Gas vs electricity – which is cheaper in Australia?

is gas cheaper than electricity?

There are two main options when it comes to powering your home or appliances: gas or electricity. Whilst there are pros and cons to both, it generally comes down to one question:

Is gas cheaper than electricity? Yes, gas is the cheaper option in the long term; however, it may take longer to start seeing savings due to the upfront costs of purchase and installation.

However, the full answer is that it isn’t quite that simple and straightforward. When deciding between these two options, and considering which is cheaper, there are several factors that should be taken into account.

There are pros and cons of both gas and electricity that should all be taken into account when deciding how to power your home.  Both options come with safety risks, however, with electricity, these can be more easily managed simply by always contacting an electrician if you suspect that there are any kinds of issues. Neither option is particularly environmentally friendly, unless if you purchase electricity that has come from renewable sources.

In this complete guide we will take an in-depth look into the running costs, and pros and cons of both gas and electricity, in order to provide a more accurate answer to the question – is gas cheaper than electricity?

Electricity running costs

Electricity is charged at a rate per kWh (kilowatt-hour) of energy used, as well as a daily supply charge. Below are the typical electricity usage rates across QLD, NSW, SA, and VIC in 2020 per kWh.

New South Wales25.78c
Victoria23.47c
Queensland21.3c
South Australia34.59c

Whilst this gives us an idea of the cost, it does not take into account daily supply charges, and customers on block tariffs or time-of-use tariffs.

Gas running costs

Gas is charged per MJ (megajoule) of gas used, and as with electricity there is a daily supply charge as well, however, these are generally lower for gas customers. See below for average usage rates in NSW, VIC, QLD, and SA per MJ in 2020.

New South Wales2.72c
Victoria3.29c
Queensland5.01c
South Australia4.05c

 

These rates are a guide only and are based on a single rate tariff, whereas many gas customers use a block tariff in which they pay more per MJ as they use more gas.

Cost comparison

From the above tables and figures, it is clear that gas is cheaper than electricity per unit. However, a kWh of electricity has a lot more power than one MJ of gas. This means that although one MJ of gas is cheaper, you will need more megajoules to power your appliances.

Therefore, in order to accurately answer the question – is gas cheaper than electricity – we need to look at some actual running costs of appliances. The table below looks at average hourly running costs for various appliances based on typical appliance usages. This table uses an average electricity rate of 26c/kWh and an average gas rate of 3.8c/MJ.

ApplianceElectricity running cost per hourGas running cost per hour
Oven$0.60$0.45
Stovetop$0.29$0.23
Heater

Tumble dryer

Hot water system

$0.62

$0.89

$3.12

$0.49

$0.57

$2.28

The above figures show that in general, gas running costs are cheaper than electricity running costs. However, these are based on assumptions and averages and are a guide only. The actual figures will vary between different households.

Cost of purchasing appliances

In order to provide a thorough and considered answer to the question ‘is gas cheaper than electricity?’ we must also consider the cost of purchasing both gas and electric appliances.

In general, gas appliances tend to be more expensive to purchase than electrical appliances. For example, electric ovens in Australia generally cost between $700-$1,500 brand new, and gas ovens cost around $900-$2,000. Therefore, in most cases, you will need to spend more money upfront in order to save money in the long run.

Cost of a natural gas connection

If you decide that gas is the way forward for you, you will also need to determine whether or not your home has an existing gas connection. If not, then this is another expense to take into account.

The cost will depend on the network, and how complex the job is based on your particular home. It could be anywhere between a few hundred to several thousand dollars. Furthermore, if you do not live close to a mains network then this may not even be possible.

Of course, there is always LPG for those who cannot get a natural gas connection.

Pros and cons of gas and electricity

Taking into account all of the above information, we will now consider the pros and cons of gas and electricity to power your home.

Electricity – pros

  • Electric appliances are cheaper to purchase
  • Most homes already have an electric connection
  • Plenty of choice of appliances
  • In general, electricity is safer, with regards to issues such as inhalation and explosions.
  • When purchased from a company that generates electricity using renewable methods, electricity has a much lower environmental impact than gas.
  • Eco-friendly electric appliances are often available.

Electricity – cons

  • Higher running costs
  • When produced in a coal plant, electricity can have an even worse environmental impact than gas.
  • Electric space heaters tend to be less efficient than gas options.
  • Electric stovetops tend to take longer to heat up.
  • Risk of fire and electrocution.

Gas – pros

  • Cheaper running costs
  • Appliances such as space heaters are generally more efficient
  • Gas stovetops tend to heat up much more quickly than electrical ones

Gas – cons

  • Appliances are generally much more expensive to purchase
  • You may need to arrange and pay for a natural gas connection
  • Gas can be hazardous in terms of explosions and inhalation
  • Gas is not a sustainable source of energy
  • Gas negatively impacts the environment

 

Summary

As you can see from the above, there are pros and cons of both gas and electricity that should all be taken into account when deciding how to power your home. We have shown that in general gas is the cheaper option in the long term; however, it may take longer to start seeing savings due to the upfront costs of purchase and installation.

Both options come with safety risks, however, with electricity these can be more easily managed simply by always contacting an electrician if you suspect that there are any kinds of issues. Neither option is particularly environmentally friendly, unless if you purchase electricity that has come from renewable sources.