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Which type of hot water system should I get?

The short answer

For most Australian households replacing a system today, a heat pump or solar-boosted electric system has the lowest running cost and attracts the largest rebates, but the right answer depends on your existing connections and available space.

TradieAnswers editorial · written in-house and sourced to the authorities listed below

Checked against 3 published sources, listed in full at the end of this page. How we source this

Hot water is typically the largest or second-largest energy use in an Australian home, so the running cost difference between system types compounds over the ten to fifteen years the unit will be in service. That makes this one of the few appliance decisions where it is worth thinking past the install price.

The options

TypeWhat it isMain consideration
Electric storageA tank with an element in itCheapest to install, highest running cost of the common options
Gas storage or continuous flowGas-fired, either tanked or heated on demandRequires a gas connection; continuous flow often needs a larger gas line
Heat pumpMoves ambient heat into the water, like a reverse fridgeMuch lower running cost; needs outdoor space and airflow, and makes some noise
Solar with boostRoof collectors plus an electric or gas boosterLowest running cost where roof orientation suits; highest install cost

What actually decides it

  • What you already have. Moving from gas to electric or vice versa means new connections and is where an unexpectedly large quote usually comes from.
  • Where it can go. Heat pumps need outside space with airflow and a noise-tolerant position. Solar needs suitable roof area and orientation.
  • Household size and peak demand. A large household running showers back to back is a different sizing problem from a couple.
  • Rebates. These materially change the comparison and several are means-tested. See the cost page for the published figures.

Sources

Every source below was fetched and its response recorded on the date shown. Where a government site blocks automated clients, that is noted rather than reported as a successful check.

  1. Hot water systems · energy.gov.auChecked 2026-08-10 · responded 200 OK
  2. Hot water systems · Your Home (Australian Government)Checked 2026-08-10 · responded 200 OK
  3. Hot water rebate · Solar VictoriaChecked 2026-08-10 · responded 200 OK

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