What Is The Most Efficient Heating System?

Choosing a heating system is an important decision to make, as it locks in your heating costs for over a decade. A system’s energy performance depends on the fuel available to you and how much space you need to heat.

For most Victorians, electric reverse cycle split systems are the most energy-efficient, lowest-cost heating option available, generating the lowest greenhouse emissions. If your house has a rooftop solar PV system, the benefits of heating with electric reverse cycle systems can be even greater.

Depending on the climate zone, heating and cooling can account for 20% to 50% of the energy used in Australian homes. So choose the most energy-efficient appliances or system that best suits your needs. Choose the right-sized appliance for your heating or cooling needs to maximise energy savings and personal comfort. You can also seal draughts around doors and windows with weather strips. Roof and wall insulation, as well as good curtains, can significantly reduce cooling and heating loads.

More expensive measures like double glazing need to be assessed for the energy savings they might bring compared to their initial cost and embodied energy. For example, double glazing may be unnecessary when energy-efficient reverse-cycle air conditioning is installed.

Find A System That’s Right For You

Fuel Available To You

Heating systems can generate heat with:

  • gas (natural or LPG)
  • electricity
  • wood.

Choosing one depends on what fuel is available to you.

How Much Space Do You Need To Heat?

There are two types of heating systems:

  • central heating
  • room (or space) heating.

Central heating would be more efficient if you needed to heat your whole house, ideally with a zoning capability that allows you to heat only certain areas of your home. If you only want to heat a certain area, a room heater would be best. Generally, it’s cheaper to use a room heater. But it depends on how big a space you’re heating. The larger the area, the larger the system you’ll need. The wrong sized system won’t heat your home efficiently and will cost you more money. If you can, get a supplier to visit and measure your home for a quote. If that’s not possible, provide them with a plan of your house, showing the dimensions of the areas you want to heat. Also, provide information about the insulation you use in your home.

Common Central Heating Options

Gas Ducted Heating

Gas ducted heating draws air from inside the home, heats it in a gas furnace and blows it through ducts to outlets located in different areas of your home. A thermostat, usually located near the return air grille, controls the inside temperature.

  • Pros
    • Can heat your home quickly.
    • Some systems can be zoned so that you only heat areas you’re using.
    • In some cases, separate zones can be controlled by different thermostats.
  • Cons
    • The air circulation fans consume a fair bit of electricity.
    • Usually operated on natural gas, but will cost more if you run on LPG.
    • More expensive than a gas space heater to install and operate.

Buying New

If you have a builder, ask what energy (star) rating the gas ducted system is. It’s worth paying more for a high-efficiency heater (5 stars or higher), as you’ll save more in the long run. Consider a system with zoning capability to save even more. These systems lose energy through the ductwork. To minimise energy loss, ask the installer about the R-value of the ductwork. This is the level of insulation. Aim for an R-value of 1.0 or higher. But be aware, the higher the R-value, the larger the diameter of the ductwork.

Energy Rating

what is the most efficient heating systemGas ducted heaters have Gas Energy Rating labels to allow you to compare the energy efficiency of different heaters. The higher the rating, the more efficient the heater is.

Use It Efficiently

The most efficient temperature to set is between 18°C to 20°C. Every one °C higher will add around 10% to your heating bill. If you can, zone your system so that it only heats the areas you’re using. Clean the filter of your return air grille monthly during the heating season to make sure the system operates effectively. Finally, have the gas furnace serviced at least every two years to ensure it operates efficiently and safely.

Gas Hydronic Heating

Gas-fired hydronic systems heat the whole house by heating water in a gas boiler and circulating it through one of the following:

  • radiators (most common)
  • pipes embedded in a concrete slab
  • fan-coil units.

The water then returns to the gas boiler to be re-heated. The system is controlled by a thermostat monitoring the temperature of the room.

  • Pros
    • Radiators don’t blow heated air or dust around the home, so they’re a good option for people who suffer from allergies or asthma.
    • Radiator and in-slab systems provide a comfortable and less ‘drying’ heat.
    • It can be zoned so you only heat spaces you’re using.
    • Radiator and in-slab systems are quiet heating sources.
  • Cons
    • It takes longer to heat spaces than air-based central heating systems, like gas ducted or ducted reverse-cycle systems.
    • More expensive to install because of the cost of pipework and radiator panels.
    • Usually operated on natural gas, but will cost more if run on LPG.

