If you are weighing up a new heating system for winter, running cost is usually the question that matters most. Gas ducted heating has warmed Victorian homes for decades. However, ducted reverse cycle systems have closed the cost gap and, in most cases, overtaken gas entirely.
Here is what the numbers actually show, and what they mean for your household.
How Each System Actually Makes Heat
The running cost difference comes down to physics, not marketing.
Gas ducted heating burns fuel to create warmth. Even a high-efficiency 6-star unit converts somewhere between 80 and 92 percent of that gas into usable heat, with the rest lost up the flue.
Ducted reverse cycle systems do not create heat at all. They are heat pumps, extracting warmth from the outside air and moving it indoors. This lets a modern unit deliver 3.5 to 4.5 units of heating for every single unit of electricity it uses. It has an efficiency of 350 to 450 percent.
That gap in efficiency is the main reason reverse cycle systems have become the cheaper option to run across most of Victoria.
The Real Running Cost Comparison
Independent modelling from Sustainability Victoria gives a clear picture for a typical Melbourne home. A 6-star gas ducted system costs around $1,540 a year to run. On the other hand, a comparable ducted reverse cycle system costs closer to $721 a year. That is roughly half the annual spend, for the same square metreage of heated home.
Other Victorian-focused estimates for 2026 put ducted gas running costs anywhere between $1,200 and $2,000 a year. This is against $700 to $1,400 a year for a good reverse cycle system. The ranges shift depending on your tariff, insulation, home size, and how many rooms you actually heat. The pattern holds firm though: reverse cycle consistently comes out ahead.
Most Victorian households can expect to save somewhere between $400 and $1,200 a year by switching from ducted gas to ducted reverse cycle. Meanwhile, households that disconnect gas entirely also avoid the daily supply charge, which typically adds another $300 to $400 a year.
Why the Gap Keeps Widening
A decade ago, gas ducted heating was genuinely the cheaper way to heat a Victorian home. That is no longer the case, and the trend is not reversing anytime soon.
Wholesale gas prices in Victoria have climbed steadily over the past five years, while reverse cycle technology has become significantly more efficient. The two trends are pulling in opposite directions on your bill.
Government policy is reinforcing the shift too. Since January 2024, new residential builds requiring a planning permit in Victoria can no longer connect to mains gas, and must go all-electric from day one. Existing gas-connected homes are not forced to change, but the direction of travel is clear.
The Victorian Energy Upgrades (VEU) Program adds another incentive, offering substantial rebates on eligible reverse cycle installations and making the switch considerably more affordable upfront. For a full breakdown of what is currently on offer, see our guide to energy rebates in Victoria.
What Else to Weigh Beyond the Bill
Running cost is the headline, but it is not the whole story.
- Upfront cost. Gas ducted heating is typically cheaper to install, from around $3,000 to $7,000, while ducted reverse cycle systems generally run from $6,000 to $12,000 depending on home size and zoning. The higher upfront investment is usually repaid within a few years through lower bills, especially with VEU rebates applied.
- Cooling included. A gas system only heats. A reverse cycle system heats and cools from the same ductwork, which means no second system to buy, install, or maintain.
- Zoning control. Most modern ducted reverse cycle systems let you heat individual zones rather than the whole house, so you are not paying to warm rooms nobody is using.
- Electrical capacity. Older homes with limited switchboard capacity may need an upgrade to support a reverse cycle system, which is worth factoring into any quote.
When Gas Ducted Heating Might Still Make Sense
We are not going to pretend gas has no place left in Victorian homes. If your existing system is relatively young, performing well, and your household is not planning to renovate or add solar in the near future, replacing it purely for running cost savings may not pay for itself quickly enough to justify the disruption.
Gas can also still suit very large homes prioritising instant, whole-home heat over zoned efficiency. But for most Victorian households, especially those replacing an ageing system or building new, the running cost case for reverse cycle is now hard to argue against.
The Bottom Line
Gas ducted heating built its reputation in a different energy market. In 2026, ducted reverse cycle is the cheaper system to run for most Victorian homes, often by several hundred dollars a year, and it gives you cooling in the same breath.
The right answer still depends on your specific home, your current setup, and how you use it day to day. That is not something a generic online calculator can tell you with any real confidence.
Ready to Find Out What You’d Actually Save?
At Tailored Heating and Cooling, we assess your home, your current system, and your household’s habits before recommending anything. No guesswork, no one-size-fits-all pitch, just a clear picture of what gas versus reverse cycle actually means for your bills.
Book a service or consultation with Tailored Heating and Cooling today and get a straight answer on the cheapest way to heat your Victorian home.