How Sydneysiders could save $730 a year by ditching gas

Sydneysiders could save $730 a year by switching from gas to electricity in the home, even without installing solar panels.

The total annual savings for NSW residents is $1.1 billion if the 1.5 million households with gas connections switch fully to electric, according to anti-fossil fuels group Lock the Gate Alliance who commissioned the research. This could save greenhouse gas emissions equivalent to nearly 1 million tonnes of carbon dioxide a year.

The research lets users search by electorate and is based on publicly available data. Grattan Institute energy program director Tony Wood said the approach was sound, and broadly reflected his own research.

Springmount Advisory chief executive Tom Quinn said the average saving is based on the comparative price of gas and electricity, and the energy consumption of appliances, and does not assume the household has solar panels or a battery.

“Wholesale gas prices over the past 10 years have been going up at about 6 per cent per annum, while wholesale electricity prices have been going up at about 3 per cent a year,” Quinn said.

“Gas prices are never going back down to what they were before the export market opened up, but over time we should see electricity prices fall, so the best way to future-proof is to switch to electricity.

The state government says it is decarbonising the electricity grid so that as households electrify, they are relying on renewable energy, such as that produced by this wind farm near Canberra.Credit: James Brickwood

“The biggest bang for your buck in electrifying appliances in NSW is hot water systems but if you live in a cold area, then go for your heater first.”

Electric heat pump hot water systems have about half the running cost of gas hot water and making this switch would slash nearly $600,000 from household energy bills across the state.

Swapping from gas to electric heaters would save nearly $130,000 across NSW households, while cooking with electric ovens and cooktops rather than gas would save $19,500. When all appliances are upgraded, cutting off the gas connection would save another $341,500.

Grattan Institute last year found Sydneysiders with gas hot water, cooking and heating would save $635 in annual running costs by moving to electric versions. If they just had two appliances the savings fell to $479 a year.

Wood said many NSW residents did not have gas heating, or did not use it much, and gas and electricity prices may have changed since last year.

The Springmount analysis does not assume how many appliances households have, but takes government data on the total number of gas appliances in NSW and distributes them evenly across households with gas connections.

Professor Bruce Mountain, the director of the Victoria Energy Policy Centre at Victoria University, said the $730 figure was plausible as a broad average, but would vary greatly from one household to the next. He said electric appliances were often significantly more expensive than gas, so the up-front cost of the switchover should be considered.

“This is an uncomfortable reality that cannot be ignored and is the main reason why electrification of households requires policy support if it is to proceed more quickly than gradual organic change,” Mountain said.

The Lock the Gate model does not include the up-front cost of appliances because it assumes they will be replaced only as needed, and it is lobbying for governments to assist households.

Lock the Gate Alliance commissioned Springmount to calculate the total savings for each NSW electorate and presented it at an event at NSW parliament attended by government, opposition and independent MPs.

Sydney electorates with dense populations stand to gain the most from electrification, especially Heffron in the inner south, where households would save a combined $21.9 million. The regional electorate that would gain the most is South Coast, which would save $16.2 million.

Lock the Gate Alliance spokesperson Jess Miller said governments also needed to ensure new homes are not locked into gas.

“The more new gas connections that are made, the more we have to undo down the track,” she said.

NSW parliamentary secretary for climate change Trish Doyle said the Minns government’s priority was “decarbonising the electricity grid so that, as households electrify, they are relying on renewable energy”.

In 2023, the NSW government approved three wind farms, six solar farms and nine large-scale batteries across the state, enough to power 1.5 million homes. One project is still with the Independent Planning Commission.

Electrification of the home is key for climate action because burning gas releases methane, a potent greenhouse gas.

Quinn said the state’s household gas usage accounted for 1.5 million tonnes of greenhouse gas emissions a year. Using Climateworks figures, he calculated that if households switched off gas and used more electricity to compensate, the net savings still would be 939,330 tonnes a year based on the current electricity network. The emissions savings would grow as the share of renewables in the grid rises.

Sydneysiders could save a lot of money if they switch from gas, according to a new study.Credit: Louie Douvis

Mountain said the greenhouse gases from electricity consumption were likely to be lower than gas, but the extent was uncertain.

Gas Energy Australia, the peak body for gas providers, has also calculated that NSW households that switched to electric appliances would save, but would only come out ahead of the purchase price if they bought cheaper low-efficiency appliances.

Gas Energy Australia chief executive Brett Heffernan said the industry did not have a problem with the government investing in wind and solar, but “what consumers want more than anything is choice.”

Heffernan said another option for consumers was to convert natural gas appliances to run on LPG gas, which he said would decarbonise at the same rate as the electricity network because of biofuels.

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