Why 2026 is the Year to Ditch Gas for Good

By Sarah Jenkins | 2026-02-05 | Category: Energy

With connection fees rising and induction technology peaking, the case for gas in the Australian home has collapsed.

Gas was once the gold standard for Australian homes — the chef's choice for cooking, the reliable workhorse for heating, the efficient option for hot water. In 2026, that reputation is under serious challenge. Wholesale gas prices have remained stubbornly elevated since the 2022 global energy crisis. State governments are accelerating timelines to phase out new gas connections. And the economics of modern electric alternatives — heat pumps, induction cooktops, reverse-cycle air conditioning — have shifted dramatically in favour of all-electric homes. This guide gives you the full picture on whether 2026 is the year to finally disconnect from the gas network.

Why Gas Has Become Expensive in Australia

Australia is the world's largest LNG exporter, which sounds like it should make domestic gas cheap. The opposite has happened. The east coast gas market is connected to international export terminals, primarily in Queensland, through a pipeline network. This means domestic gas prices are linked to international LNG prices through export parity pricing — effectively, Australian households compete with Asian industrial buyers for the same gas supply.

When international LNG prices surged following Russia's invasion of Ukraine in 2022, Australian domestic gas prices surged with them. The federal government's temporary price cap and the mandatory code applying to east coast gas producers provided partial relief in 2023 and 2024, but the underlying structural link between domestic and export prices remains. Without a fundamental change in market structure or new supply, domestic gas prices in Australia will continue to track international energy markets — and international energy markets are inherently volatile.

Network distribution costs add another layer. The gas distribution networks that pipe gas from transmission lines to individual homes are regulated businesses that charge for their services. These network charges are fixed and rising — regardless of how much gas you use, you pay a daily supply charge for being connected to the network. For low-consumption households, this fixed daily charge (typically $0.50–$1.00 per day, or $180–$365 per year) represents a disproportionate share of the total bill.

The Cost Comparison: Gas vs Electric in 2026

Running costs for gas versus electric appliances in 2026 depend on your local energy prices, your usage patterns, and the efficiency rating of your equipment. The comparison is often counterintuitive because heat pump technology has advanced to the point where modern electric appliances are dramatically more efficient than gas equivalents on a delivered energy basis.

Hot Water: A gas storage hot water system with a 5-star energy rating costs approximately $700–$900 per year to run for a typical family of four at current gas prices. An electric heat pump hot water system of equivalent capacity costs $200–$350 per year. The saving of $400–$600 annually pays back the cost premium of the heat pump system (typically $1,500–$2,500 more than a gas storage unit after rebates) within 3–5 years. Pairing a heat pump hot water system with a solar PV system and scheduling the heat pump to run during solar generation hours effectively makes your hot water nearly free.

Space Heating: A gas ducted heating system for a typical 3-bedroom home costs $1,200–$1,800 per winter to run at current gas prices. A modern inverter ducted reverse-cycle air conditioning system covering the same home costs $600–$1,000 per winter, while also providing cooling in summer. The operational saving is $600–$800 per winter. The upfront cost difference between gas ducted heating and a quality reverse-cycle system is often modest, and for households replacing end-of-life equipment the net switch cost after incentives can be zero or negative.

Cooking: Gas cooktop running costs are relatively low — typically $100–$200 per year for a household that cooks regularly. The running cost argument for switching cooktops is therefore modest. The compelling arguments for induction are different: cooking performance (induction heats faster and more precisely than gas), indoor air quality (gas combustion produces nitrogen dioxide and other indoor pollutants linked to respiratory conditions, particularly in children), and the elimination of an open flame in the kitchen. The upfront cost of a quality induction cooktop starts at $500 for a portable single zone and $800–$2,500 for a full 60–90 cm induction range.

State Government Phase-Out Timelines

Victoria is the furthest advanced in gas phase-out policy. From January 2024, new residential buildings in Victoria cannot connect to gas — all new homes are built all-electric. The Victorian government has committed to a broader gas transition plan including retrofit incentives for existing homes, and has signalled that the distribution gas network faces a managed wind-down over the next 15–20 years as connection density falls and network economics deteriorate.

The ACT has had a ban on new gas connections in residential buildings since 2020 and is the most advanced Australian jurisdiction in the transition to all-electric residential energy. New South Wales introduced requirements for all-electric new homes from January 2024 for dwellings requiring a development approval. Queensland and South Australia are consulting on similar requirements but have not yet legislated specific dates.

Western Australia and the Northern Territory, with different energy market structures and gas supply dynamics, are on slower transition timelines. Households in these states should still assess the economics of electrification individually but face less immediate regulatory pressure.

