Victoria forges ahead on electrification, with proposal to kick gas out of existing homes

The Victorian Labor party is forging ahead with plans to get gas out of homes and small businesses in the state, with the launch of consultation on the next step in the government-led march to efficient electric appliances.

State energy minister Lily D’Ambrosio on Friday released a 2024 Gas Substitution Roadmap Update and a Building Electrification Regulatory Impact Statement (RIS), calling for feedback on a range of options for the continued phaseout of gas.

In a foreword to the update, D’Ambrosio says gas is “no longer a cheap and plentiful source of energy for Victorian homes and businesses” and so weaning the state’s more than 2 million homes off the fossil fuel will cut energy bills while also freeing up supply for industry.

So far, a government ban on gas connections to new dwellings, apartments and residential subdivisions requiring a planning permit has been in place since the start of the year.

And, as a further disincentive to connect, households will have to pay full up‑front costs of a new gas connection from the start of 2025, instead of the cost being shared by all gas‑users.

But the government is keen to extend the ban to all new-builds and to start chipping away at the more than 67 per cent of the state’s homes currently connected to the gas network and using inefficient and costly gas appliances.

The Roadmap puts the savings of a typical new, all‑electric detached home (without solar) at nearly $1000 less, per year, than the around $2,950 they would pay for gas and electric. Add solar to the equation and save nearly $2,000 a year.

Converting an existing solar home from gas to electricity, can save around $2,000 a year on energy bills, the documents say. If the existing dual‑fuel home does not have solar panels, converting to all‑electric will save around $1,700 per year.

The RIS presents three options on how the Gas Substitution Roadmap might proceed, the government’s preferred option being that existing gas appliances like heaters and hot water systems must be replaced with efficient electric appliances at end-of-life.

This would not include appliances that could can be retained during a renovation, gas cooktops in existing homes, or gas appliances in existing commercial buildings, such as existing commercial kitchens.

“Gas is part of our energy transition – but supply is dwindling and prices are going up,” D’Ambrosio said in a statement on Friday.

“We want to hear from Victorians on how to help households to switch to electric appliances, so they can save money on their energy bills. This process is a genuine conversation and way to hear the views of Victorians.”

The Victorian government’s latest move to progress the state’s Gas Substitution Roadmap is being described on the one hand by climate and clean energy groups as “eminently sensible” if a little “conservative,” and on the other by the gas industry as “rushed” and “ideologically driven.”

“The Allan government has outlined a measured and practical package of reforms that responds to the facts – Bass Strait is running dry and gas will never be cheap again,” Environment Victoria CEO Jono La Nauze said on Friday.

“Selling people outdated, inefficient products that keep Victorians shackled to the gas network will result in higher energy bills and more pollution,” he said.

“These up-to-date standards will break the cycle of reinstalling 1980s-era gas technology in homes. Once in place, the standards will ensure that tradespeople come ready to install high quality, energy efficient heaters and hot water systems.”

Electrification advocacy group Rewiring Australia praised D’Ambrosio’s “steady leadership” on phasing out gas, but says the government’s numbers on potential savings to consumers are undercooked.

“The government’s modelling is conservative and households who electrify their gas heaters and gas hot water systems may expect far greater savings as gas prices continue to rise,” Rewiring Australia CEO Dan Cass said on Friday.

“They may also be eligible for subsidies that are not included in the government’s economic modelling, from the Victorian Energy Upgrades scheme and Solar Victoria.”

Apart from that, however, Rewiring Australia is impressed.

“Minister Lily D’ambrosio has provided steady leadership for electrification which should inspire other states to embrace policies that help households to save money by getting off and independent of expensive fossil gas,” Cass said.

“Electrification is the swiftest, cheapest way to lower emissions and remove thousands of dollars a year from energy bills, and it can be done with existing, off-the-shelf technology. Decisions made around the kitchen table account for 42% of emissions in the domestic consumption economy.”

On the flip-side are complaints of mixed messages – with the government also working to unlock more gas supply in the state – and the potential impact on “gas-reliant” businesses.

“This is an own goal by the government that only this week promised to fast-track new gas projects to ensure reliable access to gas for Victorian homes and businesses,” said the Victorian director of Australian Energy Producers, Peter Kos.

“Today, Victoria hung a ‘Closed for Business’ sign on its door for energy-intensive industries considering relocating or expanding in the state,” said Australian Pipelines and Gas Association chief Steve Davies.

“Today’s developments further add to the confusion and frustration around the role of gas in Victoria’s transition to net zero,” said Paul Guerra, chief of the Victorian Chamber of Commerce and Industry.

For its part, the government is keen to be as clear as possible on where it is at on the road to electrification and on the desire to have “a genuine consultation” with Victorians about the options. It is also keen to head off any scare campaigns at the pass.

“The government will not make any changes to gas cooktops in homes, gas appliances in existing commercial buildings and industrial, agricultural and factory facilities, as well as the use of LPG,” it says.

“The government has not made any other decisions on changes to be investigated through the Regulatory Impact Statement consultation process.

“All new homes that need a planning permit are already required to be built all electric. The consultation will consider expanding this requirement to all new homes and many commercial buildings.

To have your say on the Building Electrification RIS visit, engage.vic.gov.au/building-electrification.