Your guide to choosing a hot water system

Electric

Electric hot water systems are some of the most popular, found in around 50% of Australian homes. They’re usually the cheapest to buy and install, but their running costs can stack up, unless you’re pairing them up with some solar power. Electric water systems heat water with an element at the bottom of an insulated storage unit, then store it away for when you need it.

Pros

• Low up-front costs
• Commonly available and easy to replace
• Can be powered alongside solar for cheaper running costs

Cons

• Can be expensive to run on electricity alone 
• Less energy efficient than other hot water systems 

Gas

Gas hot water heaters are your mid-range option. They usually sit in the medium- to high-cost bracket when it comes to purchase, installation and continual running costs.  

Gas water heaters are most economical when running on natural gas. They’re usually installed outside for ventilation, and are almost always continuous flow systems, since their burning flame means they can’t be insulated. Given their heavy heat loss issues and non-insulated designs, they don’t work well in colder climates.  

Pros

• Reliable and fast to heat water
• Generally cheaper to run, costing about a third of an electric model

Cons

• Less efficient in colder climates
• Need access to natural gas for better efficiency
• Limited to outdoor installation

Heat pump

Heat pumps are one of the most efficient models, only using about 30% of the energy that a typical electric hot water system does. These pumps work by drawing out heat from the surrounding air (like your fridge, just reversed) to warm the water in your tank.  

Heat pumps are usually more expensive to purchase up-front but are cheaper to run long-term. You can also apply for government incentives like Small-scale technology certificates (STCs) for a discount on your installation costs.  

Pros

• Lower long-term running costs
• Energy efficient and eco-friendly
• Can pair with solar to use excess generated energy
• Less likely to overheat in hot weather

Cons

• Higher up-front purchase cost
• Can be noisy (similar level to an air conditioner)
• Some models aren’t suitable for colder climates

Solar

Solar hot water systems are some of the priciest options to buy and install, but the running costs are low, so they can pay off over time. Most systems are designed with a booster (gas or electricity) to heat your water when there’s little sunlight available. While these systems use up to 60% less energy than gas or electric hot water heaters, their effectiveness does depend on how much sun your roof gets.

Solar hot water systems either have panels on the roof to generate power or collectors to heat the water that flows into your insulated water tank. These tanks can either be on the ground or roof. These systems work by absorbing sunlight with something called an evacuated tube. Then, the sunlight is transferred to your tank to heat your water. The larger the tank, the more tubes are needed – about one for every 10 litres.

Pros

• Lowest long-term running costs
• Very energy efficient, using up to 60% less energy

Cons

• Expensive to buy and install
• Could see extra running costs from booster use in low-light conditions
• Performance depends on solar exposure, which is roof space dependent

Space available

Different hot water systems will need different-sized spaces. If you’re thinking about installing a solar hot water heater, you’ll need to think about how much roof space you have and make sure that it’s ideal for solar use (north facing and free of shade). For water heaters that are placed outside, you’ll need to think about what tank size you need and the ideal space for it (somewhere near your bathroom or kitchen).  

Existing water heaters

If you’re replacing an old water heater, some models can be converted to more sustainable systems. For example, a standard electric storage water system can be attached to a heat pump or solar hot water unit.  

Tank capacity

A tank that’s too small means your shower might run cold halfway through. But too big, and you could be paying for more energy usage than you need, or have more space taken up in your home. Most tank capacities go by the number of rooms in your home, but it’s important to think about how and when you use your hot water, too.  

Energy rating

Nearly all hot water systems come with an energy rating or minimum performance standard to see which model gives you the best energy output. If your goal is to create a more energy-efficient home, this is one of the first simple steps when looking at different hot water models.