Whether gas is cheaper than electricity really depends on your current lifestyle, the limitations of your property, market rates and the energy efficiency of the appliances you purchase.
We've broken down the variables to help you determine the right energy mix for your home, wallet and the environment.
Gas costs less per MJ in comparison to the amount you'll pay per kWh in electricity. For example, in NSW you'll pay roughly:
Keep in mind that it takes about 3.6MJ of gas to produce 1kWh of electricity at maximum efficiency so it is cheaper to use gas, but not as much as it appears on the surface. In reality, it's more like:
This make electricity roughly twice the cost of gas. However, there's other factors involved, like the cost of setting up your house with a gas connection - which not all homes have.
Practically all homes are powered by electricity but gas fittings vary from house to house and you can use as little or as much as you want. Below, you'll find an overview of gas and electricity usage prices in the four major states. The stats, as of June 2020, are from the Australian Energy Regulator's annual retail markets report.
| State | Average usage rates (c/MJ) |
|---|---|
| New South Wales | 4c/MJ |
| Victoria | 3c/MJ |
| Queensland | 8c/MJ |
| South Australia | 5c/MJ |
| State | Average usage rates (c/kWh) |
|---|---|
| New South Wales | 30c/kWh |
| Victoria | 36c/kWh |
| Queensland | 28c/kWh |
| South Australia | 42c/kWh |
While usage rates per unit appear cheaper for gas, it actually takes about 3.6MJ of gas to produce 1kWh of electricity at maximum efficiency. This makes gas cheaper, but not by as wide a margin as it seems at first.
There are two types of gas that households can purchase. The most common option is natural gas, which is distributed through the main gas network. You can also get liquefied petroleum gas (LPG), which is delivered in tanks.
This page primarily focuses on natural gas on this page as it's more frequently used. It can be cost effective, but its uses are limited to hot water, tumble dryers, fireplaces, heaters, cooking and the classic BBQ. In comparison, electricity powers a lot more appliances and the building itself.
| Response | |
|---|---|
| No | 54.85% |
| No - I live in an apartment/rent | 16.76% |
| Yes | 16.62% |
| I'm not sure | 11.76% |
Apples and oranges. While usage rates per unit appear cheaper for gas, it actually takes about 3.6MJ of gas to produce 1kWh of electricity at maximum efficiency. This makes gas cheaper, but not by as wide a margin as it seems at first.
If you don't have an existing gas connection, installing one will set you back anywhere between $1,200 and $5,000 plus1. This includes both material and labour costs.
However, if you have the option to mix and match (or are considering going all-electric), here's a look at the pros and cons of running appliances with either gas or electricity.
Keep in mind that most appliances you'll invest in will have at least a 10-year runtime so don't jump the gun and buy something without thorough research.
Sometimes, the choice may even come down to being conservative with your energy use. You can read about the most expensive appliances that run in your home here and tips on saving energy and your money.
It's worth noting that households can expect to pay about $120 (or 9%) less for electricity in 2023 than they do today, according to the Australian Energy Market Commission's annual residential electricity price trends report, released in December 2020.
Now combine this with Australia's emphasis on renewable energy and uptake in solar panel installations – 2.7 million solar panel systems in the past 20 years – and you'll soon realise that the gas versus electricity debate isn't so clear cut.
If you can afford to install solar panels on your rooftop, and bear the brunt of the upfront costs, you'll benefit from solar (and wind) being the cheapest new sources of electricity2.
A study by not-for-profit sustainability outfit Renew has found that an all-electric new-build home with rooftop solar and no gas appliances could save households in Western Australia up to $10,500 on energy costs over 10 years. This is compared to homes powered with both gas and electricity without solar.
If you don't live in a rental and are building or renovating your home, Dr Arianna Brambilla, lecturer for architectural technology at the University of Sydney has a few words of advice.
"The most environmentally conscious way to heat and cool a building is to…design it well!"
"Ideally, we want our buildings to be able to keep a comfortable indoor condition by taking advantage of the surroundings. For example, enhancing cross ventilation and capturing the cool summer breeze, or appropriate sun shading for cooling while maximising the penetration of free warm solar radiation during winter."
"When the above is not possible, think about what is the best option for the environment. We should probably take into account what will happen in the near future: with Australia moving toward carbon neutral-ready buildings, electricity will be the preferable choice.
In the future, the electricity grid will be powered mainly (and, hopefully, totally) by renewable sources, such as sun, wind or, why not, waves and tides, making electricity a so-called 'green' energy. Hence, a forthcoming and environmentally conscious builder could prepare for this scenario by building the infrastructure necessary to support the transition to a renewable-powered grid."
Our energy guides can help you compare and understand what plan is best for you.
Best energy plans: 5 plans selected by our experts, assessed and updated regularly
Cheap energy plans: Find the cheapest energy plans available this month
Solar power plans: Got rooftop solar? Compare your options and save even more
Average energy bill: Find out how your energy bill compares to the rest of Australia
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