Electrification Grants and Rebates Available in 2026

Federal and state government incentives have made electrification substantially cheaper in 2026 than just three years ago. The federal government's Household Energy Upgrades Fund, operating through the Clean Energy Finance Corporation, provides low-interest loans for energy efficiency improvements including electrification of heating, cooling, and hot water. Eligible homeowners can access up to $50,000 at concessional rates for whole-of-home electrification projects.

Victoria: The Victorian Energy Upgrades (VEU) program provides point-of-sale discounts on approved heat pump hot water systems and reverse-cycle air conditioners through accredited retailers. Discounts of $700–$1,000 on heat pump hot water systems and $400–$600 on reverse-cycle systems are available without an income test. The Solar Homes Program battery loan scheme also supports battery storage for solar-equipped homes.

New South Wales: The NSW Electrification Program (announced 2025) provides rebates of $1,600 for replacement of gas hot water systems with electric heat pump alternatives and $500 for induction cooktop replacement, income-tested to households earning under $100,000. The NSW Home Energy Action Package also provides free home assessments for identifying priority upgrade opportunities.

Queensland: The Queensland Climate Action Plan includes a $3,000 rebate for all-electric home appliance upgrades for low-income households, covering heat pump hot water systems, heat pump pool systems, and reverse-cycle air conditioning. Applications are managed through the Queensland Department of Energy and Climate.

South Australia: The SA Home Battery Scheme provides subsidised loans for battery storage. The federal Small-scale Technology Certificate (STC) rebate reduces the upfront cost of heat pump hot water systems and solar PV installations nationally regardless of state-level programs.

The Indoor Air Quality Case for Ditching Gas

Beyond the economics, there is a growing body of evidence linking gas cooking to degraded indoor air quality and respiratory health outcomes. Gas combustion produces nitrogen dioxide (NO₂), carbon monoxide (CO), and fine particulate matter (PM2.5) at concentrations that, without adequate ventilation, can exceed safe exposure thresholds within minutes of cooking on a gas range. A 2023 study in the Medical Journal of Australia estimated that 12.3% of childhood asthma cases in Australia could be attributed to gas stove exposure — a figure comparable to the effect of passive cigarette smoking.

For households with children under 10, people with asthma or chronic lung disease, or elderly residents with cardiovascular conditions, the health argument for induction cooking is now as compelling as the financial argument. Modern induction cooktops produce no combustion byproducts. They also reduce kitchen heat, lowering air conditioning demands in summer. A rangehood over an induction cooktop still improves air quality (cooking itself generates steam, grease aerosols, and some VOCs regardless of heat source) but the absence of combustion gases removes the primary indoor pollutant concern.

How to Transition Step by Step

A full household electrification is most cost-effective when timed to coincide with end-of-life replacement of existing gas appliances. Replacing a functioning gas appliance before the end of its useful life means foregoing the remaining asset value. The strategic approach is to sequence your electrification around your appliance replacement cycle.

Step 1 — Hot Water First: Gas hot water systems last 10–15 years. When yours is due for replacement, choose a heat pump. The running cost saving is largest here, the payback is fastest, and state rebates are most generous for this appliance category.

Step 2 — Heating and Cooling: When your gas ducted heater approaches end of life (typically 15–20 years), replace it with a reverse-cycle ducted system or a combination of high-efficiency split systems. This also eliminates the need for a separate cooling system if you currently have one.

Step 3 — Cooking: An induction cooktop can be installed as an independent purchase at any time — no need to wait for the gas range to fail. If you cook frequently and value the performance improvement, this is worth doing proactively. Ensure your kitchen has adequate electrical circuit capacity (most induction ranges require a 20A dedicated circuit).

Step 4 — Disconnect the Gas Supply: Once all gas appliances are replaced, contact your gas distributor to disconnect your gas supply. You will cease paying the daily supply charge immediately. This one step saves $180–$365 per year in fixed network charges with no further action required.

Is Disconnecting Gas Right for Every Household?

Electrification makes compelling economic and environmental sense for most Australian households with gas heating and hot water. However, there are scenarios where the transition is less straightforward. Apartments with body corporate restrictions may face barriers to installing heat pump systems (noise, placement) or modifying electrical circuits. Renters cannot unilaterally replace gas appliances. Households in areas with poor solar resources or high electricity rates relative to gas may find the economic case less clear-cut.

The practical recommendation for households sitting on the fence: conduct an energy audit (free through many state government programs), get quotes for heat pump hot water replacement (the highest-return single step), and model your specific numbers. The SaveNest comparison tool can help you identify the cheapest electricity tariff in your area to pair with an all-electric appliance set — the running cost comparison against gas is straightforward once you have both tariff rates.

