Gas industry admits: electricity is cheaper!

All over Australia, people are looking to ‘natural' (fossil) gas for a cheap, efficient way to heat homes and hot water, and to cook. In some areas, people even protest their lack of access to reticulated (piped) gas.

For example, for 12 years residents of Melbourne's northern fringe suburb of Yarrambat have been “calling for their town to be connected to natural gas to combat skyrocketing bills.”

Energy companies market gas as cleaner, cheaper, more efficient. AGL bills, for example, come with a flyer suggesting you “heat your home and hot water efficiently” with deals on one or another brand of gas hot water or ducted gas heating.

But they are wrong. Gas is now more expensive, as well as less energy efficient, than electricity in modern appliances.

Even a gas industry website, which encourages NSW residents to move to gas appliances, can show that gas is more expensive.

The site's bill calculator actually illustrates – if you read it critically – how electric heat pumps for hot water and space heating offer much cheaper heating solutions than gas.

The website shows zero savings if you move from a split system reverse cycle air conditioner to gas. If you play with the percentage figure at the bottom of the calculator – the estimate of how much electricity prices are going to rise – you will find that your power bill would have to rise 93 per cent for gas to be as cheap as reverse cycle air conditioning.

For hot water, power prices would have to rise 60 per cent for gas to be cheaper than a hot water heat pump.

The site only shows if gas gives you savings. If it were fairer, it would also show how much you could save by going from a gas appliance to a modern electric heat pump-based unit!

And it appears that this website is also using quite mediocre electric heat pumps as their basis for comparison with their best-of-breed 5-star gas heaters. 

From a little reverse-engineering of their figures, it seems they have chosen a co-efficient of performance (COP)* of about 3.2 for their comparison heat pumps. This may be about the average COP of what's on the market now, but it's much less efficient than a new high performance unit.

The commonly available model that has constantly topped Choice Magazine comparisons is the Mitsubishi Heavy Industries SRK20ZJX-S, which sells for under $1000. It achieves COP 5.5, and other brands also come close to this.

Just for comparison, a bar radiator COP is 1.0 and for a gas heater the COP is about 0.85 (15 per cent of heat energy is lost up the combustion flue with the exhaust gases)**.

Our reverse-engineering suggests the ‘natural choice' website also uses the peak rate of electricity, which for the Ausgrid area in and around Sydney is about 26-28 cents per kilowatt hour for a peak/off-peak pricing agreement. 

For the basis of our own calculations, we're using the latest Ausgrid time-of-use pricing, which has peak, shoulder and off-peak rates. The following table shows how different appliances compare to gas on costs.

Hot water

A Siddons Solarstream electric heat pump hot water service*** (for example) uses 22 per cent of the energy that a gas hot water service does for the same amount of heating.

Compare the heat pump's COP 4.0 to a five star Rheem Stellar gas hot water system with COP 0.89. As you can see from the diagram above, other than during the afternoon-evening, a heat pump is radically cheaper.

Cooking without gas

Gas stoves are so inefficient that nearly two thirds of the heat energy from burning the gas ends up in your room, not in the pot.

Electric induction is the most energy efficient cooktop available. As our figures show, on time-of-use pricing you would pay more to cook with induction if you don't wait until 8PM – but cooking is only a small part of household energy use compared with space heating and hot water.

The extra costs of cooking done in this period would be offset to some degree by the savings from never having to pay a 44c/day gas supply charge again, if you were to go off gas completely.

Gas cooking would have a slightly lower emissions intensity if you were on standard grid power for your induction cooktop (but not if you purchased GreenPower).

What about emissions?

Taking the electricity grid greenhouse emissions' intensity as 900 grams CO2e per kWh, we compare for efficiency with gas, which is 290 grams of CO2e per kWh.

The COP 5.5 air conditioner creates 163 grams of CO2e per kWh of heat delivered. Gas space heating, at 85 per cent thermal efficiency (COP 0.85) then gives us 341 grams CO2 per kWh of useable heat.

For heating hot water with a COP 4.0 heat pump, the emissions of 1kWh of thermal hot water heating creates 225 grams of CO2e on dirty grid electricity. Gas, at 89 per cent efficiency, produces 325 grams CO2e per kWh of hot water heating.

So are you worried about rising power bills?

The solution is clear. Smart electric appliances are almost always cheaper to run, even according to the calculations from a pro-gas website. They also nearly always cause much less carbon emissions than gas, even more so if GreenPower is chosen.

* The COP is the ratio of the amount of energy used to heat delivered. A COP of 3.2 would see 3.2 kilowatts of heat energy delivered for each kW of electricity used by the heat pump.

** The laws of physics mean that gas heaters and electric resistive element heaters (bar heaters etc) cannot perform higher than COP 1.0 as they generate the heat from their energy source, whereas a heat pump simply moves ambient heat and can achieve much higher results.

***This model uses a hydrocarbon refrigerant, with global warming potential of less than 5– hundreds of times better than alternative refrigerant gases.  There are a number of hot water heat pump options on the market, others including Stiebel Eltrom, Edson, and Quantum.