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Hot water buyers guide

By April 3, 2022June 2nd, 2023No Comments
hot water heat pump and garden

With water heating accounting for over 25% of average household energy costs, the type of hot water system you have in your home makes a huge difference to your bills and environmental footprint.

It pays to research what system better suits your needs and ideally before your hot water fails so you don’t end up investing in an inferior system under pressure.

Electric heat pump hot water systems are a great option for slashing bills.

According to Sustainability Victoria, heat pump water systems use around 60 to 75% less electricity than traditional electric hot water systems.

Difference between heat pumps and solar hot water

Both heat pump systems and high-performance solar hot water systems are the best water heating options for improving environmental outcomes. However heat pump water systems don’t need solar hot water collectors on the roof so can be a good option where sun access is not good. Many hot water systems also have gas for boosting hot water on cloudy days.

Heat pumps are also good if you do have solar panels as you’re effectively powering hot water with ‘free’ electricity.

If you plan to move away from fossil fuels and electrify your home, heat pump water heating is an excellent choice.

What are heat pump water heaters?

Traditional hot water systems heat water with electricity or gas like a stovetop kettle, but heat pump systems absorb warmth from the air and transfer it to heat water – a bit like air-conditioning.

Visit the Energy Rating website for more detail about how heat pump hot water systems work.

Choosing the right system

Get advice before you buy such as what system best suits your needs, household size, and climate, to where you should place the unit, as noise is something to consider.

Heat pump systems come as split systems, with a separate tank and compressor, and integrated systems, with a combined tank and compressor.

Renew has a great guide on what to look for when buying a system, as does Solar Victoria.

My Efficient Electric Home facebook group provides a forum for information on various models. As a guide, a four-person household will typically need a 270–315L tank.


Heat pump hot water systems have a greater upfront cost but are much cheaper to run over the life of the unit. According to Choice, systems range in price from about $3000 to $4000, excluding installation and rebates (see below).

Sustainability Victoria provides a useful overview of approximate annual energy costs and greenhouse gas emissions for various types of common water heating systems for different household sizes. Their website also details further information on efficiency and running options, including optimal on-peak set-ups and cheaper off-peak electricity tariffs overnight.

Victorian Government support

The Victorian Government’s Solar Hot Water program provides eligible Victorian households with a rebate of up to $1,000 to assist with the purchase of a heat pump hot water system or solar hot water.

This is in addition to the $1,400 rebate available for solar panels, so if you have neither solar panels or an environmentally-friendly and energy efficient hot water system, now might be the time to invest.

It’s worth noting that the hot water rebate is still available if you need to install a system urgently, eg, it breaks down. Visit the website to find out more.

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Heat pump and solar hot water rebates.
Get solar for your home.
Financial support for residents on a low income.