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All-electric homes are cheaper to run, preserve gas for industry, and are better for the environment. Replacing a gas hot water system with an electric alternative can save around $400 a year. Going all-electric can save approximately $1,900 a year, or $2,230 with solar.
Details of changes
From 1 March 2027, gas hot water systems cannot be installed. If a gas hot water system breaks and cannot be repaired, or needs to be replaced for any other reason, it must be replaced with an electric alternative.
There is no requirement to replace existing gas space heating or gas cooktops. However, homeowners are encouraged to switch to efficient electric alternatives to further reduce energy bills.
Renovations and extensions
Buildings already connected to gas can remain connected. Existing gas appliances can continue to be used, maintained and repaired as usual.
Gas supply can also be increased or extended to service new parts of an existing building.
From 1 January 2027, new residential and commercial buildings, including full knock-down rebuilds, cannot be connected to gas except in specific circumstances. This includes new detached buildings on the same property, such as sheds and small second homes.
Discounts and rebates available
Hot water discounts and rebates
Households can save up to $1,560 on the upfront cost of an energy-efficient hot water system through a Victorian Energy Upgrades discount (up to $560) and a Solar Homes hot water rebate (up to $1,000).
Eligible households that choose a locally made hot water product listed through the Solar Homes program may be eligible for a higher rebate of up to $1,400.
Replacing a gas hot water system with a heat pump hot water system can reduce annual operating costs by up to $400.
There are also discounts available for a range of energy-efficiency upgrades. Visit the Victorian Energy Upgrades program to learn more.
Choosing the right electric appliance
Factors to consider
Choosing the right electric hot water system means considering your household's hot water needs and daily usage patterns.
Efficient electric systems, such as heat pumps and electric-boosted solar hot water systems, can outperform gas equivalents and provide long-term energy savings. While heat pumps generally perform well in very cold conditions, households in cooler climates may wish to consider frost protection features.
A qualified tradesperson will also consider factors such as manufacturer clearances, ventilation, noise, maintenance requirements and access.
For more information, see the Victorian Energy Upgrades hot water buyers guide and the Solar Victoria guide to choosing a hot water system.
Page last updated: 09/10/26