Under new legislation introduced yesterday, gas hot water systems will be phased out of Victorian homes from March 2027.

The regulations mean electrical systems will be required in new builds and gas systems will require replacing with electrical alternatives when they stop working.

From 2027, new Minimum Energy Efficiency Standards will apply to rental properties and public housing. These will make ceiling insulation mandatory and require gas heaters and hot water systems to be replaced with electrical systems if they break down.

The government said there would be no changes to gas cooking or heating for owner-occupiers.

“Families will pay less on their energy bills, industry will get the gas it needs – and Victorian jobs are protected,” Victorian premier Jacinta Allan said in a statement.

After the set date the gas hot water system will be able to be repaired if they break down or reinstalled if the building is being renovated.

The reforms will apply to all commercial buildings apart from industrial, manufacturing and agricultural buildings.

A big transition

Environment Victoria CEO Jono La Nauze said it was “a very significant decision. There's a handful of jurisdictions around the world that have begun to phase out gas appliances in the way that Victoria started today”.

According to the government, Victoria has the highest rate of residential gas use in Australia, with around four in five homes connected to gas. The gas sector contributes 17 percent of the state's emissions.

La Nauze said plentiful supplies of gas in the Bass Strait made it a comparably cheap form of energy for Victorians.

“But the facts have changed,” he said. “Whether you live in a weatherboard in Warragul or a double brick in Bendigo or an apartment in Melbourne, it will be cheaper and cleaner for you to run your house on electricity.

“In Victoria, if you build an electric home from scratch, it'll be at least $1,500 a year cheaper to run compared to the same house with the same thermal efficiency, but with gas appliances. If you add solar on the roof, the savings double to $3,000.”

What does this mean for homeowners?

Trent Jones from All Electric Homes, a business that transitions homes across western Victoria from gas to electric, says demand for his company’s services has risen sharply since the state government first announced its plans to phase out gas in 2021.

“It requires multiple trades to actually service that work,” he said. “That’s where it becomes a little complex.

“To electrify a home properly, you need a minimum of three different tradespeople. Generally, if you’re trying to get quotes, you’re talking to up to six different companies. You’re getting a different opinion from each of them, and that leads to confusion.”

Jones said fully electrifying an average brick three-bedroom home with solar — replacing a ducted gas heater, gas cooktop and gas hot water system — typically costs around $20,000 after rebates.

“That’s literally half price, without rebates it would be $40,000,” he said.

“The average running cost of running that home for gas and electricity is around $3500. [But] once we spend that $20,000 on the property, we can get the bills down to around $500 or $600 a year.”

For those unable to afford the full conversion, Jones suggests starting small.

“Just address the low-hanging fruit first. A lot of people don't realise that that’s your heating system; if you get rid of that and put a split system in, that's the biggest gas consumer in your home, and that has the quickest impact on your cost of living.”

Benefits for renters

From 2027, once gas heaters and hot water systems in rentals are unable to be repaired they will need to be replaced with electrically powered alternatives.

Ceiling insulation will become mandatory and rentals will undergo draught sealing at the start of each tenancy.

Electric cooling systems will also be required for rental living rooms under the new laws.

“This is ensuring that everyone benefits and no one's left behind,” La Nauze said.

Emissions reduction

The move to electricity is a key element in meeting Victoria's emissions reduction targets of 75 to 80 percent by 2035 and net zero by 2045.

“When you burn gas you are producing carbon dioxide,” says La Nauze. “As our existing gas supplies run out, if we don't switch our homes from gas to electric, we're going to end up drilling new holes in the earth.

“Whether that's under the Twelve Apostles, or in somebody else's country, or in somebody else's state, that gas is going to come out of the ground; it's going to do damage as it's pulled out and it's going to do damage when we burn it.”