Choosing the right hot water system for your home


Heat pumps, storage, continuous hot flow and solar – with so many different options for hot water, it’s no wonder homeowners are drowning in choices when it comes to replacing or installing new systems!

Hot water accounts for over twenty percent of energy consumption in the average Australian household and is considered to be the second largest user of household energy after heating and cooling.[1]

Over half of Australian households use electricity for their hot water  (56%), nearly 40% use mains gas and only 10% use solar hot water systems[2].

Having hot water is crucial to many Australians, and the financial commitment that comes with installing a new system means it’s even more important to consider all your options, like rising energy prices and the benefits of the latest energy efficiently technology, when purchasing.

Comparing the energy efficiency of all the different types of hot water systems is a challenging task, as there’s a variety of factors to consider including energy sources, sizes, types, unit efficiencies and standing heat loss.

Purchasers need to also consider brand quality, energy availability, suitable installation location, length of pipe runs, tariff connections, energy pricing, back up service and lifetime costs.

To help buyers easily compare the benefits of each type of hot water system, Origin Energy has prepared the following guide.

Electric units

Heat pumps
Heat pumps work like air conditioners, only in reverse. Heat is drawn from ambient air to heat the water.

  • They are easy to install as they use similar connections to an electric hot water system
  • They can use up to 65% less energy than a standard electric storage system.[3]


  • Heat pumps tend to work best in the middle of the day when the temperature is the hottest, however, this is also when electricity tariffs are at their highest.
  • They aren’t as efficient when the outdoor air temperature falls near or below freezing, so if you live in a cooler climate you may want to consider another option.
  • Heat pumps also tend to be more expensive to purchase than other systems, such as electric or gas storage.

Electric storage

  • Electric storage units are generally more affordable units to purchase upfront, and it is easier to replace like for like systems – therefore you can save money on replacement costs.
  • You can also save money using this system by taking advantage of lower tariffs when using this system, which will heat water during off-peak times.


  • Installing this system on an off-peak tariff means you run the risk of running out of hot water during heavy load days, and the water won’t be reheated until overnight.
  • If you choose to run electric storage during the peak, you are likely to incur high running costs.

Gas units
Gas storage


  • The up-front purchase costs are usually lower than other types of units.
  • This type of system also has lower installation costs, with no upgrade of gas line required.


  • Storage systems lose heat through the walls of the tank so they need to burn gas regularly to keep the water at the desired temperature. As a result, these losses can contribute a significant proportion of your hot water energy use. Well-insulated tanks will have lower storage losses.[4]
  • Gas storage units aren’t as energy efficient as continuous flow units or solar hot water systems

Continuous flow gas

  • Continuous flow gas systems are mounted on a wall, and heat water as you need it so you will never run out of hot water.
  • Like most gas units, they are cheaper to run than electricity, and upfront costs are reasonable.


  • In some cases when installing this system, you may need to upgrade your gas line which can add to upfront costs.
  • Furthermore, the unit needs to be plugged into a power point and if there is a power outage, the unit won’t work.

Solar hot water systems


  • Investing upfront in a solar hot water system will reap long-term savings on running costs for buyers who have a roof that is ideal for solar power.
  • Solar hot water systems have a range of possible configurations to suit different climates, such as roof-mounted flat plate panels, evacuated tube collectors that use the sun to heat water flowing through tubes to storage tanks, and even models suited to more frost-prone areas that work by circulating a heating agent through the tubes to heat water stored in the tank.


  • Electric or gas boosters are also required to heat water in the storage tank on days when rain or cool weather impedes the sun’s rays, which adds to upfront costs

Discounts An additional benefit to households that install solar hot water systems is that they might be eligible to receive a benefit under the Small-scale Renewable Energy Scheme (SRES) to help with the purchase cost.

Installing an eligible system allows the creation of Small-scale Technology Certificates (STCs), an electronic form of currency with a value that can be redeemed by selling or assigning them. It is common to receive a discount on the total price of purchase and/or installation of a system in exchange for the right to create STCs.

For a guide to running costs for your city, please click on the links below:

Melbourne/ Sydney/ Brisbane/ Adelaide

While there are a number of options for hot water systems to consider, the key is to choose a unit that suits your situation, and ensure you look beyond the upfront costs to what long term benefits each system will deliver. Solar is a fantastic option, but it isn’t suitable for every home – so if you can’t replace your existing hot water unit with a solar hot system or storage heat pump, choose the most energy efficient gas or electric system and if electric, make sure it’s connected to an off peak tariff.

Hot water systems running costs – a city by city guide

To help guide your decision, Origin has compared annual and 10 year costs for key capital cities, based on a medium sized family household of three to four people. For further advice on energy efficiency in your state, visit

Bris v2

**energy pricing based on average Origin standard rates for Queensland current 15 April 2015  inclusive of GST exclusive of supply charges

Adelaide v2

**energy pricing based on average Origin standard rates for South Australia current 15 April 2015 inclusive of GST exclusive of supply charges

Melb v2

**energy pricing based on average Origin standard rates for Victoria current 15 April 2015 inclusive of GST exclusive of supply charges

syd v2

**energy pricing based on average Origin standard rates for New South Wales  current 15 April 2015 inclusive of GST exclusive of supply charges






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