The State Government has released its Gas Security Statement, which outlines the steps Victoria is taking to avoid the gas shortfalls forecast by the Australian Energy Market Operator (AEMO) for south-eastern states by 2029.
The Victorian Government said that gas is part of the state’s energy transition, but supplies from the Bass Strait are dwindling and prices are going up.
To combat this, Victorian Premier, Jacinta Allan, and Victorian Minister for Energy and Resources, Lily D’Ambrosio, announced a series of reforms to secure the state’s gas supply, protect industry jobs, drive down energy bills, make rental homes more comfortable and affordable and back local manufacturing.
Securing gas
The State Government said that it’s not just making sure Victoria has the gas it needs – it’s reserving it for industry.
The Gas Security Statement outlines the how these reforms will deliver major gas savings, supported by more Victorians switching to efficient electric appliances and existing rules that require new homes to be all-electric. By reducing household demand, the goal is to reserve gas for industry.
According to the statement, by 2029, these reforms will unlock just under 12PJ of gas every year, more than the annual production of Beach Energy’s Enterprise field.
By 2035, they’ll deliver 44PJ annually – enough to meet 85 per cent of Victoria’s forecast industrial demand.
That means more of Victoria’s gas will be used by Victorian manufacturers, and these new reforms aim to secure supply and reserve it for industry build on the State Government’s previous work to secure the gas Victoria needs, including:
- Streamlining decision-making for new gas projects under the Development Facilitation Program
- Passing the Offshore Petroleum and Greenhouse Gas Storage Amendment Act 2024 in October 2024, allowing gas to be stored offshore in Victorian waters in underground reservoirs
- Approving production from Beach Energy’s Enterprise field in 2024, the only application received in a decade
- Legislating in 2018 that producers in Victorian waters must offer their gas to the domestic market on reasonable terms
- Continuing to work with the Commonwealth and other state and territory Ministers on options to expand powers for AEMO to address east coast gas supply issues
The State Government said that since the beginning of 2025, its seen more than $2 billion in announcements for new gas production and exploration for the Victorian market.
This includes Esso and Woodside ($550 million), Amplitude Energy and OG Energy ($500 million), Conoco Philips, 3D Energi and the Korean National Oil Corporation ($100 million) – on top of GB Energy’s $900 million underground offshore storage project.
Driving down energy bills
The Victorian Government is also looking to make existing homes cheaper to run with electric hot water systems.
Under new regulations from 1 March 2027, when a gas hot water system reaches the end of its life, it must be replaced with an efficient electric alternative like a heat pump.
The State Government estimates that electric hot water systems will save households around $330 a year, or $520 with solar.
Electric hot water systems are also often cheaper up front than gas systems, with rebates available from the State Government’s Victorian Energy Upgrades and Solar Victoria programs of up to $1400.
Gas hot water systems can still be repaired if they break down – this is about the gas system’s end of life. Gas systems can also be temporarily removed and reinstalled during renovations.
- There are no changes to heating for owner occupiers.
- There are no changes to gas cooking in existing homes.
The Victorian Government said it is also making sure new homes and buildings are built for the future.
From 1 January 2027, all new homes will be built all electric, which according to the Victorian Government will put around $880 per year back in the pockets of new homeowners, or $1820 if they have solar.
From 1 January 2027, all new commercial buildings (other than industrial, manufacturing and agricultural buildings) will also be required to be built all electric.
There are no changes to rules regarding end-of-life replacement for gas appliances in all existing commercial buildings. The use of LPG for households or business is also unchanged.
The State Government has also rolled out of the SEC’s Home Electric Planner where Victorians can access trusted and easy to understand information on installing electric appliances – it calculates all the upfront costs, annual bill savings, return on investment and applies government discounts and rebates.
Tacking cost-of-living
In a cost-of-living crisis, the Victorian Government said that renters shouldn’t be stuck with the highest energy bills – everyone deserves a safe, comfortable and affordable home.
From 1 March 2027, new Minimum Energy Efficiency Standards will apply to rental properties and public housing – which the State Government said could save renters thousands of dollars a year:
- Hot water systems must be replaced with efficient heat pumps at end of life – saving up to $220 every year
- Gas heaters at end of life must be replaced with reverse-cycle air conditioners – saving up to $215 every year
- A minimum 4-star Water Efficiency Labelling and Standards (WELS) rated shower head must be installed at the start of a new lease – saving renters up to $38 every year
- Minimum R5.0 rating ceiling insulation must be installed at the start of a new lease where there is no ceiling insulation already in place – saving around $450 every year
- Draught sealing, including weather seals on all external doors, windows and wall vents must be installed at the start of a new lease – saving more than $110 every year
Main living areas are already required to have heating. Additionally, from 1 March 2027 at the start of a new lease, main living areas must also have an efficient electric cooling system. Installing a reverse-cycle air conditioner will acquit both the heating and cooling requirements.
Every single upgrade a property may need under the new minimum efficiency standards is eligible for a discount under the Victorian Energy Upgrades program. Exemptions also apply, including if installation costs are too high or if there is not enough space.
The State Government said these rental standards have been set following extensive consultation to make sure they are achievable and keep costs affordable for rental providers.
Backing local manufacturing
To make sure Victoria’s appliance manufacturing industry is ready to meet the demand for energy efficient hot water appliances, the State Government is also investing $9.5 million towards an Industry Diversification Program.
This aims to support existing businesses to ride the wave of the expansion of electric appliance manufacturing and help the gas appliance manufacturing supply chain upgrade their facilities and reskill their workforce.
