Victoria Unveils New Residential Gas Reduction Reforms

As the Victorian Government pursues increasing residential electrification in the state, home owners and landlords will be getting a firm push in that direction under changes to come into effect in 2027. But the reforms aren’t as broad as they could have been.

Following consultation on draft regulations for Victoria’s Building Electrification Regulatory Impact Statement, Premier Jacinta Allan and Minister for Energy and Resources Lily D’Ambrosio yesterday announced reforms to support the state’s goal of reducing residential gas consumption.

Owner/Occupier Homes And Commercial Buildings

From January 1, 2027, *all* new homes¹  and all new commercial premises besides industrial, manufacturing and agricultural buildings will need be built all- electric.

And under new regulations to take effect from 1 March 2027, when a gas hot water system in an existing home reaches the end of its service life (not just needing a repair), it must be replaced with an efficient electric alternative such as a heat pump hot water system.

To support the switch, rebates are available from the Victorian Energy Upgrades (up to $490) and Solar Victoria programs (up to $1,000 + an extra $400 for an eligible ‘Australian-made” system).

There are no changes yet to gas heating for owner occupiers or gas cooking in existing homes. While including replacing end-of-life gas heaters with efficient electric appliances (e.g. a reverse cycle air-conditioner) was the Victorian Government’s preferred option, that didn’t make the final cut.

Rental Properties

From 1 March 2027, new Minimum Energy Efficiency Standards will apply to rental properties and public housing in Victoria. From that date:

• Gas hot water systems must be replaced with efficient heat pumps at the end of their service life.
• Gas heaters must be replaced with reverse-cycle air conditioners at end of service life.

And at the start of a new lease after 1 March 2027:

• Main living areas (which are already required to have heating) must also have an efficient electric cooling system — a reverse cycle air-conditioner will satisfy this and the above gas heater requirement.
• A minimum 4-star WELS rated shower head must be installed.
• Where ceiling insulation isn’t present, minimum R5.0 rating insulation must be installed.
• Draught sealing must be installed.

In rental homes with none of the above, landlords could be forking out a significant amount of cash to get their properties ship-shape; but will also be supported by Victorian Energy Upgrades and Solar Victoria rebates. There may be some exemptions such as where installation costs are prohibitive or there are space issues.

To support local appliance manufacturing, the Allan Government will also be investing $9.5 million towards an Industry Diversification Program.

Rewiring Australia: Changes “Vital”

Rewiring Australia said the standards are nation-leading and strongly recommended other states follow suit.

“By requiring landlords to electrify their investment properties when gas appliances need to be replaced, Victoria’s new standards will crucially reduce energy bills for renters,” said Rewiring Australia CEO Francis Vierboom. “This is vital because renters have little choice in how their home is powered and cannot as easily benefit from cheaper electric alternatives as homeowners.”

IEEFA: “A Positive Step”

The Institute for Energy Economics and Financial Analysis (IEEFA) also welcomed the announcement.

“These regulations are good news for industry as well as households,” said IEEFA Analyst Jay Gordon. “Victoria is grappling with the risk of gas supply shortfalls. But by transitioning homes to efficient electric appliances that are cheaper to run, that gas can be freed up for industrial users who might not yet have the option to electrify.”

… and just on that note; the Allan Government’s Gas Security Statement was also released yesterday, outlining the steps being taken to avoid gas shortfalls previously forecast by the Australian Energy Market Operator (AEMO).

Whether you’re in Victoria or another state or territory, discover how getting off gas saves you money (and how much).