Electric, Gas, Heat Pump or Solar: Picking a Hot Water System in Australia

Most people choose a hot water system in a bad week. The old one has failed, there is no hot water, and the decision gets made in a phone call with whoever can come today. That is how a household ends up with the same technology it has always had, sometimes for the third time in a row, without anyone ever checking whether it is still the right one for the house.

It is worth spending an hour on this before you are forced into it, because hot water is usually the largest or second largest energy load in an Australian home, and the system you install will still be there in a decade. There are four technologies in common domestic use here, and they are genuinely different animals, not variations on a theme.

Electric storage: simple, cheap to buy, expensive to run

An electric storage tank is an insulated cylinder with an immersion element inside and a thermostat controlling it. There is nothing clever about it and that is its appeal. It is the cheapest system to buy, the least fussy to install, it works anywhere there is power, and there is nothing to flue or vent.

The catch is running cost. A resistive element turns one unit of electricity into one unit of heat, and at general retail tariffs that is the most expensive way to heat water available to a household. The usual mitigation is a controlled load or off-peak tariff, where the tank heats overnight at a lower rate. That works, but it changes the sizing: an off-peak tank has to hold a full day of hot water because it only heats once, so off-peak tanks are considerably larger than tanks on a continuous tariff. If you are on off-peak and you run out at night, the fault is often the sizing or the tariff, not the system. Before assuming a breakdown, it is worth reading how elements and thermostats actually fail, because a twin-element tank running on one dead element behaves exactly like a tank that is too small.

Electric storage still makes sense for small households, units and flats with no gas and no room for anything outside, and as the cheapest way to get hot water back on a property that is about to be sold or renovated. Replacement tanks and spares turn up regularly under electric storage listings.

Gas: storage and continuous flow

Gas splits into two quite different products. A gas storage system heats a tank with a burner underneath, so it recovers far faster than an electric tank and can be smaller for the same household. A continuous flow unit, sometimes called instantaneous, has no tank at all: it fires a burner when you open a tap and heats water as it passes through.

Continuous flow never runs out, which is the headline, but it is limited by how much it can heat at once. That is a flow rating in litres per minute at a given temperature rise, and it is a completely different sizing exercise to picking a tank in litres. If two showers and a kitchen tap run at the same time in July, the unit's winter flow rating decides whether that works. The sizing comparison between continuous flow and storage is the piece to read before you commit to either.

Gas has real install constraints. The gas line has to be sized for the appliance, which for a large continuous flow unit is a meaningful load that an older undersized line may not carry. Flueing, clearances from windows and boundaries, and condensate handling all apply. LPG and natural gas units are not interchangeable. All of it is licensed work: gas fitting in Australia must be done by a licensed gasfitter, and no part of it is a legitimate DIY job.

Heat pump: the efficient electric option

A heat pump hot water system is a refrigeration cycle running in reverse. A fan draws ambient air across an evaporator, refrigerant picks up low-grade heat from that air, a compressor concentrates it, and the heat goes into the water. Because it moves heat rather than making it, it delivers several times more heat per unit of electricity than a resistive element, which is why it has largely become the default recommendation for all-electric homes.

It is not free of conditions. It needs an outdoor or very well ventilated position with real airflow and manufacturer clearances, a condensate drain, and thought about noise, because a compressor and fan running for hours next to a bedroom window or a close boundary fence is how neighbour complaints start. Most units carry an electric backup element for cold snaps and heavy demand, and a unit that leans on that element often is not delivering the savings it promised. If you have rooftop solar, running the heat pump in the middle of the day on a timer is where the economics get genuinely good. The detail on how heat pumps run and what they need around them covers the siting and control decisions properly.

Solar hot water: strong in the right climate and roof

Solar hot water uses roof-mounted collectors, either flat plate or evacuated tube, to heat water directly, with gas or electric boosting for the days the sun does not cover. In a close-coupled system the tank sits on the roof with the collectors and circulates by thermosiphon. In a split system the collectors are on the roof and the tank is on the ground, with a pump moving water between them.

Where it wins is a sunny climate, a roof with unshaded north-facing area, and a household that uses hot water in the afternoon and evening. Where it struggles is a shaded or heavily overlooked roof, a heritage or strata restriction, a roof that cannot carry a rooftop tank, or a household whose whole demand lands at 6am in winter, when the boost does most of the work and the collectors are decoration.

Solar and heat pump are the two efficient options and they compete for the same buyer. Broadly, solar rewards good sun and roof access, heat pump rewards a decent ambient climate and a quiet spot to put a unit, and heat pump has become the easier retrofit because nothing goes on the roof.

How to actually decide

Work through the constraints before the preferences. Do you have gas at the property, and is the line adequate. Is there an outdoor position with airflow and tolerable noise. Is there north-facing roof with no shade. What tariff are you on and could you change it. How many people shower, and do they shower at the same time.

Whatever you land on, a new hot water install in Australia is licensed plumber work, and gas work is licensed gasfitter work, so the install quote is part of the comparison rather than an afterthought. It is worth getting more than one, which is what the hot water plumber directory is for. If you are cost-sensitive, ex-display and near-new systems do appear on the market and are a legitimate way to buy a better technology than your budget would otherwise reach, provided you know what to check on a second hand system first.

Once you know the type, browse current listings to see what is actually available near you, and take the sizing seriously. A system that is right in every respect except capacity will annoy you every winter morning for ten years.