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The Victorian Government has announced that gas connections will be phased out from all new builds from 2024, transitioning houses to all-electric. 

From 1 January 2024, planning permits for new homes and residential subdivisions will only connect to all-electric networks, with houses taking advantage of more efficient, cheaper and cleaner electric appliances.

These changes will apply to all new homes requiring a planning permit, including new public and social housing delivered by Homes Victoria.

The Victorian Government said going all-electric can be delivered at no extra cost to the buyer and will slash around $1,000 per year off household energy bills, or up to $2,200 for households that also have solar installed.

Commencing immediately, all new public buildings that haven’t reached the design stage will also be all-electric. This includes new schools, hospitals, police stations and other government-owned buildings.

Victoria has the highest use of residential gas in Australia, with around 80 per cent of homes connected. The gas sector contributes about 17 per cent of the state’s emissions, and the move to electric systems is a key element of meeting Victoria’s nation leading emissions reduction targets of 75-80 per cent by 2035 and net zero by 2045.

This decision builds on the 2022 reform that removed the requirements for gas connections for new homes.

$10 million in electrification grants

To ensure homeowners can maximise the benefits of household renewable energy, the State Government is investing $10 million in a new Residential Electrification Grants program. Grants will be available to volume home builders, developers and others to provide bulk rebates for solar panels, solar hot water and heat pumps to new home buyers up front.

This will mean new home buyers will save $4,600 before they even move in and will remove double handling of installations – saving buyers money and hassle.

To help prepare for the transition, the Victorian Government is also investing $1 million in targeted training to ensure the construction industry is supported in the transition to all electric and seven star homes.

This builds on Solar Victoria’s $11 million training and workforce development package that will upskill plumbers and electricians to take advantage of the renewable energy revolution.

The Victorian Government is also delivering a $3 million package including free training for 1,000 plumbers and apprentices to design and install energy efficient heat pumps and solar hot water systems, and free training for 400 electricians and fourth-year apprentices to safely design and install rooftop solar and home battery systems.

To make it easier to go all-electric, eligible new home builders, as well as existing homeowners and renters, can access the nation leading Solar Homes program – offering $1,400 solar panel rebates and interest free loans of $8,800 for household batteries.  

All Victorian households and businesses are also eligible for the VEU gas to electric rebates to upgrade heating and cooling and hot water heaters.

The State Government will work closely with industry including gas appliance manufacturers, the building and construction sector, local government, trade unions and consumer organisations to manage business, workforce and consumer impacts and support the sector in the transition.

The government has also said it is working to update the Gas Substitution Roadmap, which is expected to be released in 2023.

Victorian Minister for Energy and Resources, Lily D’Ambrosio, recognised that gas prices are continuing to rise, and said that this is why the State Government is stepping in to help Victorians get the best deal on their energy bills.

“Reducing our reliance on gas is critical to meeting our ambitious emission reduction target of net zero by 2045 and getting more Victorians on more efficient electric appliances which will save them money on their bills,” Ms D’Ambrosio.

Victorian Minister for Planning, Sonya Kilkenny, said, “All-electric homes are healthier, cleaner and cheaper to run. Going all-electric ensures Victorians building a new home are part of this exciting energy transition.”

Industry reacts

Energy Networks Australia (ENA) acknowledged the announcement and said the decarbonisation of Victoria’s energy system, including its electricity, gas and transport infrastructure, is a complex issue with many moving parts.

Energy Networks Australia Chief Executive Officer, Dominique van den Berg, said that the decision is premature in the absence of a thorough and transparent process.

“It is critical to carefully consider, with the benefit of all stakeholder perspectives, the whole-of-energy system implications of significant policy decisions, including impacts on costs, emissions and the most vulnerable.”

Ms van den Berg said Energy Networks Australia is keen to work collaboratively with the Victorian Government and other stakeholders to ensure that the policy is fully understood and the transition to renewable energy is smooth, fair, and minimises unintended consequences for energy customers.

“We stand ready to participate in open dialogue and consultation, offering our expertise and perspective to help shape a balanced, sustainable energy future for Victoria and Australia more broadly,” Ms van den Berg said.

The Energy Efficiency Council (EEC) welcomed the announcement.

EEC Chief Executive Officer, Luke Menzel, said, “All-electric homes are all-good for Victorian families. They are cheaper to run, healthier to live in and help lower emissions.”

The EEC said that analysis by consumer group Renew found that building an all-electric home could reduce household energy bills by 35 per cent, and that these savings can double when electrification is paired with rooftop solar and energy efficiency upgrades.

“With interest rates sky high, if used to help pay off your home loan, these bill savings from going all-electric could slash two years off an average 25-year mortgage in Melbourne,” Mr Menzel said.

“Given the upfront costs of building an all-electric home are comparable to building a home with a gas connection, that makes going all-electric a no-brainer.”

While some people have bad memories of old style electric stoves, Mr Menzel said more and more Victorians are falling in love with their modern induction cooktop.

“Induction cooktops are high quality, lightning fast and great to cook with. Getting gas out of our kitchens is the healthy option for families, with evidence linking gas cooktops to respiratory conditions like asthma,” Mr Menzel said.

Mr Menzel said that while there is likely to be some debate about this policy, it is the right call for Victorian families.

“Going all-electric means healthier homes, lower bills and a big step towards a net zero community.”

Research published by Rewiring Australia since 2021 has demonstrated that there are significant financial benefits to households that replace gas-powered appliances with modern, efficient, electric alternatives, particularly for houses with rooftop solar. It costs a resident of Victoria 49 cents to have a hot shower using gas. But if they use a commercially-available, solar powered heat pump, the cost plummets to just six cents.

Heating a Victorian home with gas costs an average of $2.47 per day, but with a solar and battery backed heat pump, the cost more than halves to $1.13.

Co-founder and Chief Scientist of Rewiring Australia, Dr Saul Griffith, said the Victorian gas ban is the first step to ensuring all Victorians get access to the financial benefits of electrification.

“Victoria has the most to gain from electrification, because it has the most households relying on gas and is exposed to price gouging by international gas companies,” Mr Griffith said. 

“The State Government has a clear and sensible plan to lower household bills and decrease reliance on fossil fuels. This is the type of commonsense leadership Australia needs.

“Electrification is the fastest and most cost effective way to shave thousands of dollars a year from energy bills and lower our emissions. Decisions made around the kitchen table account for 42 per cent of emissions in the domestic consumption economy.”

Rewiring Australia Executive Director, Dan Cass, said the policy was a profound act of climate leadership. 

“The hottest days in recorded history have been recorded this year and it is clear we are in a climate emergency that demands faster action. The most efficient and equitable way to accelerate the rate of emissions reduction is electrification.

“The fossil fuel industry will bleat about this decision because they want to keep gouging households and they do not care about the planet.

“When someone shifts from grid power dominated by coal to rooftop solar, or from a petrol to electric car, they do more than change an energy source. They permanently lower their emissions and energy bills, and they never look back.” 

Assistant Editor, Utility magazine

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