If your old gas heater is on its last legs or your winter bills keep climbing, the reverse cycle vs gas heating question is worth answering before you replace anything. For most Australian homes, a modern reverse cycle air conditioner costs less to run than gas, and it cools in summer too. The gap isn’t the same everywhere, though. It depends on your electricity and gas rates, the age of your heater, your climate and the way your home is built. This guide compares both options, shows you how to work out your own running costs, and explains when switching makes sense.
How each system makes heat
The two systems work in very different ways, which is why their running costs differ so much.
Gas heaters burn natural gas or LPG to create heat. Some of that energy is always lost, usually through the flue. Efficiency also falls short of 100%, so you never get quite as much heat as the gas you paid for. Figures commonly quoted put existing gas heaters at roughly 70 to 80% efficiency, with the best correctly installed models around 90%.
Reverse cycle air conditioners are heat pumps. Rather than generating heat, they move it from the outside air into your home, then reverse the process to cool in summer. Because moving heat takes far less energy than making it, they deliver several units of heat for every unit of electricity. This is measured as the coefficient of performance (CoP). The ACT Government’s buyer’s guide puts typical reverse cycle systems at a CoP of 2.5 to 6, meaning 250 to 600% efficiency.
Reverse cycle vs gas heating running costs
The most useful government comparison we found comes from the ACT Government. It modelled heating a 50 m² living area in a poorly rated (2-star) home using 2021/22 prices. The dollar figures are now dated and apply to Canberra’s climate, but the proportions are a good illustration.
| Heater type | Estimated annual cost |
|---|---|
| Electric element heater | $1,462 |
| Gas wall heater | $866 |
| Average reverse cycle (370% efficient) | $395 |
| Efficient reverse cycle (600% efficient) | $244 |
Work out your own cost per unit of heat
Energy prices vary too much for one national answer, but you can compare the two systems with your own bills. Find your electricity rate in c/kWh and your gas rate in c/MJ, then use these sums:
- Gas: gas rate (c/MJ) × 3.6 ÷ heater efficiency = cents per kWh of heat. There are 3.6 MJ in 1 kWh.
- Reverse cycle: electricity rate (c/kWh) ÷ CoP = cents per kWh of heat.
The table below uses example rates only, not current tariffs, with a gas heater at 75% efficiency.
| Scenario (example rates) | Cost per kWh of heat |
|---|---|
| Gas at 4 c/MJ | 19.2c |
| Gas at 2.5 c/MJ | 12c |
| Reverse cycle, CoP 3.7, electricity at 35 c/kWh | 9.5c |
| Reverse cycle, CoP 3.7, electricity at 50 c/kWh | 13.5c |
| Reverse cycle, CoP 5, electricity at 35 c/kWh | 7c |
Notice the fourth row. Cheap gas against a high peak electricity rate can narrow the gap or reverse it for an evening-only heating pattern, which is why it pays to check your own numbers. Remember too that real-world CoP falls as the outdoor temperature drops, and that these sums leave out daily supply charges. If reverse cycle lets you remove gas from the house altogether, you stop paying the gas supply charge as well. The ACT Government estimates that at around $300 a year, though it varies by retailer and region.
Upfront cost and installation
Running costs are only half the picture. As a rough guide, the ACT Government’s buyer’s guide suggests $2,000 to $4,000 installed for split systems and $7,000 to $15,000 for ducted or multi-head systems in larger homes. Prices depend on size, access and brand, so get a site-specific quote.
If your gas heater still works and you only want a cheaper option for one room, a single split system may be all you need. If you’re replacing ducted gas, keep these points in mind:
- Ducts: existing gas ducts are usually too narrow to reuse for a reverse cycle system, so allow for new ducting.
- Duct insulation: the ACT guide recommends at least R1.5 to limit heat loss.
- Electrical capacity: large systems may need a switchboard upgrade or three-phase power.
- Outdoor unit: it needs good airflow, service access, proper condensate drainage and a location that meets noise limits.
- Gas removal: a licensed gasfitter should cap the old appliance. If you’re leaving gas altogether, see our guide on how to disconnect gas.
