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Home heating costs in 2019

Keeping your home warm and showers hot in winter isn’t cheap. Around one-third of the energy supplied to our homes is used for space heating, with another third going towards hot water. So it makes sense to reduce your heating bill if you can.

We’ve calculated the rates charged for different methods of space and water heating based on the latest fuel cost data, and also look at renewable and non-renewable forms of energy.

What's new in 2019?

Year-on-year, there’s been an increase in the median price of LPG and cylinder rental. For those running LPG, it’s been a hefty hit to the back pocket with prices rising by 15 percent. That’s a staggering increase. Costs for the other main heating options, such as heat pumps and natural gas, have remained stable, which means they’re still the cheapest ways for you to keep warm this winter.

Fixed charges

You still need to cough up for fixed daily charges for electricity and gas mains, or a rental fee for LPG bottles. You could opt for a low-user pricing plan, which drops the fixed charges but has a higher price per unit of electricity. The fixed prices for electricity and gas have risen this year, but not by much. The only way to avoid these fees is by going completely off the grid. While this will appeal to some, you’ll pay big bucks for solar panels (or wind turbines, though this is less common) and battery packs.

Electricity

The average fixed daily charge for a connection was $1.74 – that’s up 2¢ from 2018.

Natural gas

The average fixed daily charge for gas rose 4¢ from 2018 to $1.50. This will cost you an extra $15 a year.

LPG

The annual rental fee for two 45kg LPG cylinders stings you $129, up from $119 a year ago.

Space and central heating

Electric space heaters run the gamut from efficient heat pumps to power-guzzling portable plug-in electric heaters.

Heat pumps use electricity to shift ambient heat from the air outdoors into your home, and can transform each unit (kW) of electricity into 3 or more units of warmth. Despite electricity costing 26¢/kWh on average, a heat pump produces a kW of heat for 8.5¢.

In contrast, plug-in electric heaters convert electricity directly into warmth via a resistive element with a 1:1 efficiency, meaning each unit of heat costs 26¢/kWh.

The improved efficiency of heat pumps comes with a hefty price tag. They cost at least 10 times more than plug-in electric heaters to buy and install, and can’t be moved from room to room. So, despite their high running costs, electric heaters are often the most cost-effective option for small or occasionally used rooms, such as the office or bedrooms.

However, in decent-sized living areas a heat pump will more than pay for itself, while electric heaters (with a maximum heat output of 2400W) just don’t have the power to tackle anything beyond very small living areas.

GUIDE TO THE FIGURES COSTS are for providing one kilowatt of heat for one hour, or to heat 40L of water by 50°C. Bars represent range between maximum and minimum costs. Bar colours represent how renewable an energy source. Red is non-renewable. Yellow is semi-renewable. Green is renewable. Grey bars represents the national median. Electricity and natural gas costs are from powerswitch.org.nz based on March 2019 data. Other costs are from pricing data collected during March 2019. GST is included.

Water heating

Natural gas (both instant and storage) is the cheapest way of keeping your shower hot, followed by heat pump water heaters and wetback woodburners. Most expensive are electric storage cylinders and LPG heaters.

Water heating makes up about a third of your household energy bills. Unfortunately, reducing your water heating bill isn’t as simple as ripping out your electric cylinder and installing an instant gas heater. If your existing water heater is still going strong, the cost of buying and installing a new water heater will usually outweigh any savings in running costs.

You can reduce your bill by cutting back on the amount of hot water you use. If your shower at its normal setting can fill a 10L bucket in less than a minute, it’s worth installing a low-flow shower head. You can also encourage your household to take showers rather than baths. And if your hot taps drip, get them fixed! It’s money going down the drain.

Installing an insulating cylinder wrap on your hot water cylinder is a good way to minimise heat loss, even if your cylinder is modern. Ensure your pipe lagging (insulation) is adequate, especially on the hot-water delivery pipe near the cylinder.

Renewable vs non-renewable fuels

Some heating fuels are much more environmentally friendly and sustainable than others. What are your options for staying clean and green?

Renewable

Firewood is a good, eco-conscious heating option as long as you’re using a woodburner. But ensure dry wood is burned hot to minimise emissions and get more heat. An open fire or burning wet wood can generate significant pollution.

Wood pellets are made from sawmill waste, a byproduct of an existing industry, giving an even smaller environmental footprint. Semi-renewable

Hydroelectric power stations provide more than half of New Zealand’s electricity, making the sector fairly sustainable.

Non-renewable

Natural gas and other non-renewable sources make up about 25% of our power sources. Natural gas and LPG are clean-burning, but they are still fossil fuels that release carbon dioxide when burned.

Diesel is a non-sustainable fossil fuel.

Solar

Photovoltaic (PV) panels, mounted on your roof, generate electricity whenever the sun shines. It’s as renewable as it gets. 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 winter heating bills. A PV system generates most power on sunny summer days, and less on gloomy winter ones.

Will solar suit you?

The system is most suited to homes that use electricity as it’s generated. Batteries can store excess power for use later in the day, but they are expensive – the cost of batteries means retail power is much cheaper than generating electricity from the sun and storing it for later use. For more on solar power, see our article on whether solar panels are right for your home.

Solar hot water

You can use the sun to reduce the cost of heating your water, but solar water heating is expensive to install and has to remain operational and trouble-free for many years before you recover costs. This doesn’t always happen.

Solar hot water systems also use an electric heater. During winter, you are likely to need to supplement the sun’s energy, which adds to the running cost. The electric heater is also used to make sure the water is regularly heated above 60°C to prevent the bacteria that cause legionnaires’ disease from growing.

Before you jump for solar water heating, you should reduce the hot water you use and cut heat loss in your existing hot water system.

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