Is Gas Cheaper than Electricity?

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What’s better, gas or electricity?

Gas versus electricity: how are prices measured?

The cost of gas versus electricity

Should I choose gas or electric appliances?

What are the pros and cons of gas and electricity?

Which is more environmentally friendly, gas or electricity?

How do I choose which energy source is cheapest for my home?

Watt’s your next energy move? Find out with iSelect

Long story short

Gas and electricity are measured differently

Gas is measured in megajoules (MJ) and electricity in kilowatt hours (kWh), but both come with usage and supply charges.

Prices are determined by more than just their unit rates

Gas often looks cheaper per unit (MJ), but it also usually comes with higher usage and connection fees, which can add up quickly.

Electricity is leading the way for Australia’s future

With a renewable-led future, electricity is becoming the main power source for Australian homes, since it can easily be used alongside solar and other cost-effective choices.

What’s better, gas or electricity?

It’s an age-old question put to the test if you’re building a new home, renovating an old one, or just cursing at another big bill. Electricity is fast becoming the new star on the field, thanks to a bigger push for renewables and tech upgrades, but gas can have its perks. At the end of the day, the real winner isn’t about which player you choose. It’s about how you actually use your energy and what option could work best to keep your bills in check.

Gas versus electricity: how are prices measured?

Gas is commonly used for your home’s heating, cooking, and hot water. Depending on your setup, you’ll either have natural gas piped in through the mains or LPG (Liquefied Petroleum Gas) delivered in smaller tanks. Either way, you’ll usually see it on your energy bill in units of megajoules (MJ).

Electricity, on the other hand, is a bit more of an all-rounder, powering everything from your lights to your laptop. You’ll see it measured on your bill in kilowatt hours (kWh). And in case you’re wondering, one kWh (kilowatt hour) equals 3.6 MJ (megajoules), which will come in handy when you want to compare rates.

Now, just because they both show up on your energy bill doesn’t mean they’re measured the same way. Yes, both gas and electricity have usage and daily supply charges, but this doesn’t mean you’ll be charged the same way. Gas rates are usually cheaper per unit than electricity, but you’ll often use more gas to match the same energy output of an electric appliance. That’s why a gas heater running at the same temperature and amount of time as an electric one can still end up costing more.

The cost of gas versus electricity

Gas might feel a bit old school – especially with Victoria’s recent ban on new gas connections for homes. But there’s still a large number of homes that run on gas energy in some way. Surprisingly, Victoria takes the top spot across the country, with 88% of Victorian homes using gas in 2024.¹Sustainability Victoria – Gas versus electric in Victorian homes

While gas has historically been cheaper than electricity, those days are mostly gone. Since then, prices for both have surged, with gas prices more than doubling over the last decade. Why? Well, it can be tied to the fact that around 80% of our mined gas is sent overseas, linking our local market to international prices. And since 17% of Australia’s energy still comes from gas, those price hikes can flow through to your electricity bills – sometimes sending wholesale electricity prices up by 50–90%.²Climate Council – Five reasons why your power bills are sky high- and how you can help bring them down

Here’s what electricity and gas usage charges have looked like in Victoria since 2022, plus how supply charges have tracked over the past few years.  

But it’s not just about the final cost on your next bill. If you’re planning to ditch gas for electricity or vice versa, there are connection costs to think about too. Just like with most things relating to your bill, the price can change depending on your state and distributor. But to give you an idea, in Victoria, a standard gas connection fee is around $2,000, while an electricity connection for Jemena ranges from $640 to $785.

When you put those side by side, gas connection fees could feel like a real sting. And there’s been a draft ruling that could see all Australians paying those pricey gas connection fees up-front (not just Victorians) – another reason more people are starting to see electricity as the way forward.

