Quick Answer

A reverse-cycle split system running on electricity costs $0.08–$0.20 per hour to heat a room in Melbourne — the cheapest option available. Ducted gas heating costs $0.20–$0.45 per hour, while a portable electric panel heater costs $0.25–$0.45 per hour. Annual heating costs for a Melbourne home range from $300–$800 for a split system to $900–$1,800 for ducted gas, depending on house size and insulation.

The three main heater types used in Melbourne homes — reverse-cycle split systems are significantly cheaper to run than gas ducted systems or portable electric heaters, despite having a higher upfront purchase cost.
The three main heater types used in Melbourne homes — reverse-cycle split systems are significantly cheaper to run than gas ducted systems or portable electric heaters, despite having a higher upfront purchase cost.

Heater Running Costs Per Hour (Melbourne, 2026)

Heater Type Power Draw Cost/Hour Notes
Reverse-cycle split system (7-star) 0.35–0.70kW $0.11–$0.22 COP 4–5; most efficient available
Reverse-cycle split system (5-star) 0.55–1.0kW $0.18–$0.32 Still much cheaper than alternatives
Ducted gas heating (5-star) N/A (gas) $0.22–$0.38 At current Victorian gas tariffs
Ducted gas heating (3-star) N/A (gas) $0.35–$0.55 Older system, lower efficiency
Electric panel heater (2kW) 2.0kW $0.54–$0.70 Resistance heating — no efficiency gain
Oil column heater (2.4kW) 2.4kW $0.65–$0.85 Resistance heating, slow warm-up
Unflued gas heater (portable) N/A (gas) $0.30–$0.55 CO risk; inefficient for sealed homes
Wood heater (slow combustion) N/A (wood) $0.10–$0.30 Highly variable — wood cost, moisture content
Pro tip: A reverse-cycle split system at $0.11–$0.22/hour is cheaper than a 2kW panel heater at $0.54–$0.70/hour — despite heating a larger space more effectively. If you’re using portable electric heaters as your main heating source, switching to a split system will cut your heating bill by 60–70%.

Annual Heating Costs for Melbourne Homes

Home Type Reverse-Cycle Electric Ducted Gas (5-star) Panel Heaters
1-bedroom apartment $120–$220 $350–$550 $350–$550
3-bedroom house (well insulated) $300–$550 $700–$1,100 $800–$1,400
3-bedroom house (poor insulation) $550–$950 $1,100–$1,800 $1,500–$2,500
5-bedroom house (all zones) $700–$1,200 $1,400–$2,200 Not practical for whole home

Note: Melbourne heating season is approximately May–September (5 months), with peak usage in June–August. Hours used per year assume 6–8 hours/day in winter, 1–2 hours/day in shoulder months.

Heating a Melbourne living room with a reverse-cycle split system in winter — at $0.11-$0.22 per hour, it is by far the cheapest way to heat a room, delivering 3-5 times more heat per unit of electricity than a resistive panel heater.
Heating a Melbourne living room with a reverse-cycle split system in winter — at $0.11-$0.22 per hour, it is by far the cheapest way to heat a room, delivering 3-5 times more heat per unit of electricity than a resistive panel heater.

Gas vs Electric Heating: True Cost Comparison

The comparison isn’t as simple as tariff rates suggest. Gas is measured in megajoules (MJ) at $0.038–$0.055/MJ, while electricity is in kWh at $0.28–$0.38/kWh. The conversion: 1 kWh = 3.6 MJ. A gas heater at $0.045/MJ costs $0.162 per equivalent kWh of energy input. With 80% heating efficiency, that’s $0.20 per kWh of useful heat delivered.

A reverse-cycle split system at $0.32/kWh electricity, with a COP of 4.0, delivers 4 kWh of heat per kWh of electricity — effective cost of $0.08 per kWh of useful heat. That’s 2.5× cheaper than gas heating at current Victorian tariffs.

What Affects Heater Running Costs?

1. Insulation Quality

A poorly insulated home loses heat 2–3× faster than a well-insulated home. Every dollar spent on ceiling insulation (R3.5–R6.0) returns $2–$5 in reduced heating costs over 10 years. In SE Melbourne’s clay-soil suburbs like Cranbourne, Pakenham and Officer where newer housing stock predominates, insulation is generally better than in older Dandenong and Frankston homes.

2. Draught-Proofing

Draughts through gaps around doors, windows, skirting boards and cornices account for 15–25% of heat loss in typical Melbourne homes. Sealing these with draught excluders, door snakes, and foam tape costs $20–$100 and reduces heating needs significantly.

3. Thermostat Setting

Each degree above 20°C adds approximately 10% to heating costs. Setting your thermostat to 18–20°C rather than 24°C can halve your heating bill. Use rugs, warm clothing and lap blankets to supplement heating at lower thermostat settings.

4. Zoning and Timer Use

Don’t heat the whole house if you’re only in two rooms. Close doors, use zoning on ducted systems, and set timers to heat only occupied periods. Running a ducted system to all zones 24/7 costs 3–4× more than heating only occupied rooms during occupied hours.

Fitting a draught excluder to an exterior door — sealing draughts is the cheapest heating upgrade available, costing $10-$30 per door and reducing heat loss by 15-25%, equivalent to cutting your heating bill by the same amount.
Fitting a draught excluder to an exterior door — sealing draughts is the cheapest heating upgrade available, costing $10-$30 per door and reducing heat loss by 15-25%, equivalent to cutting your heating bill by the same amount.

