Skip to content   Skip to footer navigation 

What's the cheapest way to heat your home this winter?

We'll explain how to keep your electricity costs down, regardless of how you heat your home.

woman using reverse cycle air conditioner
Last updated: 10 April 2024

Need to know

  • Reverse-cycle air conditioning is the cheapest way to heat your home, but it has higher upfront costs than other forms of heating and is not an option for everyone
  • Portable electric heaters are cheap and convenient to buy, but they're expensive to run and will likely result in much higher bills at the end of winter
  • CHOICE experts share some ways to shop smart and hack your heating to keep your power bills down this winter

Household bills are hitting everyone hard right now, and with chilly winter days looming, the thought of how much it's going to cost to heat your home may be front of mind.

In a recent CHOICE survey, 75% of respondents told us they were concerned about how much it will cost them to heat their home this winter. 

When it comes to choosing a heating appliance, the option that is cheapest in the short-term and long-term are two very different things.

To help you understand where your cash is going, CHOICE experts break down the costs associated with different types of heating and give some helpful tips to help you save money on those household heating bills. 

Heating options: Lowest to highest running costs

1. Air conditioning

If your home has reverse-cycle air conditioning installed, or you are a homeowner and you have the money available to get it installed, we have great news. Air con is by far the cheapest heating appliance to run. 

Our estimates show that running a reverse-cycle air conditioner for the entire year can cost less than running an electric heater for just three months over winter. 

But (and it's a big but), if you don't already have it installed, the upfront cost of air conditioning is much, much higher. You'll also need to factor in installation time before you can bask in the warmth of your AC. 

Running a reverse-cycle air conditioner for the entire year can cost less than running an electric heater for just three months over winter

"On average, you can expect to pay about $2000 for a new split-system air conditioner, but the price range is anywhere from $600 up to $5500," says CHOICE heating expert Chris Barnes

"Installation will add at least a few hundred dollars more to the bill. And for a ducted reverse-cycle air conditioning system you should expect to pay at least $9000, including installation. 

"For a typical freestanding house, the cost can easily reach $10,000 or more, depending on the size and type of system you choose. For a large or multi-floor home, you're looking at $15,000 or more."

But an added advantage of a reverse-cycle air conditioner is that it'll keep you cool in the warmer months, too – something an electric heater definitely can't do!

2. Gas heating

Gas heating is the next cheapest option to run (at the moment, at least). But gas heaters aren't suitable for everyone – you'll need to have gas already connected or set up an LPG system for your heater – and they can't be installed in bedrooms and confined spaces like bathrooms, and some require a flue to vent outside your house.

Many people are opting to move away from gas appliances entirely, however, due to the fact that gas is a polluting fossil fuel that creates greenhouse gases and using gas in the home for heating may be directly harmful to human health, particularly children.

And they aren't cheap to buy, either. You're looking at anywhere from $500 up to $1400. And then they need to be serviced regularly, so that adds to the cost. 

Gas heating is associated with some potential health and safety risks, and gas is a non-renewable resource

The price of gas is increasing, too, so while it may be a relatively cost-effective way to heat your home now, you could end up paying more over time than if you opted for an electric alternative such as air conditioning or a portable electric heater. 

Find out more in our gas heater buying guide.

3. Portable electric heating

If you're renting, or simply don't have a spare couple of thousand sitting in your bank account to install air con, then an electric heater is likely your best option. With no installation required, wide availability and prices starting at around $30, they're definitely a quick and easy fix when the cold snap hits.

Portable electric heaters are ideal for small spaces and for short periods of use. They're also a great option for renters or owners of strata apartments who may not be able to install air conditioning.

Of all the different types of electric heaters, oil column heaters are the cheapest to run – but only by a very slim margin. They also take longer to warm up. 

Portable electric heaters are a great option for renters or owners of strata apartments who may not be able to install air conditioning

But portable electric heaters are not nearly as energy efficient as a split-system air conditioner and can get expensive. You'll likely see a hike in your energy bills, particularly if you're running multiple heaters in different rooms. 

In fact, a portable electric heater can cost two to three times as much to run on average than a reverse-cycle air conditioner (based on heating six hours a day over 12 weeks in a moderate winter).

How much do different heaters cost to run?

Obviously every home is different and your heating requirements will vary depending on the climate in your area, room size, insulation, and many other factors. But, by crunching some numbers, we can give you an idea of the price difference between each heating type. 

