If you're still heating your home with gas ducted heating, you're likely paying significantly more than you need to. Modern reverse cycle air conditioners — which function as both heaters and coolers — are 3–5 times more efficient than gas heaters. In this guide, we compare the real running costs of gas and electric heating across Australia in 2026, and explain why the physics makes reverse cycle the clear winner.
Why Reverse Cycle Heating Is More Efficient
The fundamental advantage of reverse cycle heating comes down to physics. A gas heater burns gas to produce heat at a ratio of roughly 0.7:1 — for every dollar of gas, you get about 70 cents worth of heat (the rest goes up the flue).
A reverse cycle air conditioner doesn't create heat — it moves it from the outside air into your home using a refrigerant cycle. Its Coefficient of Performance (COP) ranges from 3 to 5, meaning for every 1kW of electricity consumed, it delivers 3–5kW of heat energy. Even in cold weather when COP drops to around 2–3, it's still vastly more efficient than gas.
Running Cost Comparison: Gas vs Reverse Cycle
Here's what a typical household can expect to pay for winter heating (May–September), based on 2026 energy prices and average Australian home sizes:
| Heating Type | Seasonal Cost | Efficiency |
|---|---|---|
| Gas ducted heating | $1,200–$2,000 | 60–80% |
| Gas wall furnace | $600–$1,200 | 70–85% |
| Portable electric bar/fan heater | $800–$1,500 | 100% (COP 1) |
| Reverse cycle split system | $300–$600 | 300–500% (COP 3–5) |
| Reverse cycle ducted | $400–$800 | 250–400% (COP 2.5–4) |
Running Costs by State
Heating costs vary significantly across Australia depending on climate and local energy prices. Here's a state-by-state comparison for a typical 3-bedroom home over a full winter season:
| State | Gas Ducted | Reverse Cycle | Annual Saving |
|---|---|---|---|
| Victoria | $1,500–$2,000 | $500–$800 | $800–$1,200 |
| Tasmania | $1,400–$1,800 | $500–$750 | $700–$1,050 |
| ACT | $1,600–$2,100 | $550–$850 | $850–$1,250 |
| South Australia | $1,200–$1,600 | $400–$650 | $600–$950 |
| New South Wales | $1,000–$1,400 | $350–$550 | $500–$850 |
| Western Australia | $800–$1,200 | $300–$500 | $400–$700 |
| Queensland | $400–$700 | $150–$300 | $200–$400 |
The savings are most dramatic in colder states like Victoria, Tasmania, and the ACT, where heating demand is highest and the gap between gas and reverse cycle running costs is greatest.
But What About Really Cold Days?
A common concern is that reverse cycle air conditioners lose effectiveness in very cold weather. While it's true that COP decreases as outdoor temperatures drop, modern inverter units maintain excellent performance:
- Above 7°C: COP 4–5, peak efficiency
- 0°C to 7°C: COP 3–4, still very efficient
- −5°C to 0°C: COP 2–3, still cheaper than gas
- Below −5°C: COP 1.5–2, comparable to gas in cost but rare in most Australian cities
Even in Melbourne and Canberra, temperatures rarely stay below 0°C for extended periods. For the vast majority of the Australian winter, a reverse cycle system is significantly cheaper than gas heating.
Comfort and Air Quality Benefits
Beyond cost savings, reverse cycle heating offers several advantages over gas:
- No combustion products: Gas heaters (especially unflued models) release nitrogen dioxide, carbon monoxide, and water vapour into your home. Studies have shown that gas cooking and heating can raise indoor NO₂ levels above outdoor standards.
- Humidity control: Reverse cycle systems dehumidify the air while heating, reducing condensation and mould risk. Gas heaters release moisture, worsening condensation problems.
- Even heating: Modern inverter systems provide consistent, even heat rather than the on/off cycling of older gas systems.
- Summer cooling included: Your reverse cycle system also cools your home in summer — no need for a separate cooling system.
- Zone control: Split systems allow you to heat only the rooms you're using, rather than heating the entire house through ducting.
Making the Switch: What It Costs
If you're replacing gas heating with reverse cycle, here are the typical costs:
| System Type | Installed Cost | Covers |
|---|---|---|
| Single split system (2.5–3.5kW) | $1,500–$2,500 | One room (living area or bedroom) |
| Single split system (5–7kW) | $2,000–$3,500 | Large living area |
| Multi-split system (2–4 heads) | $4,000–$8,000 | Multiple rooms from one outdoor unit |
| Ducted reverse cycle | $5,000–$10,000 | Whole home |
With annual savings of $500–$1,200 compared to gas ducted heating, the payback on a reverse cycle system is typically 3–6 years. After that, the savings flow directly into your pocket — and you get summer cooling as a bonus. Our detailed walkthrough of the cost to replace a gas heater with reverse cycle covers quotes, rebates, and install timelines.
The numbers are clear: in 2026, there is no financial case for choosing gas heating over a modern reverse cycle system. Whether you're building a new home, replacing a failing gas heater, or simply looking to cut your energy bills, reverse cycle is the smarter choice in every Australian climate.