Electrification of urban development in Victoria: Does gas have a future in urban developments?

Sustainability and future-focussed land development play a significant role in reducing Australia’s carbon footprint and achieving net zero carbon emissions by 2050.

Particularly in Victoria, where current regulations mandate gas connections in new housing developments, there is a high use of reticulated natural gas which largely consists of methane and other hydrocarbons.

As consumers become more conscious of their own carbon emissions, and with recent research and media raising concerns around the health impacts of using natural gas in homes, there may also be a growing sentiment away from household gas.

Electrification of new developments is now easily achievable, and ultimately will reduce the utility bills for households, with electric appliances cheaper to run than the equivalent gas appliances, and the growth of cheaper renewable energy. Hence from both an economic and environmental point of view, it is important that the industry transitions away from natural gas as soon as possible.

Comparatively, Victoria uses the highest percentage of natural gas in Australia. This is due to the vast natural gas reserves that have been available in the Bass Strait, and the reliance on gas for heating in the colder climate. Historically, natural gas has been readily available and was the most economical power option. But as gas prices continue to rise across the globe in recent years, and electricity prices falling due to the lower cost of renewables such as solar and wind, and the potential for household and community batteries, all-electric households are now a cheaper option for new house builds.

Victoria State Government has released the Gas Substitution Roadmap, which outlines the Government’s plan to transition to zero emissions. One of the key policy changes in the roadmap indicates that gas connections to new housing will no longer be mandatory.

As a member of the Urban Development Industry of Australia, Victoria(UDIA Victoria) Greenfields Committee, I welcomed the opportunity tocontribute to the consultation for the roadmap to ensure both industryand Government are enabled to provide Victorians with liveablecommunities. Several recommendations are being adopted.

An argument for Hydrogen

Gas industry representatives are proposing to replace natural gas with hydrogen over the longer term, in order to be meet net zero carbon targets by 2050. There is currently a lot of interest in hydrogen as being a potential carbon-free energy source of the future. Hydrogen produced using renewable energy (green hydrogen) does not produce any carbon emissions, however, it is not clear that this energy source will be a realistic one for residential households.

There will be some significant challenges to overcome for hydrogen to completely replace natural gas, not least of which is that with higher proportions of hydrogen in the network will require households to upgrade appliances, and gas authorities will need to upgrade parts of the gas reticulation network. It is difficult to envisage a time when green hydrogen will be cost-competitive with fully electric alternatives in a household setting.

A way forward

Developers face the risk of any gas networks installed in housing developments becoming stranded assets in the future as society and industry pursue net zero. Additionally, households in the future may incur the expense of switching from gas to electric appliances.

Therefore, it makes better economic sense to stop installing gas in the first place. All electric housing developments are already in existence across Australia, and buyers seem content, especially when they can offset electrical costs with solar panels.

Whilst only one piece of the broader puzzle of how the land development industry will tackle climate change, it is a crucial step toward our sustainable future – a healthier and better environment for communities to come.

Contact Stephen Watters for further details and advice on this progressing change to industry and community energy sources and requirements.

Stephen Watters

Manager - Urban Communities, VIC / SA / WA / TAS SMEC

stephen.watters@smec.com