Frequently Asked Questions

Will I lose resale value if I disconnect gas?

Recent research from the Australian Housing and Urban Research Institute suggests homes with modern all-electric systems (heat pump hot water, reverse-cycle aircon) are not penalised in resale and in some markets attract a premium, particularly among younger buyers who value sustainability credentials. The key is ensuring the replacement systems are high quality — a poorly installed heat pump is worse than a reliable gas system from a buyer's perspective.

Can I use my existing oven with induction cooktops?

Induction cooktops replace only the cooking surface, not the oven. Your gas oven can be retained while switching to induction cooking, if you prefer a staged approach. Many households do exactly this — switching to induction hobs for the daily health and performance benefits while retaining the gas oven for the occasions where it matters.

What if I have solar — does that change the economics?

Significantly. Solar PV reduces your effective electricity cost for self-consumed energy to near zero. A heat pump hot water system scheduled to run during solar generation hours, combined with an EV charging on off-peak rates, makes the all-electric home economics extremely compelling for solar owners. The key is smart scheduling — using a time-of-use tariff or solar sponge tariff to ensure appliance operation aligns with solar generation.

Gas Network Viability and the Stranded Asset Risk

An important but often overlooked consideration in the gas-to-electric transition is the long-term viability of the gas distribution network itself. As more households disconnect from gas, the fixed costs of the network — pipes, pressure regulation, metering infrastructure — are shared among fewer customers. This creates an accelerating "death spiral" dynamic: as the customer base shrinks, per-customer network costs rise, which increases gas bills, which incentivises more customers to electrify, which further shrinks the base.

The Australian Energy Market Commission has published modelling showing that in high-electrification scenarios, gas distribution network tariffs could increase by 50–100% over the next 15 years purely from this death spiral effect, even without any change in gas commodity prices. This structural cost trend is separate from the commodity price issue and reinforces the financial case for electrifying sooner rather than later — households that electrify in 2026 avoid both future commodity price rises and future network cost escalation.

The term "stranded assets" refers to the risk that gas network infrastructure built for a multi-decade service life becomes economically unviable before the end of its engineering life, resulting in write-offs and potential customer liability for decommissioning costs. Several Australian distribution network operators have sought clarity from their regulators on how stranded asset costs will be recovered — the answer affects how quickly gas distribution charges will rise for remaining customers.

Practical Guide to Induction Cooking Transition

For households new to induction cooking, the transition requires some practical adjustments. Induction cooktops heat through magnetic induction, which means only magnetic (ferrous) cookware works — you can test your existing pots and pans by holding a refrigerator magnet to the base; if it sticks, the cookware is induction-compatible. Most modern stainless steel, cast iron, and enamelled cast iron cookware is compatible. Aluminium, copper, and some older stainless steel pots are not.

If your existing cookware is not induction-compatible, the replacement cost is modest — a quality induction-compatible 5-piece cookware set is available for $80–$200 from major retailers, and cast iron pieces can be as low as $30–$50 for individual items. If you are attached to a specific copper or aluminium pan, an induction interface disk ($30–$60) can be placed between the pan and the cooktop surface to enable indirect heating — though this is less efficient than direct induction cooking.

The cooking performance difference with induction is immediately noticeable. Water boils approximately 50% faster on induction than on gas at equivalent wattage settings. Temperature response is faster and more precise — going from full boil to a gentle simmer takes seconds rather than the minute or more required on a gas burner after turning down the flame. For experienced cooks accustomed to gas, the first week on induction typically involves adjusting expectations downward on heat settings, as induction at "medium" is often hotter than gas at "medium-high."

Financing Your Electrification: What Is Available

The federal Clean Energy Finance Corporation (CEFC) provides low-interest financing for household energy upgrades including electrification, through partnerships with approved lenders. Eligible households can access loans at below-market interest rates for heat pump hot water systems, reverse-cycle air conditioning, induction cooktops, and EV charging infrastructure. Applications are processed through the CEFC's retail bank partners rather than directly through the CEFC.

State green loans complement federal programs. Victoria's Household Battery Loan and NSW's Empowering Homes Program both provide interest-free or low-interest financing specifically for solar and battery combinations. Some programs extend to electrification appliances when combined with solar. The combination of a federal CEFC household loan for appliance electrification and a state battery loan for solar storage can fund a comprehensive household energy transformation with minimal upfront capital outlay, with monthly loan repayments often lower than the monthly energy savings generated.

Checklist for Action

Compare energy plans: Compare Electricity Plans Australia | More Energy Tips