Is gas cheaper than electricity? We break down unit prices (MJ vs kWh), appliance efficiency, and supply charges to help you compare energy providers and save.
Published on 19/02/2026
By Pallav Verma
Energy Comparison
We’ve all been there staring at an energy bill, wondering if the numbers are a typo. With the cost of living rising across Australia, households are scrutinising every expense, and energy bills are often at the top of the list. One of the most common debates among homeowners and renters alike is the battle of the fuels: is gas cheaper than electricity?
The answer isn't a simple yes or no. While gas has historically been the budget-friendly champion for heating and cooking, the rise of highly efficient electric appliances and solar power is changing the game. Whether you are building a new home, renovating, or just trying to cut costs, understanding the real price difference between gas and electricity is essential for your wallet.
We’re here to break down the units, the efficiency rates, and the hidden costs so you can decide which energy source powers your life for less.
To compare gas and electric prices fairly, we first need to speak the same language. If you look at your energy bills, you will notice that gas and electricity are measured in different units:
On the surface, gas can appear cheaper than electricity because the two fuels are billed in different units on your bill — electricity in cents per kilowatt-hour (c/kWh) and gas in cents per megajoule (c/MJ).
To compare them fairly, you need to convert units. According to Australian government energy guidance, 1 kWh of electrical energy equals about 3.6 MJ of gas energy.
When you convert gas charges into the equivalent energy units, gas can work out cheaper per unit of energy consumed, but unit prices are only half the story. Your total bill also depends on supply charges, network costs and how much energy you actually use.
While gas is cheaper to buy, electricity is often much cheaper to use. This comes down to appliance efficiency.
Gas appliances, like heaters and stove tops, rely on combustion. They burn fuel to create heat, and inevitably, some of that heat escapes. For example, a gas cooktop transfers only about 40–50% of its energy to your pot; the rest warms up your kitchen air.
Modern electric appliances operate differently.
So, even though electricity costs more per unit, you might use far less of it to achieve the same result compared to gas.
If your home uses both gas and electricity, you are paying two separate "daily supply charges." This is the fixed fee you pay just to be connected to the network, regardless of how much energy you use.
Maintaining a gas connection can cost a household anywhere from $300 to $400 a year in supply charges alone. By moving to an all-electric home, you eliminate the gas supply charge entirely. This saving often outweighs the difference in unit prices.
It is also worth checking if you are on the ideal possible rate for your current setup. Many Australians stick with the same provider for years, unaware that they are paying a "loyalty penalty." You can learn more about this in our guide: Are You Paying The Loyalty Penalty?
Let’s look at how the costs stack up across the three main energy guzzlers in the average home.
Heating is the biggest energy cost for most Victorian and Tasmanian homes.
There is one factor that tips the scales heavily in favour of electricity: solar panels.
You cannot generate your own natural gas. However, with a rooftop solar system, you can generate your own electricity. If you run your washing machine, heat pump, and dishwasher during the day while the sun is shining, your running costs for those appliances drop to zero.
For homes with solar, electricity is almost always the cheaper option overall.
Where you live matters. Different states have different regulations and climate needs that affect the gas electric comparison.
Nationally, the trend is moving toward electrification. As the grid becomes greener and gas prices remain volatile, the economic argument for gas is weakening.
If you are building a new home or moving into an existing one, you have a critical choice to make.
The only way to know for sure if gas or electricity is cheaper for your specific household is to crunch the numbers based on your actual usage.
If you are planning to replace an appliance soon, consider the lifetime running cost, not just the sticker price. An electric heat pump might cost more to install than a gas heater, but the savings on your monthly bill could pay for the difference in just a few years.
In 2026 and beyond, the verdict is becoming clearer. While gas may still have a lower unit price, the high efficiency of electric appliances, the ability to offset costs with solar, and the savings from eliminating a second daily supply charge make an all-electric home the cheaper option for most Australians.
However, if you currently have working gas appliances and no solar, sticking with gas might be cost-effective in the short term until your appliances need replacing.
Don't leave your savings to chance. The energy market changes rapidly, and loyalty rarely pays off. Take a few minutes to compare energy plans and ensure you aren't paying more than you need to.
Disclaimer: The content provided is for informational purposes only and is based on publicly available information. While efforts are made to ensure accuracy, readers should independently verify all details with relevant energy retailers or providers. Electricity Provider may earn a commission from selected providers when users switch energy plans via its platform. Not all plans or providers available in the market may be included in the comparison, and availability can vary depending on location and eligibility. This content does not constitute professional advice.
