By Mike Foley
State and federal governments are ramping up their push for households to switch their hot-water systems from gas to electric heat pumps, in a bid to meet ambitious climate targets and avert a gas supply shortage. But the cost of the new technology continues to put off consumers.
Energy ministers from around the country have agreed to urgent reforms to boost the uptake of heat pumps, which use technology similar to an air-conditioner to transfer heat from the atmosphere and concentrate it to create hot water. The technology can use up to 70 per cent less energy than a traditional electric hot-water system, saving households more than $100 a year, but makes up only a small fraction of water-heater sales.
Heat pumps can use up to 70 per cent less energy than a traditional electric hot-water unit.Credit: iStock
A small gas hot-water system can be as cheap as $1000, but heat pumps start at more than triple that and range up to more than $6000. State and federal governments offer a range of rebates, which can be combined to make heat pumps competitive with gas and electric options.
Replacing gas appliances with electric alternatives is touted as one of the key changes households can make to reduce their greenhouse-gas emissions. Operating like a reverse fridge, electric heat pumps draw heat from the air and compress it to increase temperatures, instead of using a fossil fuel.
The national council of energy ministers on Friday agreed to a national road map to co-ordinate the efforts of governments and industry to boost the take-up of heat pumps.
Energy Efficiency Council chief executive Luke Menzel said the “No.1 issue with a bullet” being developed by the plan was the creation of national energy efficiency standards for heat pumps.
“We have energy efficiency standards for inefficient electric ... water heaters and we have them for gas water heaters, but we don’t yet have them for heat pump hot-water systems,” said Menzel, who leads the peak industry body for companies in energy management.
The reforms are backed by all states, which are keen to promote the benefits of hot-water heat pumps.
“Heat pumps are a key technology that is growing rapidly in popularity, and the success of this emerging industry and technology relies on consumer confidence,” Victorian Energy Minister Lily D’Ambrosio said.
NSW Energy Minister Penny Sharpe said: “We want every Australian to have access to cleaner and cheaper energy, and this road map will help us to reach that goal.”
Victoria will ban new gas connections from January 1, 2025, in homes, subdivisions and knock-down rebuilds that require a planning permit. NSW Premier Chris Minns has ruled out following suit.
The competition watchdog and the energy market operator have warned that gas supply shortfalls are a risk from now on, in NSW and Victoria, on days of peak heating demand during winter cold snaps. The situation is expected to worsen over time, with annual supply deficits from 2027.
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