Here's a comparison of various heating options for a small room:

Air con

Mitsubishi Heavy Industries SRK25ZSXA-W reverse-cycle air conditioner

  • Upfront cost: $1283 (plus installation)
  • Running costs over winter in an average climate zone: $128* 

Gas heater

Rinnai Dynamo 15 portable gas heater

  • Upfront cost: $1499
  • Running cost over winter: $317.50*

Portable electric heater

Dimplex DHCERA20E tower (ceramic) electric heater

  • Upfront cost: $145
  • Running cost over winter: $411*

*Based on 500 hours of use: 6 hours a day for 3 months, with peak pricing at 40c/kWh for electric appliances or 4c/MJh for gas.

So for the first four years the electric heater in our example will cost less than the reverse-cycle air conditioner for heating, factoring in purchase price plus running cost. But after that, the air conditioner becomes the cheaper option.

For the first four years the electric heater will cost less than the reverse-cycle air conditioner for heating, but after that the air con is cheaper

On the other hand, with many people currently balancing the cost of living month-to-month (or even week-to-week), a cheaper electric heater with slightly higher running costs may be a more feasible option than dropping thousands of dollars on a reverse-cycle air conditioning system. 

Just remember, though, that you'll see a hike in your electricity bill, particularly if you're running multiple heaters in different rooms. And with many of us working from home, you're likely to have your heater on for longer each day.  

"The more you use your heater, the more important it is to make sure that it is the most efficient type you can get, and also that you're using it as effectively as possible," says Chris.

Choosing the right model matters

So if you do have to buy an electric heater, how can you keep those power bills as low as possible while still staying warm? You don't necessarily need to buy a top-of-the-line electric heater.

"Purchase price isn't always an indicator of better performance or cheaper running costs," says Chris. 

"Among the electric heaters we've recommended in the past, some have cost less than $100 and others more than $400, yet their winter running costs tend to be similar at around $300 – and we've found other models with similar prices and running costs but which perform much worse."

Some recommended electric heaters have cost less than $100 and others more than $400, yet their winter running costs tend to be similar

However, a cheap purchase price and low running costs don't mean much if your heater isn't effective – a smaller electricity bill in three months' time is cold comfort if you're freezing right now. So finding an electric heater that performs well is vital if you want to stay warm over winter. 

"Purchase price and running costs are important, but it's also important that the heater does a good job of spreading the heat effectively throughout the room," says Chris. 

You can view a range of models in our electric heater review, with more models to be added in the coming weeks, so stay tuned. 

Tips to hack your heating

There's more to reducing your heating costs than just buying an efficient heater and using it judiciously. And a high electricity bill can be a sign that you need to make some changes to how you heat your home. 

"If you need to run an electric heater all day, every day to stay warm, it's a sign that your home is really not thermally efficient," says Chris. 

Try these tips to hack your home and make sure you get the most out of your heating this winter. You'll find a lot of these methods are also better for the environment than plugging in an appliance.

1. Insulation

While popping on an extra jumper is an easy way to warm up, having a well-insulated home will make the biggest difference to keeping your house warm. 

You can lose as much as 35% of your home's warmth if it's not insulated, which means that you can rack up the biggest electricity bill ever but still be chilly throughout the winter. Insulation will also keep your home cooler in summer, so it's worth the investment. 

Of course, if you're renting or can't afford insulation then you'll need to look at other options to keep warm – check out our 6 practical DIY tricks for staying warm this winter

Things like sealing draughts, covering floors with rugs and using curtains can all help to keep the heat in and the cold out. 

2. Use your ceiling fan on reverse

You can use a ceiling fan to hack your heater. Modern ceiling fans have a reverse switch, which will make the blades turn clockwise. Since hot air rises, this will push the warm air back down towards the floor. 

It's also important to make sure the warmth from your heater can circulate around the room. As tempting as it might be, that means not sitting on top of the heater (or directly in front of it). And if you're drying laundry inside, move it back from the flow of hot air so the heater can warm the room more effectively. 

3. Harness the sun

While solar panels are also a considerable investment, they can help to reduce your heating costs. 

"For a home with its own solar panel system, running an electric heater or air conditioner in the daytime can be significantly cheaper than running a gas heater," says Chris. 

Find out more with our solar panel buying guide

4. Buy during sales time

If you haven't already bought a heater, you could try to hold out until the end of financial year sales (or pick up a more efficient model to replace your existing heater). With the end of financial year coinciding with the start of winter, it's not surprising that electric heaters are our most searched product during this sale period. 

If you're thinking of going for air conditioning, don't wait until it's freezing cold or steaming hot to get an air conditioner installed – shop in the off-season.

"If you're looking to install an air conditioner for your winter heating, it's a good idea to organise installation ahead of the peak cold season; if you wait until the cold snap really hits, you might find longer wait times," Chris says. 

We care about accuracy. See something that's not quite right in this article? Let us know or read more about fact-checking at CHOICE.

Stock images: Getty, unless otherwise stated.