Home heating costs in 2024

We looked at plan data from our Powerswitch website, as well as retail prices for firewood, wood pellets and LPG up and down the country, to crunch the numbers on how different fuel costs compare to one another this winter.

Fixed charges

Nearly everybody needs to cough up for fixed daily energy charges. The only way to avoid daily fees is by going completely off the grid, which isn’t realistic for many (and has its own associated costs).

This year, the average annual connection charge for electricity rose by $79 to $768 a year. Households now pay over $2 a day for the privilege of being connected to the grid – before they’ve even switched on a light.

However, the hike was even larger for natural gas, rising by $102 to $689 for the year. Gas users are now paying an average of $57 a month simply to maintain their connection.

Space heating

Heat pumps use electricity to shift heat from the air outdoors into your home. They can convert each unit of electricity into three or more units of warmth. Their efficiency comes with a hefty upfront price tag, but in a decent-sized living room a heat pump is the best option and will more than pay for itself.

In contrast, plug-in electric heaters convert electricity directly into warmth with a 1:1 efficiency. Despite their high running costs, their portability makes them a good option in small or occasionally used rooms, such as offices or bedrooms. But, with a maximum heat output of 2400W, they don’t have the power to tackle anything beyond very small living areas.

If you have a night-storage heater, you can make use of cheaper electricity rates overnight – but it’ll still cost more than a heat pump.

If you have a piped natural gas connection, a flued gas heater is a decent alternative to a heat pump – but beware that the price of gas is rising quickly. Gas usage costs have increased by 16% on average since this time last year, while electricity has only risen by 3%.

LPG heaters are no longer economically viable.

GUIDE TO THE FIGURES Bars represent the range between maximum and minimum costs. Black lines represent the national median. Electricity and natural gas costs are based on May 2024 data from powerswitch.org.nz. Other prices were collected in March 2024. GST is included.

Water heating

The electric hot-water cylinder might be an iconic feature of the kiwi home, but it’s one of the least cost-effective methods for heating water.

Unfortunately, reducing your energy bill isn’t as simple as ripping out your electric cylinder and installing something else. If your existing water heater is still going strong, the cost of buying and installing a new heater will usually outweigh any savings in running costs.

When you’re ready for something new, check whether a heat pump water heater is right for your home. In 2024, for the first time, we’ve calculated that a heat pump is the cheapest way to get hot water. They’re expensive to install but pay themselves off over a 15-year lifespan. Our calculations assume you’re on an uncontrolled plan, but you can spend even less with a controlled or night-rate plan.

A wetback woodburner is another futureproof option, especially if you have access to a cheap source of wood.

If you have a gas water heater, you’re likely very satisfied with the great price you currently pay for using it. However, we’d caution against installing a new gas system – the cost of gas rose by 16% on average this year, and it may become economically unfavourable during the lifetime of a new burner.

Regardless of the technology you use, the best way to reduce your bill is to cut back on hot-water usage.

• If your shower fills a 10L bucket in less than a minute at its normal setting, install a low-flow shower head.
• Encourage your household to take showers rather than baths.
• If you have a cylinder, make sure it’s insulated well. A wrap does wonders for retaining heat, even on a modern cylinder. Make sure to insulate all the pipes you can access too.
• If your hot taps drip, get them fixed!

Renewable vs non-renewable fuels

Some heating fuels are much more environmentally friendly than others.

Carbon-neutral

Firewood is a good, eco-conscious heating option, as long as you’re using a woodburner. Make sure you burn dry wood and burn it hot, to minimise emissions and get more heat overall. Burning wet wood generates significant pollution, as do open fires.

Wood pellets are made from sawmill waste. As a byproduct of an existing industry, they create an even smaller environmental footprint.

Low-emissions

Electricity is a reasonably sustainable and low-emissions sector – over 85% of New Zealand’s electricity generation came from renewable sources in 2022 (the latest period the government has published data for).

A larger portion of the electricity used between 7am to 11am and 5pm to 9pm on weekdays is generated from gas and coal, while close to 100% of electricity used outside of those times comes from renewable sources. If you want to minimise the environmental impact of your heating, try to use your electric space heater less during peak times.

The government has a goal to get to 100% renewable electricity generation by 2030.

Carbon-emitting

Natural gas and LPG burn cleanly, but they are still fossil fuels that release carbon dioxide when burned.

Another option: solar

With solar, photovoltaic (PV) panels are mounted on your roof and generate electricity whenever the sun shines. In a grid-tied system, the electricity you generate supplies your home’s energy needs, with any surplus power sold back into the grid. The economics depend on where you live, your home, and how you use electricity.

Solar is unlikely to substantially reduce your heating bills in winter because it generates the most power on sunny summer days.

Will solar suit you?

PV systems are most suited to homes that use electricity as it’s generated. Batteries can store excess power to use later in the day, but because they’re expensive, it’s currently cheaper to buy the rest of your power from a retailer. For more on solar power, see our article on whether solar panels are right for your home.

Solar hot water

You can also use the sun to help heat your water, but solar hot-water systems are expensive to install and have to remain trouble-free for many years before you recover costs. This doesn’t always happen.

Solar water heating also uses an electric heater to keep the water above 60°C, protecting you from legionnaires’ disease. During winter, you will probably need to supplement the sun’s energy, which also adds to the running cost.

Before you commit to solar water heating, try reducing the hot water you use in your existing system first.