Reverse-Cycle AC vs Gas Ducted Heating: Which Is Cheaper to Run in Australia?

If you are building a new home or upgrading your heating system, the choice between reverse-cycle air conditioning (a heat pump) and gas ducted heating comes down to one thing: which costs less to run? The answer depends on three numbers — your local gas price, your electricity rate, and your climate zone. This article walks through the comparison without assuming one answer is right for everyone. Australia is unique. Unlike the US and UK, Australian homes have no furnace culture. Heating is dominated by reverse-cycle split systems and gas ducted heating, with electric resistance and hydronic systems making up the remainder. Understanding the operating cost comparison helps you make an informed decision.

Gas Ducted Heating

A gas ducted heater is rated by its output in megajoules (MJ) per hour. A typical system provides 15-25 MJ/h output. Natural gas in Australia costs roughly AU$0.04 per MJ (based on AEMO 2026 data). At 85% efficiency (modern gas ducted heaters), delivering 100 MJ of usable heat costs: AU$0.04 ÷ 0.85 × 100 = AU$4.71 per 100 MJ delivered

Reverse-Cycle Air Conditioning

A reverse-cycle system is a heat pump. Its CoP (Coefficient of Performance) tells you how many units of heat it delivers per unit of electricity. A modern split system with CoP 4.0 delivers 4 kW of heat per kW of electricity. At AU$0.30/kWh, delivering 100 MJ (27.8 kWh) of heat costs: 27.8 kWh ÷ 4.0 × AU$0.30 = AU$2.09 per 100 MJ delivered In this example, reverse-cycle AC is about half the operating cost of gas. But the numbers depend heavily on your specific rates.

The "break-even" electricity price — where reverse-cycle AC and gas ducted heating cost the same to run — depends on your gas price and the system's CoP. For a CoP 4.0 reverse-cycle system vs an 85% efficient gas ducted heater:

For a high-efficiency split system (CoP 5.0), the break-even electricity price is about 25% higher, making reverse-cycle AC even more competitive. The average Australian residential electricity rate is AU$0.25-0.36/kWh, and the average residential gas price is AU$0.03-0.05/MJ. In that range, reverse-cycle AC has a clear operating cost advantage in most Australian capitals.

Reverse-cycle air conditioning has an unambiguous cost advantage in these situations:

1. You currently have no gas connection. Connecting a new property to the gas network costs AU$1,000-AU$5,000. If you are not already on gas, that connection fee alone could pay for a high-quality reverse-cycle system.
2. You need cooling anyway. Reverse-cycle AC provides both heating and cooling. In Australian summers, air conditioning is essential in most capitals. A gas ducted system requires a separate split system for cooling — two appliances instead of one.
3. Your gas prices are above AU$0.05/MJ. Some regions — particularly South Australia and NSW — see gas prices above the national average. At AU$0.06/MJ, reverse-cycle AC beats gas at typical electricity rates.
4. You are in a moderate climate (Sydney, Perth, Brisbane). Reverse-cycle systems operate at peak efficiency in mild conditions. In Brisbane or Perth, the annual heating load is low enough that even small efficiency gains make a big difference.

Gas ducted heating remains competitive when:

1. Gas is below AU$0.03/MJ. Parts of Victoria and the ACT benefit from legacy gas infrastructure keeping prices low. At AU$0.03/MJ, gas heating is cheaper to run than reverse-cycle AC at typical Victorian rates (AU$0.25/kWh).
2. Your electricity rate is above AU$0.36/kWh. South Australia has the highest electricity rates in the country at ~AU$0.36/kWh, which narrows the gap. With a lower CoP unit (3.0-3.5), gas can be competitive.
3. You are retrofitting a large existing ducted gas system. Replacing a functioning gas ducted heater with reverse-cycle splitters may not pay back on heating savings alone. Let the existing system reach end of life before switching.
4. Your home is poorly insulated. Reverse-cycle systems deliver lower-temperature air over longer cycles. In a draughty Australian home, a gas ducted heater's higher output temperature may feel warmer more quickly. Fix the insulation first — ceiling insulation upgrades in Australia typically pay back in 2-4 years.

Modern reverse-cycle split systems from Daikin, Mitsubishi Electric, and Fujitsu maintain good CoP down to about 0°C. Below that, efficiency drops. Most Australian capitals rarely see extended sub-zero periods:

Source: Bureau of Meteorology (BOM) climate data Even in Canberra or Hobart, a reverse-cycle system handles 95%+ of annual heating hours efficiently. For the rare extreme cold days, an electric resistance booster or gas ducted backup (dual-fuel configuration) can maintain comfort.

• Carbon emissions: The Climate Council reports that a reverse-cycle AC running on Australia's ~38% renewable grid produces less CO₂ per MJ of heat than burning natural gas. As the grid decarbonises, this advantage grows.
• Indoor air quality: Gas ducted heaters produce combustion byproducts including nitrogen dioxide and carbon monoxide. They must be properly vented and serviced annually. Reverse-cycle AC has zero on-site combustion.
• Cooling included: Gas ducted heating requires a separate air conditioner for summer. Reverse-cycle AC handles both seasons — one system, one installation cost, one service schedule.
• Gas supply reliability: The Australian Energy Market Operator (AEMO) has warned about potential gas shortfalls in southern states from 2027. As domestic gas production declines, gas prices are expected to rise, further tilting the economics toward reverse-cycle systems.

The comparison comes down to your specific numbers. Use our Australia Heat Pump Cost Calculator to plug in your home size, climate zone, current energy rates, and installation cost. It shows annual operating costs for both systems, the payback period, and whether the verdict is a strong fit or marginal savings. No signup, no sales pitch — just the maths.