The Cheapest Way to Heat Your House in Australia: A Comprehensive 2025 Guide

The cost to heat your house in Australia

Before comparing heaters, let’s break down how much energy actually costs in Australia today:

• Electricity: Residential electricity prices vary significantly by state. In New South Wales, for example, rates range from 26.40 c/kWh to 37.27 c/kWh, averaging 32.51 c/kWh as of 2025 blog.ecoflow.com. Nationally, you can expect around 30 c/kWh, but check your local tariff.
  
  

• Natural Gas:Gas prices depend on location and supplier. In Victoria and Queensland, average rates hover around 4 c/MJ, whereas in Western Australia they can climb to 14.62 c/MJ finder.com.au. Since 1 kWh = 3.6 MJ, gas translates to roughly 14.4 c/kWh at 4 c/MJ.
  
  

• Wood:Costs vary by region and wood type, but a mid-range estimate is about $200 per tonne, yielding roughly 16 GJ of heat. That’s around 1.25 c/MJ or 4.5 c/kWh, before accounting for stove efficiency.

Top Cheapest Heating Options

1. Reverse-Cycle Air Conditioners (Heat Pumps)

Why it’s cheap: Heat pumps transfer heat rather than generate it, achieving coefficients of performance (COP) of 3–4. At 30 c/kWh and COP 3, that’s effectively 10 c/kWh of heat.

Pros:

• Highly efficient year-round (heating and cooling)

• Precise thermostat control

• Minimal installation costs for ductless split systems

Cons:

• Performance dips in sub-zero temperatures (though rare in most Australian cities)

• Higher upfront investment vs. portable heaters

2. Natural Gas Wall Heaters

Why it’s cheap: With gas at 4 c/MJ and efficient burners (~90% efficiency), running costs sit around 16 c/kWh of heat.

Pros:

• Instant warmth

• Low running cost in gas-friendly states

• No electricity required (ideal during power outages)

Cons:

• Fixed piping and installation costs

• Less environmentally friendly if using non-renewable gas

3. Wood Heaters & Pellet Stoves

Why it’s cheap: Dry hardwood can cost as little as 1.25 c/MJ (≈ 4.5 c/kWh). Even at 70% stove efficiency, that’s under 7 c/kWh.

Pros:

• Lowest cost per kWh of heat

• Ambience and self-sufficiency

Cons:

• Labor intensive (chopping, stacking, cleaning ash)

• Requires approved flue and regular maintenance

• Local council restrictions may apply

4. Portable Electric Heaters

Why it’s expensive:
Resistive heaters convert electricity 1:1, so at 30 c/kWh, you’re paying full price for heat.

Pros:

• Very low upfront cost

• Instant and portable

Cons:

• Highest running costs

• Not suitable for whole-home heating

Practical Tips to Slash Your Heating Bill

1. Zone Heating: Only heat rooms you’re using. Close doors and use draught stoppers.

2. Insulation & Sealing: Upgrade ceiling and wall insulation; seal window and door gaps.

3. Programmable Thermostat: Set temperatures to drop at night or when you’re out.

4. Regular Servicing: Keep gas heaters and heat pumps tuned for optimal efficiency.

5. Energy Rebates: Look into federal and state government rebates for efficient appliances.

6. Compare Energy Plans: Lock in lower usage rates with a competitive retailer, use our comparison tool to find the cheapest plans in your area.

Ready to cut your winter heating costs?

Use our free comparison tool to uncover the cheapest electricity or gas plan tailored to your postcode, and start saving today. Visit energyplans.com.au now to compare, switch, and cosy up for less.

By following these insights and choosing the right system, you can heat your home affordably all winter long, without compromising on comfort.