Helpful tip

There’s a handful of rebates and initiatives floating around to help make the jump from gas to electricity a little easier on the wallet. They include Switch Your Thinking in WA, the Access to Electric Program in ACT, and ActewAGL’s ducted gas heater upgrade initiative. Not to mention, there are solar rebates for those who want to change the way their homes generate electricity altogether. Long story short, don’t forget to check what’s available in your state, because as we all know, a little financial help can go a long way.

Julia Paszka

General Manager – Utilities

Should I choose gas or electric appliances?

With so many gas and electric appliances out there, let’s focus on the big three that cover our main energy usage needs.

What are the pros and cons of gas and electricity?

Gas

Pros

• Appliances are sometimes cheaper to run
• Can be more reliable (especially if the power goes out)
• Quick heating for cooking and warming

Cons

• Certain states won’t let you build a new home with gas
• Appliances can cost more to install – especially if your home doesn’t have a gas connection
• Can be potentially unsafe if not maintained properly (carbon monoxide)

Electricity

Pros

• Appliances are often less expensive and don’t require a special connection
• Appliances can have higher energy efficiency
• Can be used alongside solar for better long-term savings and environmental benefits

Cons

• Higher ongoing operation costs without solar
• Without solar, electricity is still tied to coal power, making it less environmentally friendly (though it’s still more energy efficient than gas)

Which is more environmentally friendly, gas or electricity?

When you stack up the numbers, electricity (especially when paired with renewables) starts to look like the cleaner choice. Even the most efficient heaters lose between 10 and 40% of their heat. Compare that to modern heat pumps, which deliver about four units of heat for every unit of electricity they use. That’s an efficiency of 400%.⁴Australian Energy Council – Coal or no coal, all-electric homes are better for the environment

Let’s look at this in a fictional example.

A family of four uses an instantaneous gas hot water system. This chews through around 30,000 MJ a year.  

An electric hot water storage system would drop that to the equivalent of 23,400 MJ for the same amount of water used.  

A heat-pump water heater would push this down to 11,900 MJ. 

So, you can see the big difference here.  

Of course, electricity isn’t spotless; both still burn fossil fuels. The difference is that electricity isn’t locked to this one source alone like gas is. You can pair it with renewables like solar panels, which make it a whole lot cleaner.

While some people might groan about the up-front costs of solar, panels can pay themselves off in a matter of years. After that, it’s all sunny savings going straight into your pocket. Households switching from gas to electricity can expect to save about an average of $200 a year (or $400 over a decade). Going one step further with solar could see this increase to more than $1,500 a year. Meanwhile, the price of gas isn’t looking pretty. The Clean Energy Council warns that if we don’t speed up the move to renewables and keep leaning on coal and gas, Aussie homes could see their bills jump up by an extra $499 a year by 2030.

If you’re weighing it up, you can most likely guess that electricity (with renewables) takes the crown when it comes to environmental impact.

How do I choose which energy source is cheapest for my home?

At the end of the day, the cheapest option for your home comes down to how you use your energy, what appliances you’ve got, and which energy plan could work for you. Energy prices and usage can vary a lot between households and states, so even if your neighbour swears by gas or electricity, your bills could tell a different story. That’s why it pays to look further than just your current provider and see what else is out there, even if you’re sticking to the same energy source.

With the country-wide move to renewable energy, it’s worth thinking about what that might look like for your household and the impact on your energy costs. Do you want to transfer over to solar eventually to start potentially reducing your energy bills, or just to become a more energy-efficient home? Then, starting the switch over to electricity could be better for your budget in the long run.

Watt’s your next energy move? Find out with iSelect

If you’re serious about trimming costs down and keeping your home running smoothly, it pays to keep an eye on what other energy providers have to offer. Even if you’re happy where you are, you won’t know what you could be missing out on unless you take a look. Think of it as a half-time check on your current energy plan. If you want to make sure your players are still in their prime, iSelect can help you compare from a range of energy plans and providers to make sure your team’s still scoring. Jump online to start comparing, or call our comparison experts on 1800 664 532 today.