Which Hot Water System Should You Choose?
Heat pumps can use less energy than conventional electric resistance systems, but the right choice also depends on your home, hot water use and installation options. Compare the full quote and household running-cost assumptions, then ask the supplier to explain sizing, controls and service support. There is no single price, payback period or best system for every Australian home.
Compare the actual system
Storage and continuous flow have different requirements.
Use your own assumptions
Check demand, tariffs and the full installation quote.
Plan for your property
Confirm location, climate, capacity and service support.
Hot Water Systems at a Glance
A heat pump is an electric hot water system too. Here, “electric” means conventional resistance heating, where an element heats the water directly. Gas and resistance systems can be storage or instantaneous; compare the actual type quoted.
| System | How it heats water | A key consideration |
|---|---|---|
| Heat pump | Uses electricity to move heat from the air into stored water. | Model, climate, tank capacity and compressor location. |
| Electric storage | An element heats water kept in a tank. | Heating schedule, tariff and available solar electricity. |
| Electric instantaneous | Heats water electrically when a tap runs. | The home's electrical supply and required flow. |
| Gas storage | A gas burner heats stored water. | Gas supply and heat lost from the tank. |
| Gas continuous flow | Heats water as it is used, without a storage tank. | Gas supply and simultaneous hot water demand. |
| Solar thermal | Roof collectors heat water for a storage tank, with boosting when needed. | Roof suitability and the booster's energy source. |
The Australian Government hot water overview explains the main technologies. Solar thermal collectors heat water; rooftop solar PV panels generate electricity. A heat pump can use solar PV electricity without needing solar thermal collectors.
Efficiency Is Only Part of the Comparison
Heat pumps can use less electricity than conventional resistance water heaters. That advantage does not establish a fixed annual bill: the model, conditions and hot water use still matter. Energy Rating: choosing a water heater covers installation, tariffs and ongoing costs as well as equipment efficiency.
Heat pump versus electric storage
Compare the full installed price and the expected energy use for your household. An electric storage system can have a lower purchase cost, and solar PV or an appropriate tariff can change what it costs to run. A heat pump adds questions about compressor noise, location and controls.
Heat pump versus gas
Identify whether the alternative is gas storage or continuous flow, and whether it uses mains gas or bottled LPG. Ask for model-specific performance and the work needed to change energy source. An existing gas connection is one input to the comparison, rather than a reason to assume gas will be cheaper.
Solar thermal versus solar PV
Solar thermal heats water on the roof. Solar PV can supply electricity to a heat pump or resistance system, and to other appliances. Compare the proposed equipment and roof use rather than treating these as the same installation. See Your Home: hot water systems.
Start With Your Home, Not a Universal Winner
Shortlist systems that can meet your hot water needs and fit the property, then compare their costs. The Energy Rating selection guide recommends considering climate, placement, noise, warranty and tariff options.
- Replacing electric storage: ask for a heat pump option alongside the full cost of a replacement storage system.
- Replacing gas: include any electrical work, removal and changes to the gas connection in the comparison.
- Using rooftop solar PV: ask how the heater's controls would use available generation while still meeting demand.
- Living in an apartment or rental: confirm installation space and the permissions needed before booking.
- Replacing a failed heater: agree how soon hot water can be restored and whether a temporary arrangement is available.
For published installation examples and a quote checklist, see our Heat Pump Cost Guide. These are starting questions for a supplier's assessment, not a brand recommendation or a guarantee that one system suits every home.
Check the Assumptions Behind a Savings Estimate
Ask for a comparison using the same household demand and time period. Keep a copy of the assumptions so you can see why two estimates differ.
- Compare complete installation quotes, including removal, necessary plumbing or electrical changes and exclusions.
- Show confirmed discounts separately and check whether they are already included in the advertised price.
- Request the estimated energy use, applicable tariff, heating schedule and any booster use for each model.
- Include ongoing costs and charges that would remain after the change.
The Australian Energy Regulator tariff guide explains single-rate, time-of-use, controlled-load and demand charging. A lower energy requirement and a lower bill are related, but the tariff can change the financial result.
The regulator also explains usage and daily supply charges. If gas remains connected for another appliance, do not count its daily charge as a saving from changing hot water alone. Ask the retailer about disconnection costs and which charges would stop if you remove the connection.
