Predicted Gas Price Increases

Approximately 300,000 New Zealand homes rely on gas from fossil fuel fields for heating, hot water, or cooktops, with some regions receiving gas through pipes and others using gas bottles.

A recent report from the government highlights concerns about a potential "horror spiral" in the connections to the piped gas network as the move away from fossil fuels progresses. Two reports completed in the latter half of 2023 examined the gas outlook, predicting significant rises in gas prices over the next decade.

If your home is reliant on gas as a source of hot water heating and you’re looking at alternative options, The Cylinder Guy can give you free expert advice. Our experts are available to help guide you on your journey for more energy and cost-efficient hot water heating solutions.

Angela Ogier from Ernst and Young, suggests a potential price increase of 20-40% by 2035 due to rising production costs and carbon prices. Another report by energy analyst Simon Coates warns of a "death spiral" in the last five to 10 years of customers leaving the piped gas network.

Electric heating is considered cheaper than gas for new homes, and with increasing gas prices, consumers are likely to switch to alternatives. This, in turn, could raise the price of gas for those remaining users, as pipeline costs would be spread over a smaller customer base. To mitigate this, the Commerce Commission allows gas companies to recover pipeline costs upfront from customers.

While gas pipe owners aim to replace fossil gas with green gas, Simon Coates' modelling suggests that affordable biomethane might not be sufficient to replace current household demand. Green gas options from landfills and other sources could provide alternatives, but prices would vary depending on the source and production costs.

The green gas industry is still developing, making it challenging to predict its future. Access to alternative gases could allow consumers to continue using existing appliances without costly modifications.

BusinessNZ Energy Council's Tina Schirr suggests that securing supplies of green gas poses interesting challenges, especially for industries without electric options. Climate consultant Christina Hood mentions that bottled gas, including for barbecues, will remain available for those willing to pay. However, she advises against new gas connections in new homes, as electric alternatives are often more cost-effective.

The transition away from gas is a global concern, with various countries considering bans on new gas connections. In Australia, the state of Victoria has already banned new gas connections in new homes and government buildings, while the ACT has passed a similar ban. Business NZ calls for a bipartisan plan to provide certainty for businesses and households during the gas transition, emphasising the need for a serious conversation about alternatives to gas.

If you’re looking to move away from gas hot water heating or want to talk about alternatives, give us a call on 0800 234 800 and get a free quote to make the change or learn more about different Hot Water Cylinder options.