Believe it or not, you are in control of your energy bills.
Wherever you are right now, stop reading and look around. How many lights, electric and gas appliances and equipment, can you count? No doubt it’s a big number.
I’m writing this at my kitchen table. I see a fridge, microwave, toaster, oven, gas cook top, coffee machine, electric jug, three kitchen lights. In the adjacent family room I see laptops, printer, gas heater, overhead lights. I had total control over their purchase – except the 80s wall lights I inherited from the previous owner.
My investment decisions have driven my energy use, as do yours. Our behaviour drives our energy use, too.
For many NSW households, those on the standard regulated tariff, the price of gas jumps today by 17.3 per cent.
As consumers, if we don’t like a product or its price, we can buy less, or none at all. But for many, gas cooks our food, gives us hot water and heats our homes. Gas is an essential service, right?
No longer. There’s a clean energy revolution happening, and it’s getting faster and cheaper. Solar, battery storage, LED lighting and other energy efficient equipment: they’re all getting cheaper and better. So it is indeed now feasible to stop using gas.
To review just how feasible, we’ve modelled a four-bedroom Sydney house using a typical amount of electricity and gas. It has gas hot water, gas cooking, and a gas heater.
To go gas-free, our household buys an electric heat pump hot water system (cost $4370), an induction cook top ($2255) and the most efficient reverse-cycle air conditioner for heating ($1500).
The gas can now be disconnected. Say goodbye to the gas company. No more gas bills.
But as this house does not want to increase its carbon emissions by using more power from the grid, it’s also going to install solar power ($5432) to replace the energy lost by cutting off the gas.
So now our household has spent $13,557 for electric cooking, heating, hot water and solar.
That’s a big investment for most of us. What’s the financial case? If we spend all this money, when will that investment pay for itself?
We’ve done the financial modelling. Like all such models, the assumptions drive the results. We know the cost of the new equipment, but what about the future cost of energy?
That’s a tough one. But we know gas will rise 17.3 per cent from July 1, then 0.7 per cent the following financial year (the IPART decision). We’ve used only an inflation rate of 3 per cent a year for the remainder of the 10-year analysis. We assumed electricity will rise 1.8 per cent from July 1, then just 3 per cent a year.
On that basis, your new solar-powered all-electric home will pay for itself in nine years.
But there’s one critical issue this ignores. Whereas once natural gas use had appeal because it seemed to be a low-carbon fuel compared with coal-fired electricity, that’s now being questioned. Some studies suggest that the gas industry’s impact on the climate has been underestimated. And there’s great concern about the local environmental impact of coal seam gas.
If a household puts value on the environmental benefits of not burning gas and using solar, the case for this switch becomes much stronger. For example, a household might say: “We’re a bit green. We think the environmental benefit adds 30 per cent to the financial savings.” In that case the payback becomes six years. If they’re deep green, and the environmental benefit is worth 90 per cent, the payback is just one year. This is one economic model that puts a price on people’s values.
So if you don’t like the new higher price of gas from today, start by using less. And if you can find the money, the technology’s there to turn off the gas tap – permanently.
Gavin Gilchrist heads energy efficiency advisors Big Switch Projects.