Switching to all-electric homes a cost shock that can increase CO2
11 April 2023
NEW modelling cautions Victorian homeowners considering switching from gas to electricity to delve deeper into the detail before taking an expensive and, ultimately, pointless plunge.
"The assumption that electrical appliances are always cheaper and lower emitting than gas is demonstrably wrong," Gas Energy Australia CEO Brett Heffernan declared today, releasing modelling of actual costs and emissions profiles comparing in-home gas use with high-end and cheaper electrical appliances.
"In fact, even the most efficient electrical appliances will yield only a very small CO2 reduction, while setting homeowners back almost $12,000 in appliance and related costs alone, while the costs of upgrading home wiring to cope with the new load runs higher into the tens of thousands.
"In the real world, we have fielded calls from families who have been quoted on refits and told not to expect change from $50,000. That's serious coin in anyone's language. But the emissions story is equally galling.
"Faced with these costs, people might think if they opt for cheaper, though less efficient electrical appliances, they'd still be doing the right thing on CO2. But they'd be wrong. Emissions from these less efficient electrical appliances are actually higher than sticking with their existing gas appliances."
The modelling, by Frontier Economics, specifically compares LPG appliances, used in over 320,000 Victorian homes, with both high efficiency and lower efficiency electrical appliances. However, given the cost and emissions profiles of LPG and natural gas, the findings are equally applicable to all homes using gas*.
"Taking into account appliance costs and energy bills, continuing to use LPG appliances remains lower cost for homeowners right through to the 2040s, at which point using LPG appliances and electrical appliances are very similar in cost," Mr Heffernan explained. "At the same time, total emissions are only marginally lower if using the highest efficiency electrical appliances.
"The household would incur $11,871 in upfront costs (appliance and related installation costs), and save $718.33 on annual bills, but would reduce emissions by a mere 467kg per year (or 9kg per week, equivalent to a typical BBQ cylinder).
"It would take more than 12 years for homeowners forking out for these electrical appliances to get a return on their investment, and all for a miniscule reduction in their CO2 output.
"In the end, the price homeowners pay for their carbon abatement equates to $282.65 per tonne. That's 8-times higher than the average price per tonne of buying Australian carbon credit units at $36.75**. It's very expensive and inefficient carbon abatement.
"Comparing existing LPG appliances with cheaper, lower efficiency electrical appliances shows that switching to electricity would actually increase emissions by a substantial 960kg per year.
"In this scenario, emissions from LPG appliances are already significantly lower, which means switching to electrical appliances sees CO2 emissions rise markedly. Both scenarios dispel the notion that electricity is, by default, cheaper and lower emitting than gas.
"Just as telling, these costs are only for appliance replacement. What is often hidden from consumers are the additional switching costs as all-electric homes require upgrading household power supply from Phase 1 to Phase 3 wiring.
"Depending on the size and nature of the premise, these costs can take total outlays to over $40,000 per dwelling. This was modelled in Frontier Economics' Cost of switching from gas to electric appliances in the home, released by GAMAA in 2022.
"With the transition to 100% renewable, net zero-emission bioLPG from 2025 and, ultimately, swapping all conventional LPG with a synthetic zero-emitting drop-in green gas replacement by 2045, why would any homeowner go to the expense and hassle of switching to higher emitting and less reliable electricity?
"The development of actual zero-emission rLPG users means it is lower emitting than the renewable electricity alternative. Unlike solar, wind and the like, which emit carbon through each stage of their supply chain that need to be offset, rLPG does not. No offsets are required as rLPG takes CO2 from the atmosphere when made, so the impact is zero emissions when used."
The full Frontier Economics' Residential Case Study for Victoria, commissioned by GEA and the Australian Gas Industry Trust, is available below.
Editor Note: *Modelling LPG vs electrical appliances reflects GEA's member footprint across the states. It should be noted that natural gas users stand to benefit even more from sticking with gas, at least in the short- to medium-term, given natural gas is slightly cheaper and lower emitting than LPG. The longer-term transition for natural gas to decarbonise is not as clear as LPG.
**As at January 2023.
- Preview Residential Case Study - Victoria (PDF 254.1 kb)
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11/4/2023 Switching to all-electric homes a cost shock that can increase CO2