Comfort: how the two feel day to day
Many people like gas because it produces warm air quickly. Reverse cycle air can feel cooler at the vent because the air is delivered at a lower temperature, but the room still reaches the temperature you set. Running the system at a steady setting tends to work better than switching it on and off at full blast.
The major comfort advantage of reverse cycle is that it replaces two appliances. You get heating and cooling from one system, whereas a gas heater leaves you needing separate cooling in summer. There’s also no burning of fuel inside your home, which is a plus compared with unflued gas heaters, and split systems let you heat only the rooms you’re using.
Does reverse cycle work in cold climates?
Yes, if you choose the right model. The ACT Government notes good systems keep working at -10°C, and recommends looking for an H2 rating on split systems in Canberra’s cold winters. Output and efficiency do fall as it gets colder, so check the heating capacity at low temperatures rather than only the headline figure. Our guide on what size air conditioner you need explains how to size for heating.
When comparing models, look at the Zoned Energy Rating Label. It shows red stars for heating and blue stars for cooling across hot, average and cold zones. Choose the capacity first, then the highest heating rating you can afford for your zone.
Rebates for switching from gas
Incentives can change the sums significantly, especially for ducted upgrades.
- Victoria: the Victorian Energy Upgrades program lists discounts of up to $1,610 for replacing a room gas heater and up to $5,530 for replacing a ducted gas heater with an efficient reverse cycle system (page updated August 2026). The system being replaced must be more than two years old, and the product must be program-approved. See our Victorian air conditioner incentive page.
- New South Wales: the NSW Government offers an air conditioner upgrade incentive through its household energy saving upgrades. Discounts vary by model and are generally arranged with an approved provider before work starts. See our NSW incentive page.
- Other states and territories: programs and retailer offers come and go, so check your state government’s energy website before you buy.
Rules and amounts change often, so confirm what applies to your home before signing a quote. Victorian landlords should also check the state’s electric and efficiency standards, which set out requirements for replacing heating in rental properties.
Adding solar to the equation
Rooftop solar can tip the balance further towards reverse cycle, because exported solar usually earns far less than the power you buy. Winter heating peaks in the evening when panels have stopped producing, so timing matters. Warming the house in the afternoon helps, as does a battery that carries daytime solar into the evening. Read more in can solar power run air conditioning at home.
Reverse cycle vs gas heating: which suits your home?
Reverse cycle is likely the better fit if:
- Your gas heater is old or needs replacing.
- You also want cooling in summer.
- You have solar or are planning to install it.
- You want to move off gas entirely.
- You qualify for a discount on the upgrade.
Keeping gas for now may make sense if:
- Your heater is relatively new, working well and serviced.
- You have a low gas rate and a high evening electricity rate.
- Your electrical supply would need expensive upgrades.
Insulation and draught sealing pay off with either choice. A well-sealed home needs less heating, whichever system you use. If you’re weighing up system types, our comparison of ducted vs split system efficiency can help.
FAQ
Is reverse cycle cheaper than gas heating?
In most cases, yes, particularly with an efficient modern unit. The exception is usually a very cheap gas rate paired with expensive peak electricity. Use your own bill rates to check.
Can I reuse my gas ducts for reverse cycle?
Usually not. Gas heating ducts are typically too narrow for a reverse cycle system, so most ducted conversions need new ductwork. An installer can inspect yours.
Should I replace a working gas heater?
Not necessarily. Compare the cost of replacement, any available discount and your likely savings. Some households add a split system to the main living area first, then replace the gas heater when it reaches the end of its life.
Will a reverse cycle system keep my home warm on frosty mornings?
A correctly sized unit suited to your climate should. Check its low-temperature heating capacity, and ask your installer about defrost cycles, which are normal in cold conditions.
Get a quote for your home
The best answer to reverse cycle vs gas heating comes from your own home, bills and climate. If you’re ready to compare the options, request a free quote from Sunloop Energy. We’ll assess your home, recommend a split or ducted system sized to suit it, and show you how it can work with solar and battery storage.