Cheapest Heaters to Run: Ranked

Rank Heater Type Cost/Hour Best For
1 Reverse-cycle split system (7-star) $0.11–$0.22 Living areas, bedrooms — whole home with multi-head
2 Wood heater (efficient, dry wood) $0.10–$0.30 Living areas; pollution issues in some councils
3 Ducted reverse-cycle electric $0.20–$0.40 Whole home; higher upfront than split systems
4 Ducted gas (5–6 star) $0.22–$0.38 Whole home; lower upfront, higher ongoing
5 Hydronic heating (gas) $0.28–$0.50 Premium comfort; high upfront cost
6 Unflued gas heater $0.30–$0.55 Not recommended — CO/NO2 health risk
7 Electric panel heater $0.54–$0.70 Occasional use only — expensive to run continuously
8 Oil column heater $0.65–$0.85 Supplementary heating only
Safety warning: Unflued gas heaters (portable cabinet heaters and blue-flame heaters) produce carbon monoxide and nitrogen dioxide inside your home. In tightly sealed modern homes, these gases accumulate to unsafe levels. Victoria’s building code restricts their use in bedrooms and small rooms. Replace with a reverse-cycle split system — cheaper to run and genuinely safe.
Testing for carbon monoxide near an unflued gas heater — these portable units produce CO and NO2 inside sealed rooms, posing real health risks that make them unsuitable for modern well-insulated Australian homes.
Testing for carbon monoxide near an unflued gas heater — these portable units produce CO and NO2 inside sealed rooms, posing real health risks that make them unsuitable for modern well-insulated Australian homes.
Installing lined thermal curtains on south-facing windows — heavy curtains reduce radiant heat loss by up to 40% on Melbourne winter nights, one of the highest-return passive heating improvements for existing homes.
Installing lined thermal curtains on south-facing windows — heavy curtains reduce radiant heat loss by up to 40% on Melbourne winter nights, one of the highest-return passive heating improvements for existing homes.

Top Tips to Cut Heating Costs

  1. Switch from panel heaters to a split system. If portable electric heaters are your main heating source, a reverse-cycle split system pays for itself in 2–4 years through running cost savings alone.
  2. Add ceiling insulation if you don’t have it. R3.5 ceiling insulation (roughly $1,200–$2,000 installed for a 3-bed home) reduces heating and cooling costs by 30–40%, paying back in 4–7 years.
  3. Seal draughts before winter. A draught-proofing kit from Bunnings ($30–$80) addresses the most common entry points — under doors, around window frames, through skirting boards.
  4. Use a timer. Set the heater to come on 30 minutes before you wake up and turn off 30 minutes before you leave. Most people heat an empty house for far longer than necessary.
  5. Service ducted gas heating annually. Gas heaters need annual servicing by a licensed gasfitter ($120–$200) — a dirty heat exchanger reduces efficiency by 15–20%.
  6. Get your ducted system serviced. Regular filter cleaning and annual professional service ensures the system runs at rated efficiency.
  7. Close internal doors. Heat only occupied rooms. Closing doors to unused bedrooms and hallways can reduce heating needs by 25–40% in a standard Melbourne home.
  8. Use heavy curtains. Lined thermal curtains on south and west-facing windows reduce radiant heat loss by up to 40% on cold nights.

Local Melbourne Resources

Frequently Asked Questions

What is the cheapest heater to run in Australia?

A reverse-cycle split system air conditioner is the cheapest heater to run in Australia, costing $0.11–$0.22 per hour for a living area. It delivers 3–5 times more heat per unit of electricity than resistive panel heaters because it moves heat rather than generating it. The upfront cost ($800–$2,500 installed) is recovered through running cost savings within 2–4 years if replacing panel heaters.

Is gas or electric heating cheaper in Melbourne?

Reverse-cycle electric is now cheaper than gas heating in Melbourne for most households. At current tariffs (gas $0.045/MJ, electricity $0.32/kWh), a reverse-cycle system delivers heat at $0.08–$0.14 per kWh versus $0.18–$0.25 per kWh for gas ducted heating. The gap has widened substantially since 2020 as gas prices rose.

How much does it cost to run a 2kW electric heater for 8 hours?

A 2kW panel heater running 8 hours uses 16 kWh of electricity. At a standard Victorian tariff of $0.32/kWh, that’s $5.12 per day or roughly $460 over a 90-day winter. A reverse-cycle split system heating the same space would cost $1.20–$2.50 per day — saving $300–$400 over winter alone.

Are unflued gas heaters safe to use indoors?

Unflued gas heaters produce carbon monoxide and nitrogen dioxide inside the room. In well-sealed modern homes, these can reach unhealthy concentrations without adequate ventilation. Victoria restricts their use in bedrooms and small rooms. They are not recommended as primary heating systems — reverse-cycle split systems are safer and cheaper to run.

How much does ducted gas heating cost to run per year in Melbourne?

A 5-star ducted gas heating system in a 3-bedroom Melbourne home costs approximately $700–$1,100 per year for heating, based on 6–8 hours/day use in winter and shoulder months. A 3-star system in a poorly insulated home can cost $1,100–$1,800 per year. Converting to reverse-cycle ducted or multi-head split systems typically saves $300–$700 per year in running costs.

Final Thoughts

The right choice for heating in Melbourne is almost always a reverse-cycle split system — it’s the cheapest to run, heats and cools, and doesn’t carry the health risks of unflued gas. If you’re currently relying on portable electric heaters, replacing them with a split system pays back within 3 years. If you have ducted gas heating, keep it maintained until it’s due for replacement, then compare ducted reverse-cycle electric costs before automatically replacing with gas. The economics in 2026 strongly favour the switch.