How To Keep Your House Warm On The Cheap

If you enjoy skiing, you're probably delighted that Australia's cold snap isn't abating. But for everyone else it can be a massive — and costly — inconvenience. Many in the community are shivering while contemplating just how big their next gas bill will be. Let's take a look at why gas is so expense — along with some ways to stay warm on the cheap.

Eastern Australia's gas market is rapidly changing, driven by the first exports of liquefied natural gas (LNG) from Queensland. And this is affecting the whole supply chain, from gas producers, to the way we use gas in our homes.

Gas was cheap, for decades

In Victoria, South Australia and through to New South Wales, Queensland and Tasmania, gas has long been viewed as the preferred fuel for many applications — from industrial uses right down to warming our lounge rooms. Since the discovery of the massive Bass Strait oil and gas deposits off Victoria in the late 1960s, gas consumption across eastern Australia grew, decade after decade.

But despite these discoveries and growing production, the resource companies involved were often frustrated. While global crude oil prices went up and up, eastern Australian gas prices were stuck in the 1970s. Gas consumers enjoyed access to some of the cheapest gas in the developed world.

On the other hand, gas producers dared not complain too loudly. They often considered this gas nearly a waste product – interfering as it did with the speed at which the far more valuable crude oil and LPG could be drawn from the ground. If eastern Australia had been another jurisdiction such as Nigeria or North Dakota, this nuisance gas could have been quickly disposed of by flaring or venting. However, with some foresight, Australian industry regulators have generally discouraged such wasteful and environmentally damaging practices.

Faced with this constraint, what were the resource companies to do? Unlike crude oil, gas is costly to ship to the more lucrative markets in Japan and Korea, first requiring liquefaction at temperatures as low as minus 160C. Creating new demand "sinks" for gas in-country was one strategy. Pipelines were built to connect up all of the eastern states. Still, this "domestic" gas languished at a sales price far below that of crude oil.

Coal seam gas arrives

Then in the first decade of this century came the realisation that coal seam gas (CSG), located mostly in Queensland but also in New South Wales, could be produced in quantities far exceeding the demands of the staid domestic market, by a factor of three or more.

Following the examples of Western Australia and the Northern Territory, the only option for gas companies was to invest billions of dollars in, at last, building the first liquefaction and export facilities on Australia's east coast.

For legacy gas producers, even those not directly involved in the LNG-export decisions, this was the dream come true. After decades, a buyers' market rapidly coldshifted to become a sellers' market. Where previously buyers would remind producers they would be happy to take that "waste product" off their hands, producers could now inject into supply contract negotiations the spectres of "world-parity pricing" and "high CSG production costs".

Nowhere in the world had it ever occurred where an established, reasonably large domestic market, serving customers ranging from large industry to millions of homeowners, was suddenly eclipsed by the mammoth export-focused LNG industry.

Eastern Australia gas demand peaked — three years ago

Even before the launch of the first LNG export cargo from Queensland late last year, major gas buyers raised concerns about future gas costs and contractual availability. The Australian Competition and Consumer Commission is examining transparency and barriers to competition in the gas industry.

When the New South Wales upper house held an inquiry into gas supplies earlier this year, it gave us, at the University of Melbourne Energy Institute, the opportunity to present our analysis of declining future gas demand in that state. Now Victoria's upper house is likewise having an inquiry where we will present aspects of our extended research into gas supply and demand across all of eastern Australia.

The eastern Australian gas market has experienced significant upheaval and will continue to change over the next ten years. Data from the Australian Energy Market Operator indicates that the volume of gas used in eastern Australia peaked three years ago.

Gas demand will continue to decline across all sectors. In the electricity-generation sector, with rising gas prices, the abolition of the carbon price, and a surplus of coal-fired generation, gas will only be sparingly used. The Australian Energy Market Operator is also forecasting a steep drop in the amount of gas used by industry.

The solution: fuel-switch from gas to electricity

The amount of gas used in buildings will also decline. As we shiver here in Melbourne, how would you like to reduce your heating costs by up to, say, 70%? If interested, you have to do two things: (1) turn your gas heater to "off" and (2) turn your reverse cycle air conditioner to "on" – on heating mode of course!

