With gas prices climbing and network charges adding $250–$400 per year just to stay connected, more Australian households are looking to replace gas heaters with reverse cycle air conditioning. The appeal is clear: reverse cycle heat pumps deliver three to five units of heat for every unit of electricity they consume, making them dramatically cheaper to run than gas — especially when paired with solar. But the upfront replacement cost depends heavily on what you're replacing and what type of reverse cycle system you choose. Here's a complete breakdown of costs, rebates, and payback when you switch gas heating to electric in Australia.
The Three Gas Heater Types and Their Replacement Paths
Before pricing anything, you need to know what you're replacing. Each gas heater type has a different replacement strategy, and the cost gap between them is significant:
- Gas ducted heating — a central gas furnace pushing warm air through ducts under the floor or in the ceiling. Found in a lot of Victorian and ACT homes. Replacement usually means either a ducted reverse cycle system or two to four split systems.
- Gas wall furnace or space heater — a fixed unit flued through an external wall, heating one or two rooms. Typical replacement is a single split system in the same living area.
- Portable / unflued gas space heaters — LPG or natural gas units sitting on the floor. These are the easiest to replace: any reverse cycle split or even a portable heat pump works.
Reverse Cycle Split System Costs Per Room
A single-head split system is the go-to replacement for a wall furnace or to heat one zone of a home. Installed prices in Australia in 2026 typically fall in these ranges:
| Capacity | Room Size | Unit Only | Installed (Back-to-Back) | Installed (Complex Run) |
|---|---|---|---|---|
| 2.5 kW | Bedroom / small study (up to 20 m²) | $700–$1,000 | $1,200–$1,600 | $1,700–$2,200 |
| 3.5 kW | Medium living (20–35 m²) | $900–$1,400 | $1,500–$2,000 | $2,100–$2,600 |
| 5.0 kW | Open-plan living (35–50 m²) | $1,200–$1,900 | $1,800–$2,400 | $2,400–$2,800 |
| 7.1 kW | Large living (50–70 m²) | $1,700–$2,500 | $2,200–$2,800 | $2,800–$3,600 |
Brands like Mitsubishi Electric, Daikin, and Fujitsu sit at the top of that range; Haier, Kelvinator, and Midea come in cheaper. Stick to models with a Zoned Energy Rating Label (ZERL) score of 5+ stars in the cold zone if you're in Melbourne, Canberra, Hobart, or inland NSW.
Multi-Head Systems for Whole-Home Coverage
A multi-head system uses one outdoor compressor driving two to five indoor heads. Great when you have limited outdoor wall space, but not always the cheapest option. Installed prices:
| Configuration | Typical Total | Per-Head Cost |
|---|---|---|
| Dual head (2 rooms) | $3,800–$5,500 | $1,900–$2,750 |
| Triple head (3 rooms) | $5,500–$8,000 | $1,830–$2,670 |
| Quad head (4 rooms) | $7,500–$11,000 | $1,880–$2,750 |
| Five head (5 rooms) | $10,000–$14,000 | $2,000–$2,800 |
For most three to four bedroom homes, two or three well-placed single-head splits end up cheaper and more efficient than a full multi-head system, because you only run the rooms you use.
Ducted Reverse Cycle: The Premium Replacement
If you're replacing whole-home gas ducted heating and want the same "set and forget" experience with zoned control, ducted reverse cycle is the direct equivalent — but it's the most expensive path.
| Home Size | System Capacity | Installed Price |
|---|---|---|
| Small (3 bed, ~120 m²) | 10–12 kW | $10,000–$13,000 |
| Medium (4 bed, ~180 m²) | 14–16 kW | $12,000–$15,000 |
| Large (5 bed, ~250 m²) | 18–20 kW | $15,000–$18,000 |
| Extra large or two storey | 20 kW+ | $18,000–$25,000 |
Rebates That Significantly Reduce the Cost
State electrification incentives are now stackable with federal incentives, and they meaningfully change the maths:
- Victoria (VEU): Victorian Energy Upgrades discounts of $500–$3,500 off reverse cycle systems replacing gas heating, applied at point of sale by accredited installers.
- NSW (HEER): Home Energy Efficiency Retrofits and the Energy Savings Scheme offer $1,000–$3,000 off split systems replacing resistive or gas heating. Income-tested Energy Bill Relief boosters apply for concession holders.
- South Australia (REPS): Retailer Energy Productivity Scheme provides $300–$1,800 per system, higher for concession households.
- Western Australia: Household Electrification Package rebates up to $1,000 for eligible households replacing gas with efficient electric.
- ACT: Sustainable Household Scheme zero-interest loans up to $15,000 for electrification including reverse cycle.
Running Cost Savings Compared to Gas
This is where reverse cycle becomes a no-brainer. Gas heating in 2026 costs roughly 4–5c per MJ for the energy itself, plus a daily supply charge of $0.70–$1.20. Reverse cycle, at a coefficient of performance (COP) of 4, effectively pays around 8–10c per kWh of heat delivered on a 35c tariff — and far less than that on solar.
| Scenario (Average Melbourne Home, Winter) | Gas Ducted | Reverse Cycle | Annual Saving |
|---|---|---|---|
| Heating only usage | $1,400–$1,900 | $550–$800 | $850–$1,100 |
| Plus gas supply charge (if disconnecting) | +$320/yr | — | +$320 |
| With 6 kW solar offset (daytime heating) | $1,400–$1,900 | $300–$500 | $1,100–$1,600 |
Payback Period Examples
Combining the upfront cost, rebates, and running cost savings gives a realistic payback:
- Single wall furnace to one 5 kW split: $1,800 installed minus $800 VEU rebate = $1,000 net. Running cost saving $400/yr. Payback: 2.5 years.
- Gas ducted to 3 × splits across living, master, kids' zone: $6,500 installed minus $2,500 in rebates = $4,000 net. Saving $1,000/yr. Payback: 4 years.
- Gas ducted to full ducted reverse cycle: $13,000 installed minus $3,000 rebates = $10,000 net. Saving $1,100/yr plus $320 gas supply = $1,420/yr. Payback: 7 years.
When Reverse Cycle Alone Isn't Enough
Modern inverter heat pumps keep working efficiently down to around -7°C, and cold-climate models (look for "Hyper Heat", "Maxi Cool", or "Cold Region" badging) hold output to -15°C or lower. But output drops as it gets colder, so sizing matters.
- In Canberra, Ballarat, Bendigo, Armidale, or the Tasmanian highlands, always size 20–30% above the standard Australian sizing chart, and prefer cold-climate models.
- If your home has minimal ceiling insulation (under R2.0), insulate first. A $1,500 insulation upgrade halves the system size you'll need.
- Consider keeping one source of backup heat — a small electric panel heater or an existing wood fire — for the half dozen coldest nights a year.
Don't Forget the Gas Disconnect Decision
The biggest "hidden" saving from switching to reverse cycle is permanently disconnecting gas — you stop paying the daily supply charge of $0.90–$1.20, worth $320–$440 a year. But disconnection only pays off if you've fully electrified (cooking and hot water too), because running one gas appliance alone means paying the full network charge anyway. Use our Gas Disconnect Calculator to model your full switch — including heating, hot water, and cooking — and see exactly when abolishing the gas meter makes sense for your household.