Simple payback compares the extra upfront cost with estimated yearly savings. It leaves out factors such as financing, repairs and later price changes. If the assumed yearly saving is zero or negative, there is no positive simple payback under those assumptions.
Eligible systems may receive a purchase discount when STC rights are assigned to a registered agent. Check the exact product and paperwork with the provider; see the Clean Energy Regulator guidance and our Heat Pump Rebates Guide.
Agree the Installation Scope Before Booking
Get the supplier to assess the site and name the work included. Solar Victoria heat pump planning guide discusses integrated and split systems, electrical work and equipment placement.
- Confirm the exact model, tank capacity, proposed location and access for installation and servicing.
- Ask who handles the plumbing, electrical and any gas work, and check their relevant licences and insurance.
- Agree old-system removal, any connection changes, exclusions and the expected interruption to hot water.
- Confirm any property, strata or programme approvals needed before work starts.
- Request operating instructions, required compliance documents and the written warranty at handover.
Have the installer confirm safe water-temperature controls, electrical requirements and manufacturer instructions for the proposed system. This guide does not specify a circuit, temperature setting or installation method. Agree the booking and completion schedule with the supplier; a standard number of days cannot describe every replacement.
Choose for Local Conditions and Available Space
In a cold area, ask for a heat pump designed for the conditions at your property. Check its operating limits and whether it relies on an electric booster. Frequent booster use can affect running costs; Solar Victoria explains boosting and noise.
Ask the installer to assess compressor noise near bedrooms and neighbours, airflow, service access and the proposed heating schedule. For solar thermal, ask how local sun, shading and winter conditions affect collector placement and boosting. Use the exact model's specifications rather than a state-wide brand or savings ranking.
Match Capacity to How Your Household Uses Hot Water
People count is a starting point, not a tank-size rule. Describe busy periods, baths, shower use and likely changes in occupancy. Solar Victoria sizing guide recommends checking household needs and manufacturer guidance.
| Household pattern | Tell the supplier | Ask them to confirm |
|---|---|---|
| Several showers close together | When demand peaks and which outlets run at once. | Usable capacity or flow, and recovery for the proposed model. |
| Frequent baths or visitors | How demand differs from an ordinary day. | How the system handles the extra demand. |
| Low or irregular use | Typical occupancy and periods away. | A suitable size and the manufacturer's operating guidance. |
| Planned household changes | Extra occupants or a renovation affecting outlets. | Whether the proposed system allows for those needs. |
A storage heater needs enough available hot water between heating periods. Continuous flow avoids a storage tank, but still has a rated delivery capacity. Ask the supplier to explain their sizing choice instead of assuming either a larger tank or “unlimited” hot water is the answer.
Compare Warranty and Local Service Support
Read the terms for the tank, compressor, other parts and labour separately. Ask who provides service locally, what call-outs cost and which care requirements apply.
Solar Victoria warranty guide notes that terms vary and may depend on installation, servicing and water quality. A warranty period is not a prediction of service life. Keep the model manual, invoice and installation records, and follow the manufacturer's maintenance guidance.
Have faults assessed by an appropriately qualified technician. Do not use a generic guide as instructions for electrical, gas, refrigerant or pressure-system work. This comparison does not assign a standard lifespan or annual maintenance budget to each technology.
Consider Energy Use and Emissions Together
The footprint depends on energy consumption, its source and the system itself. Your Home hot water guide identifies household demand, grid emissions, boosting and refrigerant leakage as relevant factors.
A heat pump using renewable electricity can reduce operational emissions, but rooftop PV does not establish that every heating cycle uses solar power. Gas burns fuel at the home; electric systems also depend on the electricity supplied when they run.
Ask for the model's refrigerant information and an appropriate end-of-life disposal arrangement. Compare any emissions estimate using stated energy-source and usage assumptions. This guide does not calculate a national annual footprint, promise zero lifecycle emissions or translate savings into trees or car kilometres.
Sources and Checks
Official guidance was checked on 14 October 2026. Links appear beside the relevant topics. Ask the supplier for model-specific information and confirm current programme rules before booking.
- Australian Government hot water overview
- Your Home hot water systems
- Energy Rating water heater selection
- Solar Victoria heat pump planning
- Solar Victoria system sizing
- Solar Victoria warranty guidance
- Australian Energy Regulator tariffs
- Australian Energy Regulator supply and usage charges
- Clean Energy Regulator eligible systems and STCs