According to Victorian Minister for Energy and Resources, Lily D’Ambrosio, the State Government is taking action now to secure Victoria’s gas supply – not just for today, but for the decades ahead.
Victorian Premier, Jacinta Allan, said that these reforms mean families will pay less on their energy bills, industry will get the gas it needs – and Victorian jobs are protected.
“It’s good for industry, workers, renters and families – we’re on their side,” she said.
“We are not just making sure Victoria has the gas it needs – we are reserving it for industry.”
Industry response
Energy Networks Australia
Energy Networks Australia (ENA) welcomed the Victorian Government’s commitment to securing gas supply, driving down energy bills – a move ENA said will help avoid spiking electricity wholesale prices during winter demand peaks.
ENA CEO, Dominique van den Berg, said ENA’s modelling shows that the wholesale cost of electricity would have gone up for all Victorians – homes and businesses – if they were forced to switch from gas too soon.
“This is a sensible recalibration. It gives the industry time to plan for the changes and for households to consider electrification solutions that make sense for them – without creating sudden and unexpected cost burdens for everyone,” Ms van den Berg said.
“Energy networks support decarbonisation, but the pace and sequencing of reform matters. This new plan better recognises the complexity of the transition and the diverse needs of Victorians.
“We look forward to continuing to work collaboratively with the Victorian Government on the implementation of this policy.”
Read ENA’s Victoria’s Power Shift report here
APGA
The Australian Pipelines and Gas Association (APGA) has welcomed the announcement, recognising it as a step toward a more deliverable and consumer focused energy transition.
APGA Chief Executive, Steve Davies, said the State Government’s shift away from an outright appliance ban is a pragmatic move that better reflects the diversity of Victorian homes and the varying needs of households. But targeting hot water in isolation risks recreating the same problems in a narrower form.
“When you need to design a broad exemption regime just to make a ban workable, it’s worth asking whether that ban should exist at all,” Mr Davies said.
“For many households, particularly those in older homes or regional communities, gas hot water is not just a preference, it’s the most practical and affordable option.”
APGA said it has called for an integrated energy transition strategy that supports emissions reduction through both electrification and renewable gas, while maintaining flexibility and fairness for consumers.
“Technology-neutral policy makes sense. Not just for emissions outcomes, but for household budgets,” Mr Davies said.
“Energy transitions succeed when they empower people, not when they lock them into one-size-fits-all solutions that don’t match their circumstances.
“We urge the Government to go further, to remove unnecessary restrictions and instead focus on supporting choice, clarity and investment across the full suite of clean energy options.”
EEC
The Energy Efficiency Council (EEC) also welcomed the Victorian Government’s reforms.
EEC CEO, Luke Menzel, said the State Government’s package of reforms set the pace for other states.
“The Energy Efficiency Council sees this package of reforms as a big step towards an all-electric future for Victorian households and it establishes a benchmark for other states and territories to follow,” Mr Menzel said.
“These reforms will bring down energy bills for Victorian families, they will protect renters across the state, and they’ll free up gas for industry.”
However Mr Menzel said it was disappointing that one of the major reforms the government consulted on – phasing out gas space heaters in existing homes – was dropped from the package.
“Electrifying space heating is a huge opportunity for cutting bills and freeing up gas for industry,” Mr Menzel said.
“Every Victorian with a gas bill landing on their kitchen table this winter knows how crazy gas prices have been getting. We can’t afford not to electrify our space heating in this state.
“Based on our analysis, electrifying space heating in Victorian homes could save an average of 31PJ per year between now and 2035.”
“While it is disappointing, this outcome means electrifying space heating rockets to the top of the list for the next tranche of reforms the Energy Efficiency Council will be calling on the Victorian Government to deliver.
The EEC said that these reforms come as its new analysis demonstrates just how much gas can be freed up through efficiency and electrification.
Mr Menzel said that the analysis shows just how much more can be achieved through efficiency and electrification.
“An ambitious program to electrify Victorian homes and commercial buildings could free up an average of 80PJ of gas a year by 2035,” he said.
“It underlines that the solution to our gas challenge isn’t always digging more of it up, or shipping more of it in. Being smarter about the way we use gas, electrifying where it stacks up economically and saving the gas we have for higher value uses in industry, will be a big part of that transition.
“Today, the Victorian Government took a big step towards unlocking this huge opportunity.
“We need to keep up the momentum so we can deliver the benefits of efficiency and electrification for every family and business in Victoria.”
The EEC’s analysis can be found here.
Energy Consumers Australia
Energy Consumers Australia (ECA) also welcomed the announcement.
ECA CEO, Brendan French, said the reforms will provide consumers with the certainty they need to take action and plan for the future.
“Our research shows household electrification will also mean significant cost savings for consumers,” Dr French said.
“We look forward to seeing further announcements in the coming weeks regarding funding for the supports that will be provided to enable this transition for Victorian consumers.”
Dr French said ECA was also pleased to see the announcement regarding the minimum energy efficiency standards for rental properties in Victoria.
“Alongside other stakeholders, we have called for this for a long time. Our research shows that renters face particular barriers in the energy transition, and are more likely to be facing energy poverty.
“Improving the energy efficiency of rental properties and introducing more efficient electric appliances will cut down people’s energy use and bills,” he said.
“We understand the reasons why space heating and gas cooking for existing private properties hasn’t been included, but we look forward to this being included in future iterations of the Victorian Gas Substitution Roadmap.”
