The Economics Have Flipped: Gas Is Now the Expensive Option
For decades, gas heating was the default for Australian commercial buildings. It was cheap, reliable, and well-understood. That era is over.
Since 2022, wholesale gas prices have increased 60%. Retail gas rates for commercial buildings now sit at $0.04-$0.06/MJ — making gas heating cost $0.044-$0.067 per kWh of useful heat delivered (at 90% efficiency). Meanwhile, a heat pump delivering the same heat costs $0.06-$0.10 per kWh of electricity consumed — but delivers 3-5x that in useful heating. Net cost: $0.012-$0.033 per kWh of useful heat.
"We retrofitted a 2,000m² commercial office in Parramatta last quarter. They were spending $38,000/year on gas heating and $22,000 on split-system cooling — $60,000 total HVAC energy. The new VRF heat pump system handles both heating AND cooling for $19,000/year total. That's a 68% reduction in HVAC energy costs, and the system paid for itself in 2.8 years after ESS rebates." — Mark Willis, Head of Renewables & Electrification, Cable Co
Heat Pump Efficiency Explained: Why 300-500% Isn't Magic
A gas heater burns fuel to create heat. Maximum theoretical efficiency: 100% (condensing boilers reach ~95%).
A heat pump doesn't create heat — it moves it. Using a refrigeration cycle, it extracts heat from outdoor air (even in winter) and concentrates it inside. For every 1kW of electricity consumed, it delivers 3-5kW of heating (or cooling in reverse).
| Technology | Energy Input | Useful Output | Efficiency | Cost per kWh of Useful Heat |
|---|---|---|---|---|
| Gas ducted heating | 1 kWh gas | 0.9 kWh heat | 90% | $0.044-$0.067 |
| Electric resistance heating | 1 kWh electricity | 1.0 kWh heat | 100% | $0.25-$0.35 |
| Heat pump (COP 3.5) | 1 kWh electricity | 3.5 kWh heat | 350% | $0.071-$0.100 |
| Heat pump (COP 4.5) | 1 kWh electricity | 4.5 kWh heat | 450% | $0.056-$0.078 |
| Heat pump + solar | 1 kWh (free solar) | 4.0 kWh heat | 400% | $0.00-$0.02 |
When paired with rooftop solar, heat pump HVAC can operate at near-zero marginal cost during daylight hours — which is precisely when most commercial buildings need cooling.
The Gas Ban Timeline: What's Already Happened and What's Coming
| Jurisdiction | Ban Type | Effective Date | Scope |
|---|---|---|---|
| ACT | Full ban on new gas connections | December 2023 | All residential, commercial, community buildings |
| Victoria | New building gas ban | March 2027 | All new residential + most commercial |
| Victoria | Existing building mandate | Under consultation (2026) | Timeline TBD |
| NSW | No legislated ban yet | — | Strong incentives via ESS/PDRS |
| QLD | No legislated ban yet | — | Gas substitution roadmap in development |
| SA | No legislated ban yet | — | City of Adelaide electrification rebates active |
| WA | No legislated ban yet | — | Battery rebates incentivising all-electric |
Even in states without legislated bans, the economic case is clear: gas infrastructure is a stranded asset. New gas connections cost $2,000-$5,000 to install, gas appliances have 10-15 year lifespans, and the gas network itself faces declining utilisation (meaning higher per-customer costs for those who remain connected).
Commercial HVAC Electrification: System Options
Variable Refrigerant Flow (VRF/VRV) Systems
The gold standard for commercial buildings. One outdoor unit serves multiple indoor units across different zones, providing simultaneous heating and cooling where needed.
- Best for: Office buildings, retail, hotels, aged care, education
- Capacity: 10kW to 150kW+ per outdoor unit
- COP: 3.5-5.2 (heating), 3.0-4.5 (cooling)
- Cost: $300-$600/m² (installed, including ductwork modifications)
- Brands: Daikin VRV, Mitsubishi City Multi, Samsung DVM, LG Multi V
Packaged Heat Pump Systems (Rooftop Units)
Direct replacement for existing gas-fired rooftop packaged units. Same footprint, same ductwork — just swap the unit.
- Best for: Warehouses, large retail, industrial offices
- Capacity: 20kW to 200kW per unit
- COP: 3.0-4.0
- Cost: $150-$300/m²
- Advantage: Minimal disruption — uses existing ductwork
Heat Pump Hot Water (Commercial Scale)
Commercial heat pump hot water systems replace gas boilers for domestic hot water, process heating, and hydronic systems.
- Best for: Hotels, hospitals, aged care, food processing, laundries
- Capacity: 50kW to 500kW+
- COP: 3.5-5.0 (Sanden, Reclaim Q-TON, Stiebel Eltron)
- Cost: $20,000-$80,000 depending on capacity
- Savings: 60-75% reduction in hot water energy costs
The Rebate Stack for Commercial HVAC Electrification
| Rebate | Value | How to Claim |
|---|---|---|
| NSW Energy Savings Scheme (ESS) | $3,000-$6,000 per HVAC system | Through accredited provider (Cable Co) |
| Victorian Energy Upgrades (VEU) | Up to $2,800 per system | Through accredited provider |
| Federal STCs (heat pump HW) | $800-$2,400 depending on capacity | Claimed by installer |
| NSW Heat Pump Feasibility Grant | Covers assessment costs | Application to NSW Government |
| Expanded SRES (from Oct 2026) | ~20% off solar 100kW-1MW | Claimed by installer |
| Instant Asset Write-off | Full deduction up to $20,000 | Through tax return |
Case Study: 3,500m² Aged Care Facility — Full Gas Elimination
Before: Gas ducted heating ($45,000/yr), gas hot water boilers ($28,000/yr), split-system cooling ($18,000/yr). Total HVAC energy: $91,000/year.
After: VRF heat pump system (heating + cooling), commercial heat pump hot water (Reclaim Q-TON), rooftop solar (50kW). Total HVAC energy: $24,000/year.
| Item | Cost | Rebate | Net Cost |
|---|---|---|---|
| VRF System (3,500m²) | $420,000 | $18,000 (ESS) | $402,000 |
| Heat Pump HW (2x Q-TON) | $65,000 | $4,800 (STCs) + $6,000 (ESS) | $54,200 |
| 50kW Solar | $45,000 | $13,800 (STCs) | $31,200 |
| Gas decommission + electrical upgrade | $28,000 | — | $28,000 |
| TOTAL | $558,000 | $42,600 | $515,400 |
Annual savings: $67,000/year
Payback: 7.7 years (without solar revenue) / 5.8 years (with solar self-consumption)
20-year net benefit: $825,000
Cable Co's Cooling & HVAC Division: Powering What's Next
Cable Co's expansion into cooling systems, plumbing, and gas fitting isn't an add-on — it's the natural evolution of our critical infrastructure delivery capability. When you're already the licensed electrician upgrading the switchboard, installing the solar, and wiring the battery, adding the heat pump HVAC and decommissioning the gas is a single-contractor solution that eliminates coordination overhead.
Our HVAC electrification capability:
- Licensed refrigeration mechanics (ARCTick AU52702)
- Licensed gas fitters (for safe decommission)
- Licensed plumbers (heat pump HW connections)
- Licensed electricians (power supply upgrades)
- CEC-accredited solar installers (rooftop integration)
- ESS/VEU accredited provider (rebate paperwork handled)
One contractor. All trades. All rebates claimed. One invoice.
Call: 1800 117 177 | Email: renewables@cable-co.com.au