No more fossil “gasplaining” – going electric is past the tipping point and guaranteed to slash cost of living

The electrification of Australian homes and vehicles is no longer trade-off between climate action and cost, but a guaranteed way to drive down the cost of living – and a economic policy imperative.

A new report from Rewiring Australia says Australia has passed the “electrification tipping point,” where replacing gas appliances and petrol cars with electric alternatives works out cheaper over a 15-year period, even accounting for any higher up-front costs.

This means, for example, that while an electric heat pump hot water system might cost around $4,000 compared to $1,900 for a gas hot water system, a gas system would spend up to $8,000 on fuel over 15 years, compared to $3,900 on grid electricity for the heat pump, or just $1,000 with rooftop solar.

Electric heat pump air conditioners can save an average of $530 in bills per year in 2025 compared to heating with gas, and over a 15 year lifetime with upfront costs included, save an average of $8,500, the report says.

Electric driving, too, is now the lowest cost way to drive including upfront costs, according to Rewiring Australia, offering savings of $1,500 per year in driving costs in 2025, or $2,500 with solar.

Over a 15-year period, electric vehicle drivers could expect a saving of $17,000 with upfront costs included, compared to a similar petrol car, or $35,000 when charging with solar.

Put another way, solar EV charging, the report says, is the equivalent of paying $0.13/Litre in a petrol car, while grid electricity charging is equivalent to $0.80/Litre (petrol prices are currently around $1.90/Litre).

Overall, a typical Australian household using gas heating, gas water heating, gas cooking, and petrol vehicles is likely to spend an average of $9,200 a year on energy bills (including petrol), versus $1,300 per year for that same household electrified.

Looking forward over a 15-year period – and factoring the upfront costs of replacing fossil fuel appliances and vehicles – a fully electrified household with rooftop solar and a battery will spend $4,100 less per year on average, the report says.

“The economic tipping point has been reached for each appliance or vehicle purchase decision and for the whole home,” the report says, in all states and territories

“Reaching this point emphasises that rapid household electrification should not be seen as a cost of solving climate change, but rather as a nation-building investment opportunity to deliver lower bills, lower emissions and improve national energy productivity.”

Francis Vierboom, Rewiring Australia CEO and one of the authors of the report alongside Saul Griffith and Josh Ellison, says that passing the electrification tipping point means it is now up to governments to focus policy on how to speed up the electrification of homes and vehicles.

At a federal level, this could mean policies to drive up electric vehicle uptake – or to disincentivise new fossil car purchases – and more help, both financial and logistical – for households to navigate the switch from gas to electric appliances. A federal discount on home batteries would also go a long way to encourage electrification.

The federal opposition Liberal and National Party has so far promised to do more or less the opposite – with the exception of home batteries – by pledging to focus on investing in more gas to power homes and business and to cut the fuel excise to relieve pressure at the petrol pump.

But Vierboom says these sort of “bandaid” policy solutions do nothing to drive down the cost of living in the long term, and set Australian households further behind the pace on electrification and decarbonisation.

“It’s good to see Labor and the Coalition acknowledge people are hurting when it comes to energy bills, but our research shows that investing in electrifying our cars and vehicles will bring greater cost-of-living relief,” he says.

“We want to see investment in long-term solutions, not a battle of the bandaids.

“I think [some politicians] are underestimating Australian people and their ability to see what it would mean to actually lower bills,” Vierboom tells Renew Economy.

“The real savings are actually made in upgrading to electric machines that need way less energy. That’s why they have much lower bills, and in supporting people to generate their own energy and use it as well.

“Look at what Rio Tinto is doing in Gladstone,” he adds. “You see where the big companies are investing and the idea that Australia is going to build a ton of new, 30-year investments on the premise that will be burning gas is a bit laughable.”

Rewiring Australia is calling for a shift in focus, particularly in the lead-up to the May 03 federal election, to making easier in both a financial and practical sense for Australians to make their next energy decision electric.

In particular, the report notes that Australia’s finance system works in a way that fixates on up-front cost and ignores fuel cost, to the longer term detriment of consumers and the environment.

For example, it says, investing $10,000 in rooftop solar at the start of a mortgage can save a household about $30,000 by the end of their mortgage. But getting $10,000 added to a mortgage limit can be difficult, despite the fact it would free up more income to make the mortgage easier and less risky to repay.

“The same is true of vehicles. If you are approved for $30,000 of vehicle finance, and an electric vehicle will save you $10,000 over the finance period, then it should be clear that you should be approved for a $40,000 electric vehicle or $30,000 petrol vehicle,” the report says.

“Yet this isn’t the case today, because banks and finance providers often more or less ignore energy economics. In this way our financing system fundamentally favours fossil fuels, where upfront costs are low and long term costs are high and more volatile.”

Equitable access to capital is also a problem, the report notes, with high-income homes able to get easier access to loans, at lower interest rates, than low-income homes. And those already in the housing market can redraw their mortgage to get lower interest vehicle finance than renters.

“The speed and fairness of the energy transition will be heavily determined by access to finance,” the report says.

“I think the big question is, what is the set of policies that make sure that this rolls out fairly,” Vierboom says. “Because this is already an economic reality. This is where Australia is going to go. It’s where it’s going to end up.

“And the real question is, how can we get there without it just being, you know, an energy divide happening between houses that can make these upgrades and houses that can’t.

“That definitely includes a role for [battery and other appliance] rebates and support that will help people make the decision to buy things faster. But probably the biggest policy that we’re advocating for, that we see lowering household bills at scale is a flexible finance scheme.”

As for getting the message across on “total product cost” – the cost of an appliance or vehicle over it’s lifetime, factoring in both the upfront investment and the operational costs – Vierboom says this is a a big project.

“That’s why we do things like the electrify 2515 community pilot, because it’s really important for Australians to see people that look like them upgrading their homes and benefiting from low bills and … understanding that that is the way that the future is going to look,” he tells Renew Economy.

“I think there’s [also] a real role for general government-driven education and consumer education, making people aware that this is going to be the plan.

“And in some ways the simplest way to communicate that is if, you know, if there are big financial incentives. It’s a really strong signal that everyone can understand.”