You do not have to rip out a working gas heater, but reverse cycle heats for around half the cost per unit of heat. The 2027 rules and the sums.

No law makes an owner occupier pull out a working gas heater in Victoria. The rules that start on 1 March 2027 apply to gas hot water at the end of its life, and to heating and hot water in rentals. The case for switching heating is the running cost: a reverse cycle system uses less than a quarter of the energy a gas heater needs for the same heat, so even at Powercor's default electricity rate it heats for roughly half the cost of gas or less, and it cools in summer.

What the rules say, as of 31 October 2026

Victoria's Gas Substitution Roadmap has turned into a set of dated rules.

New homes needing a planning permit have had to be all electric since 1 January 2024.
From 1 January 2027, all new homes must be built all electric. AusNet says homes with a building permit approved by 31 December 2026 may still be able to connect to gas.
From 1 March 2027, when a gas hot water system in an existing home reaches the end of its life and cannot be repaired or safely maintained, it must be replaced with an electric system such as a heat pump.
Gas heating and cooking in owner occupied homes are unchanged. You can repair a gas heater, or replace it with another gas heater.
Rentals are stricter. From 1 March 2027, a rental's heating or hot water that breaks and cannot be repaired must be replaced with an efficient electric option, and the main living area needs energy efficient cooling at the start of a new lease.
Bottled gas stays. AusNet notes LPG can still be used in regional homes for hot water and cooking.

The government estimates an all electric new home saves around $880 a year, or $1,820 with solar, in its announcement of 24 June 2025.

The running cost, one unit of heat at a time

Here is the comparison with the inputs shown, so you can redo it with your own bill.

Gas: EnergyAustralia's standing offer from 1 July 2026 for the AusNet West zone, which covers postcodes including Ballarat (3350), Kyneton (3444), Castlemaine (3450) and Daylesford (3461), charges 4.2559 cents per MJ for the first 100 MJ a day in winter (1 June to 30 September), falling to 3.1449 cents above 1,400 MJ, plus 159.06 cents a day supply, all including GST. Market offers are often cheaper, so check your own bill.
Electricity: Powercor's Victorian Default Offer from 1 July 2026, including GST: 28.22 cents per kWh flat, or on time of use 22.49 cents off peak (9 pm to 11 am), 41.67 cents peak (4 pm to 9 pm) and 17.26 cents in the 11 am to 4 pm solar soak.
Efficiency: Environment Victoria and Renew's 2024 analysis says three quarters of gas ducted heaters sold are rated 4 stars or less, at most about 75% efficient, and that the average ducted reverse cycle system in Victoria uses less than a quarter of the energy a gas heater uses for the same room heat. Split systems tend to do better again.

Now the sum. One kWh of gas is 3.6 MJ. At 4.2559 cents per MJ that is 15.3 cents. The same heat from a ducted reverse cycle system takes under a quarter of a kWh of electricity:

On the flat rate: 0.25 kWh at 28.22 cents is 7.1 cents
Off peak overnight: 0.25 kWh at 22.49 cents is 5.6 cents
In the evening peak: 0.25 kWh at 41.67 cents is 10.4 cents
Against the cheapest gas block: 3.6 MJ at 3.1449 cents is 11.3 cents, still more than the flat electricity figure

There is one more line. Once nothing in the house uses mains gas, the supply charge goes. At 159.06 cents a day that is about $581 a year on this tariff.

What the modelling says for a Bendigo climate

The same Environment Victoria and Renew report, published in October 2024 on 2024 prices, modelled five Victorian climates, with Bendigo the closest to ours. It found that keeping an older home warm with ducted gas cost more than $2,800 a year in every climate modelled, and that replacing ducted gas with three split systems cut the heating and cooling bill by 46 to 67%, cooling included. In newer, better insulated homes, gas ducted heating cost between $1,400 a year in Moorabbin and $2,000 in Bendigo, and splits saved at least 66%.

It also found that 44% of Victorian houses heat with ducted gas and have no cooling at all. Going electric fixes both.

Ducted reverse cycle or split systems?

Split systems heat the rooms you use: a living area and two bedrooms is the pattern behind the Renew savings figures above.
Ducted reverse cycle heats and cools the whole house from one outdoor unit, with zones you can switch off. It suits a house that already lives with ducted heating and wants the same feel.
In a frost zone, size the system for the coldest mornings around Trentham, Daylesford and Kyneton, not an average winter day, because a heat pump makes less heat as the outdoor air gets colder and has to defrost its outdoor coil.

We install Daikin and Mitsubishi Heavy Industries air conditioning. Our sister business Spa Refrigeration in Daylesford, which has the same owner, designs and installs split and ducted air conditioning across Hepburn Shire and the Macedon Ranges. More on our air conditioning page.

Discounts in October 2026

The Victorian Energy Upgrades program discounts efficient reverse cycle air conditioners; Energy Matters put the figure at up to $1,610 in September 2026. The discount depends on the unit and what it replaces, so ask for it to be shown on the quote. Heat pump hot water has its own rebates, covered in our heat pump hot water article.

Add solar, and plan the evenings

Winter heating runs in the mornings and evenings, when solar is weakest. Pre warming the house in the middle of the day on solar or the 17.26 cent solar soak rate, and carrying the evening on a battery, both cut the cost further. Our article on charging your home battery for free this winter shows how the free window plans fit, and the energy plan finder ranks every plan for your own usage once the gas is gone.

If you want to see what going electric looks like for your house, send us a recent electricity and gas bill and your address and we will come back with a right sized design.

Questions

Do I have to replace my gas heater in Victoria?

Not if you own and live in the home. From 1 March 2027 the rule for existing homes covers gas hot water at the end of its life. Owner occupiers can keep, repair or replace gas heaters. Rentals must replace broken heating and hot water with efficient electric options from 1 March 2027.

Is reverse cycle heating cheaper than gas ducted heating?

Per unit of heat, yes. With gas at 4.2559 cents per MJ, one kWh of gas costs 15.3 cents, and a ducted reverse cycle system makes the same heat from under 0.25 kWh, about 7.1 cents at Powercor's 28.22 cent flat rate.

Does reverse cycle heating work in a Central Victorian frost?

Yes, but output falls as the outdoor temperature drops, and the outdoor unit spends some time defrosting on frosty mornings. Sizing for the coldest mornings, not the average, is what keeps the house warm at 7 am in July.

Can I keep gas for cooking?

Yes. The 2027 rules do not touch gas cooking in existing homes. If you keep one gas appliance you keep the gas supply charge, which is about $581 a year on the AusNet West standing offer.

Sources

Written by the Trentham Energy team.

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Getting off gas heating in Central Victoria: the rules and the running costs