Hot water system types explained: gas, electric, solar and heat pump

There are five main types of hot water system in Australian homes, and each one suits a different setup, budget and set of habits. Terry has fitted and repaired all five across Western Sydney for 40 years, so here is a plain-English rundown of how each works, what it costs, and who it suits best.

Gas continuous flow (instantaneous)

These heat water on demand as it passes through the unit, so you never run out no matter how many showers run back to back. Nothing sits in a tank losing heat, so running costs are low. They are sized by flow rate: roughly 16 to 20 litres a minute for one bathroom, 24 to 26 for two, and 32 for three or more.

• Pros: endless hot water, cheap to run, long life of roughly 15 to 20 years, compact wall unit.
• Cons: needs a good gas supply, output drops if undersized for the house.
• Fitted cost: roughly $1,900 to $3,500.
• Suits: gas-connected homes that want endless hot water, especially busy households.

Electric storage

A simple insulated tank with an electric element inside. It is the cheapest system to buy and fit, which is why it is so common, but it is dear to run on a normal tariff and much better value on off-peak or controlled load. Tank sizes run from 125 to 170 litres for one or two people, 250 to 315 litres for three or four, and 315 to 400 litres for five or more.

• Pros: cheapest up front, works anywhere with power, simple and reliable.
• Cons: dear to run on full tariff, can run out, lifespan of only roughly 10 to 12 years.
• Fitted cost: roughly $1,500 to $2,500.
• Suits: tight budgets, homes on off-peak tariffs, or as a quick replacement.

Gas storage

A tank like the electric version, but heated by a gas burner underneath. It reheats faster than electric and runs at normal tariff without needing off-peak wiring.

• Pros: simple like-for-like swap, decent recovery, moderate running cost.
• Cons: still loses standing heat, lifespan of roughly 10 to 12 years.
• Fitted cost: roughly $1,800 to $3,000.
• Suits: gas homes wanting a straightforward tank replacement without going continuous flow.

Heat pump

A tank that works like a reverse air conditioner, drawing heat from the air instead of making it with an element. That is why it uses only about a third of the power of electric storage, giving the lowest running cost of any electric option. It is rebate eligible in NSW, which can bring the price down close to a plain tank.

• Pros: cheapest to run, rebate eligible, fits the footprint of a normal tank.
• Cons: higher up-front cost, works a little slower in cold air, lifespan of roughly 10 to 15 years.
• Fitted cost: roughly $3,500 to $5,500 before rebate.
• Suits: homes wanting to cut running costs, especially replacing an old electric tank.

Solar hot water

Roof-mounted collectors heat the water using the sun, with an electric or gas booster for cloudy days. It has the lowest bills over the long run but the highest up-front cost, and it needs unshaded, north-facing roof space.

• Pros: lowest long-term running cost, long life of roughly 15 to 20 years.
• Cons: highest up-front cost, depends on roof space and orientation, leans on the booster in winter.
• Fitted cost: roughly $4,000 to $7,000.
• Suits: homes with good north-facing roof space planning to stay put for years.

How to choose the right one

The best system depends on three things: whether you have gas, how much you can spend up front, and how much you want to cut running costs. A quick guide:

• On gas and want endless hot water: gas continuous flow.
• Tight budget or on off-peak: electric storage.
• Want the lowest running cost with a rebate: heat pump.
• Right roof and playing the long game: solar.

Whatever you land on, it needs to be sized right and installed by a licensed person. Gas and hard-wired electrical work is not a DIY job, and getting the size wrong means either cold showers or wasted money. Terry is a licensed plumber and gas fitter, NSW licence L10959, and quotes a fixed price before starting.

Not sure which type suits your home around Berala, Auburn, Strathfield or Merrylands? Call Terry on 0415 274 542 for an honest recommendation and a fixed quote.