The Victorian government has launched a sweeping suite of energy reforms amid mounting concern over dwindling gas supplies from the Bass Strait and rising energy prices.
Premier Jacinta Allan, alongside Minister for Energy and Resources Lily D’Ambrosio, announced the changes, focused on securing gas for industry, easing household power bills, upgrading rental properties, and supporting local manufacturing.
As aging fields decline, the government’s new Gas Security Statement outlines a strategy to avoid the shortfalls forecast for south-eastern states by 2029.
Victoria will reserve gas primarily for industry, ensuring that local manufacturers have reliable supply.
By 2029, reforms are projected to unlock just under 12 petajoules (PJ) annually, and by 2035, 44 PJ—enough to meet 85 per cent of the state’s industrial demand.
“Families will pay less on their energy bills, industry will get the gas it needs – and Victorian jobs are protected,” Premier Allan said.
“We are not just making sure Victoria has the gas it needs – we are reserving it for industry.”
Recent initiatives underpinning this approach include streamlining new gas project approvals, legislation requiring Victorian gas be offered to the domestic market, and collaborations to strengthen the Australian Energy Market Operator’s powers.
Since the start of 2025, over $2 billion has been announced in new gas production and exploration for Victoria.
A central pillar of the reforms is the drive to electrify homes.
From March 2027, when gas hot water systems fail, they must be replaced with efficient electric alternatives, such as heat pumps.
These systems can save households up to $330 per year, or $520 with solar, and rebates of up to $1,400 are available to make the switch more affordable.
All new homes and most commercial buildings must be all-electric from January 2027 — a move expected to save new homeowners around $880 each year, or up to $1,820 with solar.
For existing homes, there are no changes to heating or gas cooking requirements. Gas hot water systems can be repaired, but at end of life replacement must be electric.
The use of LPG remains unchanged.
From March 2027, rental properties — including public housing — will be required to meet Minimum Energy Efficiency Standards.
Among the measures:
- Hot water systems must be replaced with efficient heat pumps at end of life
- Gas heaters at end of life must be replaced with reverse-cycle air conditioners
- Minimum 4-star rated shower heads and R5.0 ceiling insulation must be installed at the start of a new lease, where lacking
- Draught proofing and weather seals for all external doors, windows, and wall vents
- Main living areas must also include an efficient electric cooling system by new lease commencement
All upgrades are eligible for discounts under energy efficiency programs, with exemptions for impractical or excessively costly compliance.
Nick Staikos, Minister for Consumer Affairs, said: “This is an important step towards making rental properties safer, more comfortable and more energy efficient — giving renters peace of mind for both winter and summer and driving down their bills.”
The reforms have been broadly welcomed by business, energy councils, and advocacy groups.
The Energy Efficiency Council called the package “a big step towards an all-electric future for Victorian households,” noting the reforms will both lower family bills and support renters.
However, the council and others expressed disappointment that existing gas heaters were omitted from mandatory replacement.
IEEFA’s Jay Gordon said: “The days of cheap, abundant gas in Victoria are long gone. Victorians have been left at the mercy of high, volatile gas market prices, which are heavily impacted by geopolitical events.
“Meanwhile, efficient electric appliances like heat pump hot water systems use a fraction of the energy of their gas counterparts.”
The government has invested $9.5 million in an Industry Diversification Program to ready local manufacturing for increased demand for electric appliances, while consultations on further upgrades and electrification measures for homes are expected to continue in the coming years.
Minister D’Ambrosio summed up the government’s long-term outlook: “We’re taking action now to secure Victoria’s gas supply — not just for today, but for the decades ahead.”
