Powering Australian homes is changing fundamentally. The natural gas network that generations of households have relied on for cooking, heating, and hot water is in the early stages of a managed decline, and the policies, economics, and technology driving that change are accelerating faster than most people realise.
This isn’t a distant forecast. It’s already reshaping what we build, what we incentivise, and what costs more for those who stay behind.
Whether you’re building a new home, replacing an ageing appliance, or simply trying to understand where your energy costs are heading, here is what the shift away from gas in Australia actually means for your household.
The short answer is a combination of policy, economics, and physics, and all three are pointing in the same direction.
Australia’s east coast gas reserves are finite and shrinking. East coast gas reserves-to-production ratios have fallen significantly, with some forecasts suggesting supply constraints could tighten further into the late 2020s. As legacy gas fields decline and new extraction faces increasing restrictions, the domestic price of gas has risen sharply over the past decade, pushed higher by the linking of local prices to international LNG export markets.
In 2026, gas prices continue to climb, driven by pipeline maintenance costs, tightening supply, and the structural costs of a network in managed decline. The federal government’s announcement in December 2025 of a Domestic Gas Reservation Scheme, requiring LNG exporters to set aside a portion of production for domestic use, reflects how acute the supply concern has become.
Here is the economic dynamic that many households don’t yet fully appreciate.
More homes are electrifying. Fewer customers now share the fixed cost of gas pipes, valves, and regulators. That means the network component of each remaining customer’s gas bill rises.
As bills rise, more households choose to leave. Which pushes costs up further for those who stay. Repeat.
Energy Consumers Australia modelling shows that the network component of household gas bills could more than quadruple by 2050 as the network recovers costs from fewer and fewer customers. With network charges making up about 50% of the average gas bill, this will send total household energy costs through the roof. For a typical South Australian household, that same modelling projects a 64% increase in their total gas bill by 2036, long before 2050’s projections become relevant.
The trend is already measurable. More than 11,000 homes disconnected from gas over two quarters in 2025, while electricity connections increased by 62,000.
Australia has legislated net-zero emissions targets, and gas, as a fossil fuel, sits squarely in the crosshairs of that transition. State governments have moved at different speeds, but the direction is consistent across the country.
The policy landscape has shifted considerably over the past two years, and it continues to evolve. Here’s where things stand across the key states.
Victoria is Australia’s most gas-reliant state and has moved furthest along the electrification path. The key milestones already in place include:
Critically, existing Victorian homes are not required to remove gas connections immediately. There are no penalties for households currently on gas. But the requirement to replace gas hot water systems with electric alternatives at end of life is a significant shift in what happens when your current system eventually fails.
The ACT has been the national leader on electrification.Canberra already sources its electricity from 100 percent renewables and has committed to phasing out all fossil fuel gas connections by 2045. New gas connections in the territory have effectively ceased. For an ACT household still on gas, staying connected is already getting measurably more expensive. There is no structural reason for that trend to reverse.
The City of Sydney moved to ban gas from new residential developments from 1 January 2026, with the policy requiring all new construction projects within the City of Sydney Local Government Area to go all-electric. Outdoor gas fittings follow from January 2027. Across the wider state, the NSW Government is working on a Gas Decarbonisation Roadmap, with delivery expected by late 2026. The Australian Energy Market Commission has ruled that new gas connection charges must reflect real costs, starting October 2026. The rule applies to new retail customers in NSW, SA, the ACT, and South East Queensland.
Policies vary by state, with South Australia and WA facing their own network cost pressures. WA’s regulator acknowledged in 2024 that households must accept rising costs to pay for the gas network’s managed decline. Queensland has no statewide ban on new connections yet, but the same economic forces reshaping the national gas market are still closing in.
If you’re an existing homeowner with gas appliances, here’s the practical reality.
It’s worth being clear about this. Existing gas connections are not being forcibly removed in any Australian state. If you have gas appliances today, you can continue using them. The policies being introduced are primarily aimed at new builds and, in Victoria’s case, at end-of-life replacement decisions.
What is changing is the cost trajectory for remaining on gas, and the incentive structure for switching to electric alternatives.
For most households, the critical moment arrives when a gas hot water system, ducted heater, or cooktop reaches the end of its life. At that point, they’ll need to replace it. In Victoria, that decision is already being shaped by regulation, requiring electric replacement for hot water systems. In other states, it’s being shaped by economics.
