Need debt and deficit reduction? All-electric homes lead the way

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The Alternative Technology Association (ATA) recently released their report on switching from gas to efficient electric appliances – concluding the switch is good for producing less greenhouse gas emissions. They also concluded it made good economic rationale for the household to fuel-switch. Yet the recently completed NSW State and Regional Development Committee inquiry into the “Downstream Gas Supply and Availability in NSW” suggests we are mugs for halting gas distribution growth, claiming the benefits of connecting regional NSW to gas have:

“Economic benefits: gas is a cheaper alternative to coal based electricity for residential, commercial and industrial purposes, and with the potential to attract industry and businesses to regional areas; and

Environmental benefits: gas is a cleaner, more greenhouse efficient fuel.

Source: pg. 11, NSW State and Regional Committee (2014)

In the Victorian jurisdiction, you would be forgiven for reaching the same conclusion. A tax payer funded $85 million gas extension program named “Energy for the Regions” will extend the gas network, the cost of each gas connection is estimated as high as $45,333. Furthermore, if you want to install a solar hot water and would like to connect a highly efficient electric hot water heat pump – bad luck – if a reticulated gas supply is available:

“…then the SWH must be gas boosted, you cannot install an electric boosted unit.”

Source: Victorian Building Authority, p. 2, Technical Solution Sheet 6.13

Understandably after talking to many of our clients, they are confused by these mixed messages. And since we could not find research to substantiate the basis of these jurisdictional claims/outcomes, we decided to conduct our own investigation. We decided to examine the energy running costs of the household’s highest energy demand sources – heating and hot water – across every Australian jurisdiction.

We examined the three most common fuel sources available to homeowners – electricity (solar), electricity (grid) and gas (grid).

Prior to considering the efficiency of the appliances, i.e. the Coefficient of Performance (COP) = 1.0, consider a standard bar radiator heater (heating) and an electric resistance hot water system (hot water) and gas fuel is burned with 100% efficiency (which is not possible). We determine the running costs using these three different fuels before considering efficiency.

150209 No efficiency considerations

Source: Jurisdictional standing electricity and gas residential retail tariffs 2015; rooftop solar at $1/W fully installed; Clean Energy Council (2012) GC Design Guidelines; TrueDemand analysis

It’s clear that grid electricity is the most expensive, followed by gas and the cheapest being solar derived electricity.

Now, let’s recognise the significant advances in readily available off the shelf electrical appliance technology with COP 5+ (i.e. for every bar of heat, you get 4 additional bars free sourced through renewable ambient heat) heating air conditioners (reverse cycle splits) and heat pump hot water systems COP 4.5+. Firstly, let’s take a look at the energy costs to heat your home.

150209 Heating efficiency

Source: As above; COP 5.81 (Daikin Sarara Ururu 7); Gas ducted heating COP 0.6; TrueDemand analysis

And for the hot water heating cost:

150209 Hot water eff

Source: As above; COP 4.5 (Sanden CO2 heat pump); Gas hot water COP 0.7; TrueDemand analysis

In both cases, gas is by far the most expensive fuel source to heat your home or hot water. Even in the jurisdiction where gas is ‘dirt’ cheap, Victoria, still does not compete.

So the next time you’re contemplating a house retrofit, a replacement or just want to start reducing your energy costs, bear these charts in mind.

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About Author

Paul Szuster

Paul Szuster

Paul Szuster is the Director of TrueDemand. Paul is a civil engineer with specialisations in the application of renewable engineering, developing technological solutions and robust energy economic analysis. His clients have included small and large businesses, households, and energy economic firms. He has worked mainly in Australia along with teams in Britain, US, and Singapore. He has a Bachelor of Civil/Structural Engineering (1st class Honours) at the University of Adelaide and a Master of Engineering in Sustainable Energy (with Distinction) at RMIT University.