Electric vs Gas vs Solar vs Heat Pump: Choosing a Hot Water System

Choosing a hot water system usually comes down to a trade-off between what you pay upfront and what you pay to run it over the next decade or more. The four main types in Sydney homes are electric, gas, solar and heat pump, and each suits a different situation.

Electric storage

Electric storage systems are the cheapest to buy and install, and they work anywhere there's a power connection, which makes them the default in many older Sydney homes. The downside is running cost: heating water with electricity is generally more expensive than gas, and an electric tank runs at standard electricity rates unless it's connected to a controlled-load tariff.

Gas storage and gas instantaneous

Gas systems have traditionally been cheaper to run than electric in Sydney, though gas prices have risen in recent years. Gas storage heats a tank of water, while gas instantaneous (continuous flow) units heat water on demand, so there's no tank and you don't run out of hot water. Instantaneous units are compact but need a suitable gas connection and adequate gas line sizing.

Solar hot water

Solar hot water uses roof-mounted collectors to heat water, with an electric or gas booster for cloudy days. Upfront cost is higher than electric or gas, but running cost is very low. Solar works best on a north-facing roof with good sun exposure, and it's worth checking whether your roof orientation and available space suit collectors.

Heat pump

Heat pump systems work like a reverse-cycle air conditioner, drawing heat from the surrounding air into the water, using around a third to a quarter of the electricity of a conventional electric element. They cost more upfront but are cheap to run, and are increasingly popular in Sydney. They need an outdoor location with good airflow and are a little noisier than a standard tank, so placement matters.

What to consider beyond the system type

• Household size and daily hot water use, which determines tank size or flow rate
• Existing connections: replacing like-for-like is usually cheaper than switching fuel type
• Available space, both indoors for a tank and outdoors for solar or heat pump units
• Upfront cost versus the running cost over the system's expected 10 to 15 year life
• Current state and federal incentives, which change and can improve the payback on solar and heat pump systems

Get advice on your situation

Because the right choice depends on your household, roof and existing connections, it's worth getting a plumber to assess your situation and quote on more than one option before you commit. A plumber can also confirm the correct sizing and whether your gas or electrical supply needs upgrading to support a new system.