Buying New

There are some energy losses from the pipework when the heating is operating. When installing a new hydronic heating system, ask the installer about the R-value of the cladding applied to the pipework. This is the level of insulation. The better it is insulated, the lower these heat losses will be and the more efficient it will run.

Energy Rating

There are no energy rating labels for gas hydronic heating in Australia. However, the supplier should be able to provide information on the efficiency of the gas boiler. New systems should have a boiler with an efficiency of 75% to 85%. For higher efficiency, consider a condensing boiler with 89% to 94%. The higher the efficiency, the lower the running costs.

Gas boilers for hydronic heaters sold in Europe must have a European energy rating label. Suppliers of these products should be able to provide information on this rating. The rating is based on a G (lowest efficiency) to A (highest efficiency) scale:

  • D is 78 to 82% efficient
  • C is 82 to 86% efficient
  • B is 86 to 90% efficient
  • A is more than 90% efficient.

Use It Efficiently

We recommend you to set your temperature between 18°C to 20°C. Every one °C higher will add around 10% to your heating bill. These systems can be zoned. Radiators in individual rooms can be switched off by turning off the hot water supply, allowing you to limit the heating to just those areas where it’s needed. In some systems, there’s a thermostat in each room or zone, giving another level of control. Have the gas boiler and pumping system serviced at least every two years to ensure it operates efficiently and safely.

Types Of Heating

Heating Choices

  • electric reverse-cycle air conditioners (medium to high cost)
  • electric or gas portable or installed heaters (low to medium cost)
  • ducted gas heating (high cost)  
  • electric in-slab floor heating (medium to high cost)
  • wood fireplaces (medium to high cost)
  • heat shifters (low cost)

FAQs About The Most Efficient Heating System?

Geothermal systems provide the most efficient type of heating. They can cut heating bills by up to 70 per cent. Like other heat pumps, they are also very safe and environmentally friendly to operate.

Gas heaters and reverse cycle air conditioning units generate over 65%4 less greenhouse gas emissions than a conventional electric heater. The most efficient reverse cycle air conditioners can produce 80%5 fewer emissions than standard electric heaters.

The most energy-efficient HVAC systems currently available for heating your home are heat pumps (geothermal and air sources) and furnaces. Heat pumps are also a very efficient way to cool your home. Your most efficient cooling system will be either a heat pump or an air conditioner for the summer.

What’s The Best Way To Heat Your Home?

The main types of heaters include electric heaters, gas heaters and reverse-cycle air conditioners. The best option for you depends on a few factors. Let’s take a look at each type.

Electric Heaters

These are usually portable, cheaper to buy, and a good option if you’re not using them in large spaces or for long periods. Check our electric heater buying guide for more details, and also take a look at our electric fireplace heater buying guide.

  • Good for: small heating spaces, or individual people.

Most home air conditioners (single phase, non-ducted) display an Energy Rating Label that shows the system’s energy efficiency. This Energy Rating Label is endorsed by the Australian Government’s Equipment Energy Efficiency (E3) Program. The householder’s cost-effectiveness and sustainability of heating are greatly improved when the power is sourced from solar panels. Solar battery storage is also becoming more economical to buy and install. In 2019, a Zoned Energy Rating Label (ZERL) was introduced that provides a seasonal efficiency rating for three distinct climate zones across Australia, providing more detailed information regarding an air conditioner’s energy efficiency. 

Gas Heaters

A gas heater can be a very efficient and good value for money, and some people prefer the feel of gas heating over electric heaters and air conditioners. Gas heaters can run from reticulated natural gas (connected to your home) or bottled LPG. Still, you need to make sure you have the right model for the type of gas you have available, as a heater designed for natural gas won’t work with LPG and vice versa.