Infrared image of wall-mounted air conditioner producing heat at 50C. (Tim Forcey)

In my home we did that for the first time this winter. Our savings are remarkable, though not surprising nor different to what others in the community are reporting. As an example, during two particularly blustery days I found I could comfortably heat my house one day with gas at an energy-only cost of $4.80 and then do it the next day with my air conditioner at a cost of just $1.50. Our savings across the full heating season will add up to hundreds of dollars.

Results in other homes will depend on factors including what you pay for electricity and gas, the efficiencies of your gas heater and air conditioner, where your heat sources are located within your home, and individual comfort and convenience preferences. But it should not be long before word gets out to the 4.4 million Australian homes that already have at least one reverse-cycle air conditioner.

Previously I reported on the similarly large savings possible by using an efficient heat pump to heat water, especially if you have excess self-generated solar electricity. Add an induction cooktop and there is no economic need to connect gas to most Australian homes. Businesses are springing up that offer "all-electric" home conversions" to people interested in making the switch.

Collectively, homes are large consumers of eastern Australian gas. This coming "second-era of Australian home electrification" will have a big impact on gas and electricity supply-demand dynamics over the next decade.

The ConversationTim Forcey is Energy Advisor, Melbourne Energy Institute at University of Melbourne.

This article was originally published on The Conversation.


Comments

    The old computer parts like fans and power supply can be put together with some black sealed irrigation pipe that sits in the sun. Pump air from a high point in your room using the fans through the black pipe and have it enter back into the room at a low point, voila.
    The sun needs to be out and the piping long enough and positioned accordingly to warm the air going through it.

    Last edited 21/07/15 7:59 pm

    Currentgas fueled central heating units are much more efficient than older ones, and still more efficient than reverse cycle AC in terms of dollars.

    If you compare an older, inefficient central heater to a RC aircon, of course it's going to be worse off.

      I've recently gone from a big old wall furnace to ducted heating both gas. Costs less and heats the whole house.

      I guess the question is grant, is just how many people, unlike yourself, actually don't know that it can be a no-brainer to use the reverse cycle AC instead of the old-reliable ducted gas? Would it be a million Australian homes?

      And whether a newer ducted gas unit is cheaper or more costly than running say just a single reverse cycle: another important factor is just how much of the house you want to / need to heat at any moment. My wife and I nearly always finish up just in the lounge room (1/8th of the living space? zoned off) heated just with the air con. Why blow hot air around the entire house just to heat the one room? Which is what happens with the ducted gas. OK, we do shut down a register or two, but that can just overpressure the rest, and lead to more ducted leakage...

      Another factor is whether or not the owner asked for and got a 30% discount on their electricity charges by simply ringing up their supplier and asking for it (as most Victorians can do)

      And if you can access peak/shoulder/offpeak pricing and how that aligns with your heating schedule. That can be another factor. Lots of options with electricity these days (heck, generate your own!). Not so many with gas.

      Are you able to do a test run in your house?

      A more full explanation of our home experiment may be published in the next edition of Renew Magazine...

    Alternatively, I just cradle my goddamn R9 290X.

    "was suddenly eclipsed by the mammoth export-focused LNG industry."

    yeah we have a huge problem in handssince we are the only country in the world that does not set up a domestic reserve (WA has some, 20%), Shale gas not being anywhere enough to supply China, gas price will sky rocket (as contract have been already signed).

    Any shale gas rig is to export, not for domestic benefit ( but we get the pollution, profits go overseas as these company are 100% foreign owned).

    Our only hope is a global gas market price crash, else many australian industries will disappear ( at the time of rising unemployment)

    In our last place we had a gas wall heater and reverse cycle unit - we found the reverse cycle worked much better to consistently heat the place. The hot water was electric too, which meant we wouldn't have even needed to connect gas.. if it wasn't for the gas stove. $20 a month connection fee for maybe a dollar or 2 in actual usage.

    Air conditioners tend to be mounted high up and in highset, wooden, houses (like the 'Queenslander' type) cold air comes up through the floorboards so you get a layer of warm air staying up high and cold air down low, often where you're sitting or sleeping.

    Last edited 22/07/15 9:36 am

    I think insulation is really important when it comes to retaining the heat inside your house. Taking an extra layer or two out of storage to wear indoors isn't too bad an idea either.

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