Connections to gas will be banned in all new homes and subdivisions across Victoria from next year as the state moves to transition to an all-electric economy.

But there are concerns that existing gas users may be left to shoulder higher costs to support the gas network and that the move to all-electric homes could place further strain on the electricity system during times of peak demand.

In an announcement on Friday, the Victorian Government said that:

• From 1 January 2024, all new homes and residential subdivisions will only be able to connect to all-electric networks as a condition of being granted a planning permit. The changes will apply to all homes that require a permit and will include new social and public housing being delivered by Homes Victoria.
• Commencing immediately, all new public buildings that are yet to reach the design stage will need to be all electric. This will include new schools, hospitals, police stations and other government buildings.

The Government will also provide a range of incentive and support measures to enable homeowners to pursue electrification and to assist the building industry to prepare for an all-electric future.

These include:

• Grants for bulk rebates which are available to developers, home builders and others for the up-front inclusion of solar panels, solar hot water and heat pumps under a new Residential Electrification Grants program. According to the Government, this could save owners of new homes up to $4,600.
• Investment of $1 million in targeted training to support the building sector in the transition to all-electric and 7-star homes. This builds on Solar Victoria’s $11 million training and workforce development package that will help to upskill plumbers and electricians to capitalise on the renewable energy revolution.
• Access to the Solar Homes program for eligible new home buyers as well as existing homeowners and renters. This program offers rebates of $1,400 for solar panels and interest free loans of $8,800 for household batteries.
• Access to the VEU gas to electric rebates for all households and businesses. This offers rebates to upgrade heating, cooling and hot-water heaters.

(An electric heater/air conditioner)

The latest announcement follows an earlier reform in 2022 that removed a previous requirement for gas connections in new homes.

It comes as Victoria aims to achieve carbon dioxide emission reductions of 75 to 80 percent compared with 2005 levels by 2035 and to achieve net zero by 2045.

In the case of Victoria, this poses a challenge as the state has the highest use of residential gas (80 percent) in Australia.

As a result, gas accounts for around 17 percent of the state’s carbon dioxide emissions.

The move also comes amid a broader push toward all electric buildings across Australia.

Whilst gas has been preferred to the previously coal-dominated electricity network from an environmental viewpoint over past decades, electrification has emerged as the preferred pathway to decarbonisation of the energy system on account of the rapidly growing penetration of renewable electricity.

(In 2021/22 – renewable sources accounted for 32 percent of electricity generation Australia-wide, although coal was still the leading electricity generation source at 47 percent.)

In addition, there are concerns particularly with gas cooktops that these are potentially hazardous as a result of burns or kitchen fires and are potentially harmful from a viewpoint of public health on account of the gasses which are released during cooking.

A 2018 study published in the Medical Journal of Australia found that exposure to gas stoves for cooking accounts for 12 percent of childhood asthma. (However, this could be reduced to three percent if high-efficiency range-hoods are used – with the preferred option involving rangehoods that vent outside rather than recirculating the air.)

Nevertheless, the move toward all electric homes does involve complications.

First there are concerns that existing gas users may be faced with spiralling energy bills as the capital cost associated with maintaining the gas network falls upon a dwindling customer base.

This is particularly concerning as many who are left on gas are likely to be lower income households.

In addition, whilst the move to all-electric homes will reduce emissions over the longer term, the latest Victorian policy is likely to increase short-term emissions on account of the state’s current reliance upon brown coal for energy generation.

Beyond this, a guide to electrification published last year by the Green Building Council of Australia indicated that the transition to all-electric households as well as commercial premises involved some important technical considerations.

Despite offering lower operating and running costs, for instance, electric options such as induction cooktops for cooking and heat pumps for heating typically involve a higher up-front capital cost compared with gas cooktops and boilers.

Finally, switching to all-electric will increase peak demand on the electricity system.

This is a significant issue amid growing concerns that the massive volumes of additional storage and transmission infrastructure which is needed to support renewable electricity may not be ready before fossil fuel plants close down.

In its announcement, the Victorian Government said that the move toward all electric homes and public buildings would help to deliver upon the state’s climate change targets.

The government also claimed that going all-electric can be delivered at no extra cost to buyers – a claim disputed by the gas industry – and would slash around $1,000 per year off household energy bills. This annual energy saving could increase to up to $2,200 for those with solar panels.