The question won’t be “should I replace this gas appliance with another gas appliance?”. Instead, it will be “is staying on gas still the right financial decision for my household, given where costs are heading?”
For most households, the honest answer is increasingly: no.
A concern that comes up frequently is whether electric alternatives can actually match the performance of gas. A decade ago, that was a legitimate question. Today, the technology has caught up considerably.
Heat pump hot water systems are the headline replacement for gas hot water. Heat pumps don’t use an electric element to heat water directly. Instead, they extract warmth from the surrounding air, using the same principle as a reverse-cycle air conditioner. As a result, this makes them dramatically more efficient than gas storage systems.
The Victorian Government estimates switching from gas to an efficient electric hot water system can save households around $400 a year on energy bills. A NSW household making the same switch can save even more. In fact, switching from gas storage to a heat pump saves $900 to $1,400 a year, including eliminated gas supply charges. Over 10 years, that’s $9,000 to $14,000.
Reverse cycle air conditioning is the standard replacement for gas ducted heating. Homes currently running separate gas heating and cooling systems can replace both with one reverse cycle unit. This simplifies the setup and slashes operating costs.
Induction cooktops have improved substantially in responsiveness and control. As a matter of fact, professional chefs now widely regard these as superior to gas for precision cooking They’re also safer, producing no combustion gases indoors, and easier to clean.
There’s immediate financial reason to consider switching sooner beyond the long-term cost trajectory. The current landscape is generous. However, it will not stay this way indefinitely.
The combination of federal and state incentives currently available for electrification is substantial.
Victoria: Homeowners can stack multiple programmes. The Solar Homes hot water rebate offers up to $1,000, or up to $1,400 for locally manufactured products. The Victorian Energy Upgrades (VEU) scheme provides additional discounts through accredited providers. These can be combined with federal STCs for meaningful upfront savings.
New South Wales: The NSW Energy Saving Scheme (ESS) provides point-of-sale discounts for replacing gas or electric hot water systems with heat pumps.You’ll save $600 to $1,200 off the installed price, and you can stack it on top of federal STCs.
ACT: The Home Energy Support Programme offers rebates of up to $5,000 for eligible homeowners covering reverse cycle heating and cooling upgrades, solar, and hot water systems.
Income thresholds are being introduced or tightened in some of these programmes from mid-2026. Acting sooner means accessing the full suite of rebates before eligibility narrows.
For households that already have solar panels, electrification of gas appliances is particularly compelling. Running a heat pump hot water system or reverse cycle air conditioner on self-generated solar electricity reduces running costs to near zero during daylight hours. The more appliances that run on electricity, the more value you extract from a solar system that’s already on your roof.
Rewiring Australia modelling has shown that replacing gas heating, hot water, cooking, and a petrol or diesel vehicle with efficient electric alternatives, then powering them with rooftop solar, can save households between $3,000 and $5,000 from annual energy bills.
If you’re trying to decide how to respond to the shift away from gas, here’s a sensible framework.
If your gas hot water system is ageing: Don’t wait for it to fail. Replacing it proactively with a heat pump system while the full rebate suite is available is a smarter financial decision than scrambling to replace it in an emergency when rebate conditions may have changed.
If you’re on gas ducted heating: Reverse-cycle heating is more efficient. Additionally, it does not require a separate cooling system, and has lower running costs in most Australian climates. When your gas heater reaches end of life, this is the upgrade worth planning for.
If you want to understand your specific situation: A professional assessment of your home’s energy setup, appliance ages, and current tariffs will give you a clear picture of where the savings are and in what order upgrades make the most financial sense.
The shift away from gas in Australia is not a hypothetical future event. It is happening now, in policy, in pricing, and in the decisions Australian households are making every day. The gas network is entering a managed decline, costs for remaining customers are already rising, and the electric alternatives, heat pumps, reverse cycle systems, and induction cooking, have reached a point where they genuinely outperform gas on efficiency, cost, and increasingly, on convenience.
The households that navigate this transition most successfully will be the ones that understand it clearly, plan ahead, and take advantage of today’s rebates and support. More importantly, they don’t let a rushed decision force their hand later.
At Tailored Power, we help Australian homeowners make the shift to all-electric living with confidence. Our experienced team will assess your home, from heat pump hot water installations to reverse cycle heating and cooling upgrades. As a result, your transition will be managed on your terms and not by a system failure.
Book a consultation with Tailored Power today and take the first step toward a home that’s ready for where energy is heading.
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