What is the cheapest way to heat a New Zealand home?

New Zealand homes stay warm in lots of different ways, from open fires to heat pumps. Some are more expensive to run than others, but it isn’t as easy as simply picking “the cheapest” or “the best”.


Source: genless.govt.nz

This graph comes from Gen Less, the government-supported website responsible for helping Kiwis reduce their energy use.

Heat pumps are the cheapest to run on average, closely followed by wood burners and highly rated flued gas heaters. Unflued gas heaters, meanwhile, are the most expensive on average.

But there is some overlap. This means there are some instances where a wood burner is cheaper to run than a heat pump, and some instances where a flued gas heater is cheaper than a wood burner, and so on.

It isn’t cut and dried, and there are several things that you need to consider, including:

  • Fuel costs. Saving on your heating bill doesn’t always necessarily mean buying the most efficient heater. The cost of fuel varies depending on where in New Zealand you live. A household in Kerikeri, for example, may have to spend twice as much on electricity as a similar household in Dunedin for every hour a heat pump is on. For the Kerikeri home, a heat pump is more expensive to ‘fuel’. Wood pellets, firewood or LPG bottles could be cheaper.
  • Installation costs. Heat pumps are very efficient, but they can be pricey to install. Estimates for buying and installing a heat pump range from $2,000 to $4,500, depending on size of room and heat pump, to up to $12,000 for larger, multi-ducted, whole-house versions. This may vary further depending on the structure of your home. It could take quite a while for the long-term savings to cover the upfront costs. If you’re not planning to stay in the home for a long time, you might move before it balances out.
  • Room size. Some types of heating are more suitable for some rooms than others. Bedrooms and small living spaces could warm up nicely with an electric heater – but that heater would struggle with a big open-plan kitchen that’s twice the size! A heater that isn’t right for the room may also use up more power than necessary.


We’d love to give you a single clear cut answer, but there isn’t one. However, Gen Less has put together a fantastic summary of each of the major ways to heat a home along with their pros, cons and considerations. Find their guide here.

This article is solely for information purposes and is not intended to be financial advice. If you need help, please contact Avanti Finance or your financial adviser. Neither Avanti Finance nor any person involved in this article accepts any liability for any loss or damage whatsoever which may directly or indirectly result from any information, representation or omission, whether negligent or otherwise, contained in this publication. References to third-party websites are provided for your convenience only. Avanti Finance accepts no responsibility for the availability or content of such websites.

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