This, the government says, is particularly pertinent in light of the current rise in gas prices.

“We know that with every bill that arrives, gas is only going to get more expensive,” Victorian Minister for Energy and Resources Lily D’Ambrosio said.

“That’s why we’re stepping in to help even more Victorians get the best deal on their energy bills.

“Reducing our reliance on gas is critical to meeting our ambitious emission reduction target of net zero by 2045 and getting more Victorians on more efficient electric appliances which will save them money on their bills.”

(induction cooktops are becoming particularly popular)

The latest announcement has drawn mixed responses, with the new measures receiving support from environment, health and property/construction lobby groups but being slammed by gas industry groups.

In separate statements, groups such as the Property Council of Australia, the Master Builders Association of Victoria, Rewiring Australia, Friends of the Earth and the Energy Efficiency Council and healthcare workers organisation Healthy Futures all welcomed the announcement.

Pointing to an analysis by consumer group Renew, Luke Menzel, CEO of the Energy Efficiency Council, said that building all-electric homes could slash energy bills by up to 35 percent – savings which double when this is paired with rooftop solar and energy efficiency upgrades.

Whilst some have bad memories of old-style electric cooktops, Menzel said modern induction cooktops offered fast and high-quality cooking as well as being safer and helping to avoid respiratory conditions such as asthma which can be exacerbated through gas cooktops.

“All-electric homes are all-good for Victorian families,” Menzel said.

“They are cheaper to run, healthier to live in and help lower emissions.

“Going all-electric means healthier homes, lower bills and a big step towards a net zero community.”

Property Council of Australia National Policy Director Frankie Muskovic agrees, saying that the shift to all-electric homes will reduce energy costs for Victorian households at a time when cost of living pressures remain at historic highs.

“We know that all-electric homes with efficient appliances combined with solar on the roof are much cheaper to run than homes with gas,” Muskovic said.

“The incentives announced today support upskilling of key trades to deliver all-electric homes, as well as rebates for solar panels, batteries and heat pumps for hot water and heating, which will be game-changers for Victorian households.

“Electrification is the fastest, cheapest way to decarbonise the way we heat our buildings, and the ban on new gas connections provides industry with the certainty it needs to deliver zero-carbon-ready buildings that can contribute to Victoria’s ambitious emissions reduction targets.

“Every new building built with gas will need to be retrofitted in the future, so we welcome this move from the Victorian Government to avoid investment in new gas network infrastructure and focus on reducing energy bills, and providing cleaner, healthier homes for Victorians.”

But the gas industry has slammed the decision.

In a statement, the Australian Pipeline and Gas Association said the decision adds to a track record of ‘bad decisions’ which had been made by the Andrews Government over recent weeks.

It argues that a ban would not be needed if electric appliances were genuinely cheaper compared with their gas counterparts.

Instead of banning gas, the Association says that a more effective pathway to decarbonisation would involve more renewable gas such as biomethane and hydrogen.

“APGA agrees with the Victorian Government on the importance of achieving net zero as quickly as possible, APGA CEO Steve Davies says.

“Pretending it is a simple task doesn’t make it one.”

“If electric appliances were truly cheaper and better than gas appliances, a ban on gas connections wouldn’t be needed. Every Victorian looking to buy heating appliances right now knows that like-for-like gas appliances are cheaper than heat pumps.”

“At a time when the energy transition is slower than it needs to be, when transmission lines essential to delivering renewable energy are stalled and when all energy costs are increasing, Victoria is mandating electric technology in new homes.

“Victoria has the highest emission electricity in the country thanks to its ongoing reliance on brown coal. The best thing the Victorian Government can do to reduce emissions is accelerate the replacement of brown coal generators. That alone is a massive undertaking.”

“If the Victorian Government wants to accelerate the transition by reducing emissions from gas, it should be talking about getting more renewable gas into the system.

“Renewable gases like biomethane and hydrogen can help Victorians decarbonise today. Renewable gas is already being delivered to thousands of homes around the country through blending with natural gas and major projects are underway in Victoria.

“Preventing new homes from connecting to gas now will not lower emissions, will not lower costs and will cut people off from the opportunities of the future.”

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