Reducing my $597 gas bill with a heat pump
Back in the winter of 2023 I received a $597 gas bill and so I calculated how much I could save if I got a heat pump to heat our home instead.
Sam Bendat
Updated: August 20, 2024
I just paid $597 for two months of gas!
So I'm going to calculate how much I can save if I upgrade my gas heating system to a reverse cycle air conditioner, also known as a heat pump.
Bottom line of the calculations
I would save between $121 to $203 on my gas bill if I were to swap out my gas heater for an efficient electric heat pump.
It would be a yearly savings of around $400 to $700.
So let's break these numbers down into their component parts to see how this works.
Our home's setup and prices
In our little Melbourne weatherboard home, we have a ducted heating system that runs through the attic. The home was built in 1935 and it shows, we have a lot of air leaks around doors and probably the attic too so we use more heat than we should normally need.
Our energy prices
For the pricing our gas costs 3.2¢ for the first 5700 megajoules (MJ) of energy, 3.1¢ for the next 5700 MJ and then everything thereafter is 2.69¢ per MJ. Our supply charge cost us $45.46 for the period.
In all for the billing period we used 18,516 MJ of gas energy. To make it simple I'm going to say 10,000 of that went to gas heating which is around 54% of our gas usage.
Our electricity costs 22.678¢ for each kilowatt hour and the supply charge is 91.050¢ per day.
Translating gas usage into electricity usage
I am 100% not a scientist, so the math and calculations of converting combustive gas energy into electric energy are beyond me. Luckily there are handy calculators out there that do this for us.
The internet says that 1 MJ of gas energy is equivalent to 0.27778 kWh of electric energy, and has the internet ever lied...?
If we hold those figures to be truthy then we can say that using 10,000 MJ of gas energy to heat our home it is equivalent to 2,777.8 kWh of electric energy.
Except for one big ace up the sleeve for electric heat pumps, one MJ of gas energy to heat a home is wildly inefficient, an efficiency loss of at least 50%.
On the other hand, heat pumps are absurdly efficient, they can reach up to 600% efficiency in their use of electric energy.
As we replace one wildly inefficient device with another extremely efficient device we need to take into account those efficiency changes. So, in fact, it would not require 2,777.8 kWh to heat the same home because the heat pump will be far more efficient with its use of energy to create the same heat levels.
The math of comparing gas vs electric
Given the above math and the pricing of our energy discussed before we can calculate what our savings and costs might look like if we do swap gas for electricity.
Using the gas heating math from before we estimate that around 54% of each gas tier went into our heating. That comes down to a price of around 3¢ for a MJ.
Attributing 10,000 MJ to gas heating means we spent around $300 on heating alone.
The electric math
Again as I noted before, an electric heat pump would require significantly less energy to generate the same level of heat. If we say the spectrum of efficiency difference is between 350% and 650% we can create a range from the lower end to the higher end of heat pump efficiency.
It requires between 427 to 793 kWh to heat our home to the same identical level over the same period.
Taking into account our electricity pricing this works out to a cost range of $97 to $179. to heat our home with a heat pump.
A savings of $121 to $203 per billing period
Considering a heat pump lasts fifteen years and are eligible for government rebates then this is a great deal!
It's chilly enough in Melbourne that we would use the gas heating for at least five to six months of the year, if not more, so we are talking at least three of these absurd heating bills a year.
I could achieve a savings of around $400 to $700 with a new heat pump.
The upfront costs and more calculations to come
There are more calculations to be done around purchasing and installing a heat pump for an old gas heater. Also in a draughty house making sure there is good insulation should be the first thing to do before swapping out the heating system.