Australians are eager to embrace an all-electric lifestyle, yet many are unsure where to begin. Should they invest in solar panels, opt for a home battery system, or eliminate gas reliance altogether?
In a quest to uncover the most effective transition strategy, we analyzed three distinct electrification pathways for a three-bedroom home located in Melbourne’s western suburbs.
Our findings indicate that order matters significantly in the shift to electric living. The journey should begin with enhancing energy efficiency by improving insulation and sealing draughts, followed by transitioning from gas heating to a high-performance reverse-cycle air conditioner. Ideally, the installation of home batteries should cap off the process.
What did we do?
We utilized standard industry data to simulate a household equipped with ducted gas heating, gas-powered hot water and cooktop, typical electrical appliances, and a petrol car.
Annually, this model household consumes 5,300 kilowatt-hours of electricity, nearly 50 gigajoules of gas, and around 1,230 liters of petrol for approximately 11,100 kilometers of travel. The expense of sustaining this energy usage amounts to $2,477 for electricity, $1,494 for gas, and $2,255 for petrol, culminating in a total energy cost of $6,226 per year.
We modelled replacing these with a 10-kilowatt ducted reverse-cycle air conditioner, a hot water heat pump and an induction cooktop.
We also modelled two further options: one where the household switches to a mid-range EV with a battery of about 60kWh and another where the household keeps its petrol car.
Which pathway?
We tested three pathways to going electric. These don’t include rebates or the cost of the EV.
Pathway 1a – all electric, no battery, EV
Here, the household adds a large 11.76kW solar array, gets off gas and replaces its petrol car with an EV.
Although total electricity use rises, the grid electricity bill falls due to solar. The new electricity bill would be about $1,800. Because gas and petrol costs fall to zero, the household saves about $4,400 yearly.
Total cost: about $32,600.
Pathway 2a – all electric, medium home battery, EV
This pathway mirrors the first, but adds a 13.5kWh home battery at the end. The power bill falls to about $950. Savings would be about $5,300.
Total cost: about $48,100.
Pathway 3a – all electric, large home battery, EV
Here, the household doubles storage to 27kWh. The power bill drops to about $600. It doesn’t reach zero due to low solar over some periods and annual supply charges. Annual savings: about $5,900.
Total cost: about $56,400.
Stacking rebates
Governments offer a range of rebates and subsidies for households to go electric.
Federal incentives
Pathway 1: Applying a solar rebate means the cost falls to just under $30,000.
Pathway 2: Using solar and battery rebates, the cost falls to about $41,700.
Pathway 3: After both rebates, the cost falls to $47,800.
State rebates
In Victoria, the maximum possible state support comes to just over $6,000.
This includes $1,400 for solar, $1,400 for locally made hot water, and indicative discounts of about $2,500 to replace ducted gas with a 10kW reverse cycle air conditioner, $560 to switch from gas hot water to electric and $140 for induction cooktops. These are maximums, not entitlements, and there are eligibility requirements.
If the household was eligible for all federal and Victorian rebates, the total cost would fall to about $23,900, $35,800 and $41,800 for the three pathways, respectively.
Electrify in the right order
Our modelling suggests an optimal order for going electric.
1. Reduce demand
The first step is making the house more energy efficient by sealing gaps, boosting insulation and adding shading to stop direct sun. This can make it possible to install smaller appliances.
2. Go solar
Solar is a no-brainer almost everywhere. When choosing the size, it’s best to go bigger to power a future all-electric home.
In Melbourne, a 11.76kW array would produce about 15,400kWh a year. Set hot water systems, appliances and EV chargers to run during the day to maximise use of solar. Our modelled all-electric household with an EV uses 8,500kWh a year in total, including 1,800kWh for EV charging.
3. Get off gas
First, replace expensive older gas heaters with a correctly sized reverse-cycle air conditioner. This will bring immediate savings and can also cool in summer.
Next, replace gas hot water with a quiet, efficient heat pump.
Then replace gas cooktops with induction. These can be expensive, so consider trialling a portable induction hob. Finally, abolish the meter.
4. Consider a battery
Batteries should only be installed if they are useful. The most common use is releasing stored power from solar to avoid peak evening rates.
Home batteries are more valuable once gas appliances and petrol cars have been replaced and the home is fully electric. In our model, the first battery saves about $852 a year, while doubling storage saves only another $355 a year. This is why they should be done last if possible.
How quickly does this pay off?
Unlike other home improvements, householders can often recoup the cost of going electric. But payback time differs a lot. Quitting gas can rapidly pay itself off, while oversized home batteries can take much longer.
For our three pathways for a household with an EV, simple payback takes 5.4, 6.8 and 7.4 years respectively. Zero- or low-interest loans offered by some governments can reduce upfront cost, but will push payback time back roughly 2–3 years.
To optimise payback, it’s best to begin by improving the building to reduce energy use, shift away from gas to efficient electric appliances, use solar directly if available and then buy a home battery if warranted.