Worked Estimates and Checklists
Gas heating vs reverse cycle running costs: how to compare the bills with your own tariffs
A step-by-step method for comparing the running cost of gas heating, reverse cycle air conditioning and hot water options in Australia, with MJ to kWh conversions and supply charges.
To compare gas heating with reverse cycle air conditioning, convert both to the same unit of heat delivered, divide by each system's efficiency, multiply by your tariff, and then add the fixed daily supply charge you would avoid by closing the gas account. Because an efficient reverse cycle system delivers several units of heat per unit of electricity, it usually costs less per unit of heat than gas at common tariffs, and the gap widens if removing all gas appliances means you stop paying a gas supply charge. The same method works for hot water. This guide shows the arithmetic with illustrative tariffs; plug in the rates from your own bills. It is part of the heating and cooling quote checklist.
The conversion you need
Gas is billed in megajoules (MJ); electricity in kilowatt hours (kWh).
- 1 kWh = 3.6 MJ.
- So 1 MJ = 0.2778 kWh.
Efficiency figures:
| System | Efficiency used in the example (illustrative) | Meaning |
|---|---|---|
| Gas ducted heater | 80% | 0.8 units of heat per unit of gas energy |
| Gas space heater (flued) | 75–85% | Varies by age and model |
| Reverse cycle (heating) | COP 3.5–4.5 | 3.5–4.5 kWh heat per kWh electricity |
| Electric panel or fan heater | 100% (COP 1) | 1 kWh heat per kWh electricity |
| Heat pump water heater | COP about 3–4 | Varies with climate and model |
| Gas storage water heater | about 70% including standing losses | Varies |
| Electric storage water heater | about 90% including standing losses | Varies |
These efficiencies are illustrative assumptions for the arithmetic. Older systems and duct losses can reduce real efficiency significantly.
Worked example 1: heating a living area through winter
Assumptions (illustrative): the living area needs 2,400 kWh of heat over winter (20 kWh a day for 120 days). Electricity 32 c/kWh; gas 4 c/MJ.
Gas heater at 80%:
- Heat needed in MJ: 2,400 × 3.6 = 8,640 MJ.
- Gas used: 8,640 ÷ 0.8 = 10,800 MJ.
- Cost: 10,800 × $0.04 = $432.
Reverse cycle at COP 4:
- Electricity used: 2,400 ÷ 4 = 600 kWh.
- Cost: 600 × $0.32 = $192.
Electric panel heater at COP 1:
- 2,400 kWh × $0.32 = $768.
Reverse cycle is cheapest here because its efficiency more than offsets the higher price of a kWh. Change the tariffs to yours and the order may change; for example, very cheap gas and an inefficient older split narrow the gap.
Worked example 2: adding the gas supply charge
If heating and hot water are your only gas appliances and you replace both, you can close the gas account and stop paying the daily supply charge.
- Illustrative supply charge: $1.00 a day → 365 × $1.00 = $365 a year.
- In example 1, the heating usage saving was $432 − $192 = $240 a year.
- Removing all gas adds the $365 supply charge saving, so the total becomes $605 a year, before hot water savings.
That fixed charge is why a whole-home switch often makes more sense than replacing one gas appliance at a time. See the gas-to-electric worked example, and remember there may be a disconnection or abolishment fee (Victorian gas rules).
Worked example 3: hot water for a household of four
Assumptions (illustrative): 3,650 kWh of useful hot water energy a year (10 kWh a day). Off-peak or solar-timed electricity 20 c/kWh; gas 4 c/MJ.
| System | Energy used | Cost per year |
|---|---|---|
| Electric storage at 90% | 3,650 ÷ 0.9 ≈ 4,056 kWh | 4,056 × $0.20 ≈ $811 |
| Gas storage at 70% | 3,650 × 3.6 ÷ 0.7 ≈ 18,771 MJ | 18,771 × $0.04 ≈ $751 |
| Heat pump at COP 3.5 | 3,650 ÷ 3.5 ≈ 1,043 kWh | 1,043 × $0.20 ≈ $209 |
The heat pump saves about $600 a year compared with the electric storage tank and about $540 compared with gas in this illustration. Put your own saving into the payback calculator and see the heat pump worked example.
Solar changes the calculation
If you have rooftop solar, running a heat pump water heater or reverse cycle system during the day uses electricity you would otherwise export. The relevant cost is then the feed-in tariff you give up, often much lower than the price you pay for grid power. Many heat pumps can be timed for the middle of the day. That can make the electric options cheaper again, but only if the system actually runs when the panels are producing.
Where to find your real tariffs
| Figure | Where it is on your bill |
|---|---|
| Electricity usage rate (c/kWh) | Usage charges; may be peak, shoulder and off-peak, or a controlled load rate |
| Electricity daily supply charge | Fixed charge per day |
| Gas usage rate (c/MJ) | Usually in steps (first block, then cheaper blocks) |
| Gas daily supply charge | Fixed charge per day |
| Feed-in tariff (c/kWh) | Credits for exported solar |
Gas often has stepped rates. Use the rate that applies to the MJ you would stop using, usually the higher first block if you are removing a large load.
To compare offers, use Energy Made Easy (most states) or Victorian Energy Compare (Victoria).
Common errors in running-cost comparisons
- Comparing c/kWh with c/MJ without converting.
- Ignoring efficiency, especially old gas heaters and duct losses.
- Forgetting the gas supply charge, or counting it as saved when another gas appliance remains.
- Using the peak electricity rate for a heat pump that runs off-peak or on solar.
- Using label kWh figures without scaling for your own hours.
Frequently asked questions
Is reverse cycle always cheaper than gas?
Not always. It depends on your tariffs, the efficiency of each system, your climate and how you use them. The method above lets you check with your own numbers.
Why does my reverse cycle use more power on very cold mornings?
Heat pump efficiency falls as outdoor temperature drops, and defrost cycles use energy. Cold-climate models handle this better.
Should I count the gas supply charge if I still have a gas cooktop?
No. You only save the supply charge once every gas appliance is gone and the account is closed.
What COP should I assume?
Use the manufacturer's or label's seasonal figures for your zone if available, and be conservative.
Official sources
- Energy Made Easy — compare electricity and gas offers (most states)
- Victorian Energy Compare — compare offers in Victoria
- energy.gov.au — heating, cooling and hot water running cost guidance
- Energy Rating — annual energy figures on labels
