The State Government has announced new changes to cut gas use, including phasing out gas hot water systems, mandating electric new builds, and updating Minimum Energy Efficiency Standards for rentals.
Premier Jacinta Allan and Minister for Energy and Resources Lily D’Ambrosio announced the gas reforms on Tuesday 24 June.
The State Government states that gas supplies from the Bass Strait are dwindling, and prices are going up, which is driving the reforms.
“We are not just making sure Victoria has the gas it needs. We are reserving it for industry,” Premier Jacinta Allan said.
“Families will pay less on their energy bills; industry will get the gas it needs; and Victorian jobs are protected.”
The State Government projects that by 2029, the reforms will unlock just under 12 petajoules (PJ) of gas every year, more than the annual production of Beach Energy’s Enterprise field.
By 2035, the reforms will deliver 44 PJ annually, enough to meet 85 per cent of Victoria’s forecast industrial demand.
Gas hot water system
Under new regulations from 1 March 2027, when a gas hot water system reaches the end of its life, it must be replaced with an efficient electric alternative like a heat pump.
The State Government claims that electric hot water systems will drive down energy bills, saving households around $330 a year, or $520 with solar.
“Electric hot water systems are also often cheaper up front than gas systems, with rebates available from the Labor Government’s Victorian Energy Upgrades and Solar Victoria programs of up to $1,400,” according to the media release.
Gas hot water systems can still be repaired if they break down. Gas systems can also be temporarily removed and reinstalled during renovations.
There are no changes to heating for owner-occupiers, and gas cooking in existing homes.
Electrification of new builds
From January 1, 2027, all new homes will be built all-electric. All new commercial buildings (other than industrial, manufacturing and agricultural buildings) will also be required to be built all-electric.
According to the State Government, the electrification will put around $880 per year back in the pockets of new homeowners, or $1,820 if they have solar.
There are no changes to the rules regarding end-of-life replacement for gas appliances in all existing commercial buildings.
The use of LPG for households or businesses is also unchanged.
New energy standards for rentals
From 1 March 2027, new Minimum Energy Efficiency Standards will apply to rental properties and public housing.
Hot water systems must be replaced with efficient heat pumps at the end of life, which will save up to $220 every year, according to the State Government.
Gas heaters at the end of their life must be replaced with reverse-cycle air conditioners, estimated to save up to $215 every year.
A minimum 4-star Water Efficiency Labelling and Standards (WELS) rated shower head must be installed at the start of a new lease, estimated to save renters up to $38 every year.
Minimum R5.0 rating ceiling insulation must be installed at the start of a new lease where there is no ceiling insulation already in place, estimated to save around $450 every year.
Draught sealing, including weather seals on all external doors, windows and wall vents, must be installed at the start of a new lease, estimated to save over $110 every year.
Main living areas are already required to have heating. Additionally, from 1 March 2027, at the start of a new lease, main living areas must also have an efficient electric cooling system. Installing a reverse-cycle air conditioner will acquit both the heating and cooling requirements.
Every single upgrade a property may need under the new minimum efficiency standards is eligible for a discount under our Victorian Energy Upgrades program. Exemptions also apply, including if installation costs are too high or if there is not enough space.
The State Government states that the rental standards have been set following extensive consultation to make sure they are achievable and keep costs affordable for rental providers.
Liberal Nationals released a media release, claiming that the gas reforms were not affordable, as power companies like AusNet had warned that the agenda would increase infrastructure costs, driving up bills for households already under pressure.
Shadow Minister for Energy and Resources David Davis said the Premier’s latest announcement was nothing more than a deception.
“If re-elected, Labor will kill household gas choice. Their so-called “transition” is more expensive, more unstable, and unreliable, undermining public and commercial confidence and threatening Victoria’s energy and commercial security,” he said.
