Gas vs reverse-cycle: what it really costs to run.

Last checked: 29 August 2026

The short version. For most Victorian homes, reverse-cycle (a heat pump) is cheaper to run than gas heating. That's not our opinion: Sustainability Victoria lists efficient reverse-cycle split systems as the lowest-cost way to heat, and cheaper to run than gas ducted or gas room heaters. The reason is simple efficiency.

Why it's cheaper: it moves heat instead of making it

A gas heater burns fuel, so at best it turns a bit less than one unit of gas energy into one unit of heat. A reverse-cycle system doesn't burn anything. It uses a heat pump to move heat from the outside air into your home, which lets it deliver roughly three to five units of heat for every unit of electricity it draws. In other words, it's around three to four times more efficient than gas at putting warmth in the room.

Running cost

Because it uses so much less energy for the same warmth, reverse-cycle costs less to run than gas ducted or gas room heating for a typical Victorian home. Exactly how much you save depends on your electricity tariff, your gas rate, how much you heat, and whether you can heat just the rooms you're using. Your energy retailer or installer can estimate your own numbers, but the direction is well established.

Don't forget the gas standing charge

There's a cost people miss: staying connected to gas carries a supply charge of roughly $300 to $400 a year, which you pay just to have the connection, whether you use much gas or not. If reverse-cycle (and a heat-pump hot water system) get your home fully off gas, you can drop that standing charge altogether, on top of the running savings.

Upfront cost, and how the gap closes

Reverse-cycle can cost more upfront than a like-for-like gas replacement. Three things narrow that gap: the VEU rebate takes a solid chunk off the install, one reverse-cycle system both heats and cools so you're not buying a separate air conditioner, and the lower running cost keeps paying you back every winter. For the rebate detail, see the VEU rebate guide.

When does each make sense?

• Reverse-cycle suits almost every home getting off gas: it's efficient, it heats and cools, and it's what Victoria's transition is built around.
• Keeping gas a bit longer can make sense only while your existing gas heater is working and you're not ready to spend. Even then, it's worth knowing that when it dies, electric is what replaces it. See the getting-off-gas guide for the rules and timing.

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