owner or renter (with landlord approval)
- Existing gas ducted system — must be replacing an existing system
- VEU-approved installer — must use an accredited provider
- VEU-approved equipment — not all systems qualify
- No means testing — available to all households regardless of income
How to Access
- Get quotes from VEU-accredited providers (they handle the paperwork)
- The rebate is applied directly to your invoice
- You pay the reduced amount
ROI Calculator
Let's calculate the payback for a typical Melbourne household:
Scenario: Replace Gas Ducted with Reverse Cycle
| Item | Amount |
|---|---|
| Ducted reverse cycle system cost | $10,000 - $15,000 |
| VEU rebate | -$5,000 to -$8,000 |
| Your cost after rebate | $2,000 - $10,000 |
| Annual savings (grid power) | $500 - $750/year |
| Payback period | 3-6 years |
Think Whole-of-House Electrification
Heating is just one part of the picture. When you're considering a home battery, factor in all the loads you could electrify:
- • Space heating (this guide)
- • Hot water — another $450/year saved
- • EV charging — potentially $2,000+/year saved vs petrol
- • Cooking (induction vs gas)
A battery that seems expensive when only considering heating ROI becomes a no-brainer when you factor in the total savings from full electrification. The ROI of your battery system fundamentally changes when powering an electrified home.
Other States
Victoria leads on gas heating rebates. Other states are catching up:
NSW
- No direct equivalent to VIC's VEU program for heating replacement
- Energy Savings Scheme provides smaller incentives
- Some local councils offer their own rebates — check with your council
- Focus is more on hot water heat pumps than space heating
South Australia
- REPS (Retailer Energy Productivity Scheme) offers some incentives
- Combined with federal battery rebate, systems become more affordable
Queensland
- Warmer climate means less heating demand
- Split systems for cooling (with heating capability) may qualify for energy efficiency incentives
Check Your State
Visit our state energy pages for the latest rebates available in your area.
Next Steps
1. Get quotes from VEU providers (Victoria)
Search for "VEU accredited installers" in your area. They'll assess your home and provide quotes with the rebate already deducted.
2. Consider the full system
Don't just replace gas with electric and pay grid rates. Add solar + battery to achieve near-zero running costs.
3. Calculate your total savings
Use our calculator to see your potential savings across heating, hot water, and general electricity.
Calculate Your Full Energy Savings
Heating is just one piece. See how much you could save with solar + battery covering your heating, hot water, and general electricity.
Calculate My Savings