An Energy Rating Label developed by the Australian Government’s E3 program does not cover gas heaters. Certain gas heaters carry a different gas appliances energy rating label as part of state and territory gas technical and safety regulations’ product certification process. All but the smallest unflued models also use electricity for running fans and other electrical components, which also factor into running costs. Gas heaters typically turn only 85% of the gas into useable heat. The rest is lost through the flue or open windows for unflued products.

Gas heating produces small amounts of waste products: dangerous carbon monoxide and water vapour, leading to condensation and mould problems. They also release nitrous dioxide and fine particles, which several studies have shown contribute to childhood asthma and other respiratory health problems. Flued gas heaters and central ducted gas heating may be less likely to have this risk as they vent most of the waste outside, but they can still release a small number of emissions into the indoor air, so the risk is not zero for these types either.

  • Flued heaters direct their fumes outside through a flue or pipe and are generally more expensive to buy and install. This removes the waste products such as carbon monoxide and water vapour from home, which is safer but can also create a small amount of heat loss, reducing efficiency.
  • Portable or unflued heaters expel their waste products into the room being heated. Australian standards and regulations strictly limit the number of emissions allowed, but even so, you need to keep the room ventilated.
  • Gas heaters need to be professionally serviced every few years to ensure they’re operating safely and effectively.
  • NEVER use an outdoor gas heater for indoor heating! They don’t have the same emission standards as indoor gas heaters and can give off a dangerous amount of carbon monoxide and other gases if left running indoors for several hours. The same applies to your kitchen’s gas cooktop or oven.
  • If you have a gas heater of any type (whether flued, portable, unflued or ducted central heating), then make sure to install a carbon monoxide alarm, too – they’re readily available from hardware stores. If the heater develops a fault, this could save your life and starts putting out dangerous amounts of this deadly gas.

A Guide To Electric Heating Options

In past issues of Renew, we have focused on what are arguably the two most popular energy-efficient heating options—reverse-cycle air conditioning and hydronic heating. Both have advantages and disadvantages, and both suit some people, house designs and climates better than others, so which is best? Are there other options that should be explored? There are lots of questions to answer when it comes to heating, and making the right choices is important for a comfortable, warm home with low running costs and low environmental impact, not gas. 

Firstly, we should note that we are not considering gas heating. Gas is a fossil fuel, and there is simply no way to run gas appliances without greenhouse gas emissions. On the other hand, while electricity is in part generated by coal and other fossil fuels, it doesn’t have to be—you can purchase 100% GreenPower or install a solar power system large enough to cover your needs throughout the year and effectively be greenhouse neutral. The economics of gas heating also no longer stack up in almost all cases. See Renew’s latest research report on this subject.

Now that is out of the way, what are the electric heating options available? Firstly, we will look at the two technologies we have covered previously, which tend to be used for space (whole-of-house) heating—reverse-cycle air conditioning and hydronic heating. Next, we will look at resistive electric heaters, solar air heaters and other heating considerations.

Reverse-Cycle Air Conditioners

what is the most efficient heating system (3)Reverse-cycle air conditioners work by compressing a gas, called a refrigerant, which transfers heat from one place to another. The technology that does this is called a heat pump. Heat pumps are all around us; for example, in your fridge, a heat pump transfers heat from inside the cabinet to outside, which is why the outside of the fridge gets warm. The transfer can go either way in a reverse-cycle air conditioner, hence the name. In winter, heat is taken from outside and dumped inside, and in summer, the opposite occurs.

A Big Pro For Heat Pumps: Efficiency

The amazing thing about reverse-cycle air conditioners is how efficient they can be. While electric heating using resistive elements to turn the electricity into heat directly (covered later) can only ever be at most 100% efficient, the heat pumps used in reverse-cycle air conditioners are much more than 100% efficient, in fact, up to 600% efficient, meaning that they use a lot less energy to produce the same amount of heat. How can that be? As its name suggests, a heat pump pumps heat from one place to another. Instead of turning energy from one form (electricity) into another (heat), it uses electric energy to move heat from one place to another. Because heat is relatively easy to collect and move, heat pumps can move a lot more heat energy than the electric energy they use.


When the cold hits in winter, you need to find a middle ground between having a cosy home and a resulting energy bill that won’t send you broke. This guide will help you heat your home using less power but maximum effectiveness.

Scroll to Top