How to Choose the Best Hot Water System

If you are building a new home or looking to upgrade you existing hot water system then deciding on what system is best for you needs some consideration. And if your existing hot water system has suddenly broke, don’t just replace it with the same system without considering all your options. Getting the right hot water system for your household and climate conditions means you can save money on water and energy bills.

Did you know that water heating contributes to a quarter of unusual household energy use? That’s why its a good idea to know all of the options on offer when replacing or when you are undergoing a new build. A hot water system that saves energy is also better for the environment. And new government regulations concerning energy consumption can mean a new electric storage system might not be an option

Should I get Electric, Solar, Gas or Pump?

solar hot water

This is the first decision that needs to be made. To know the best system for you, its good to know what exactly makes each system work.


    • Solar collector panels and storage tank system. Size of system depends on number in household. For instance 4 people would usually need around 4 square metres of a solar collector area (two panels) and a 300 – 360 litre tank. Having a large tank will allow for days with less sunlight.
      location on your roof is important. The installer will advise of the best location to collect energy. If the panels cannot be installed in the recommended spot then you may need to have a bigger collection area (more panels).The system will still have an electric or gas booster, which keeps the water hot on days with little or no sunshine.It is true that compared to the other hot water systems solar is expensive to install. Plus it takes longer to install. But what you need to remember is these systems have a low running cost and pay for themselves in the long run.
      The government offer rebates and incentives which go toward offsetting the price.

How much does a solar hot water system cost?

Not including installation, solar hot water systems cost from $2000 to $7000.


If you have a connection for natural gas its better than electricity because it works out cheaper. This in part is due to gas rates not being varied throughout the day. Gas systems heat the water as is needed.

Gas hot water systems are installed outside for venting requirements but there is an option to install indoors with a flue.

These systems have energy efficiency star ratings to provide an energy consumption guide.
Some come with a pilot light and this uses a small amount of gas. More common is electric ignition to it being more economical. But this means in a blackout you will not have hot water.

LPG bottles are an alternate to natural gas, but they are much more expensive to run.

How much does a Gas hot water system cost?

Not including installation they are $900 to $2000.


Electric hot water systems are cheaper than the other systems to buy and install. But they are more expensive to run. And electricity rates can be varied, higher during the day and less overnight when people rarely shower.

Off peak rates can be used on a systems that uses a larger tank by heating the water overnight. Though not all homes have access to off peak rates.

Installed indoor or outdoor

Instantaneous electric hot water systems are also available to purchase.

How much does an electric hot water system cost?

Not including installation they are $300 to $1500.

Heat Pump

This is a much more efficient system of electric storage and works the same as a fridge or air conditioner.They extract the heat from air and use it to heat the water in the tank. A unit can be integrated by having the tank and compressor together or split.

Installation must be in a well ventilated area, it is best to install outdoors.

They are noisy and need to be located away from neighbours. The compressor sounds like the outdoor unit of an air conditioner. Climates most suited to these systems are warm climates. Though you can find systems designed for colder climates. Most systems also use a booster element for cold weather or high use.

You can get government rebates and incentives to help offset the cost.

How much does as heat pump system cost?

Not including installation from $2500 to $4000.

What size hot water system do I need?

The answer will depend on the number of people in your household. Typically up to 4 people requires a 135 litre hot water system. For a household of 5 to 7 people a larger system is required – 170 litres. Or switching to a continuous flow unit will provide all the hot water needed.

That being said, it would also be advantageous for a small household, say 1-2 people, switching to a continuous hot water system. Because they would not use a lot of water, money would be saved on gas usage. It may work out cheaper.

What is a Continuous Hot Water System?

A Continuous flow hot water system are tank-less and designed to provide hot water on-demand. Because they do not store any water, the water flowing through them is heated immediately until the hot water is turned off. Another benefit to this system is the continuous hot water flow is only triggered when the tap is turned on. The system ignites the gas burners and water flows through a heat exchanger where it is heated immediately. The gas is only used when hot water is turned on and is not used to maintain a pilot light.

What are the benefits of a solar hot water system?

  • Free and clean energy to pre heat your water captured from the sun
  • Provides up to 90% of your water heating needs
  • Reduces your carbon footprint through less energy consumption
  • Cheaper power bills and helps to keep rising energy costs at a minimum
  • Hot water at any time in any weather

How do hot water systems work?

Storage (hot water tank): This system works by having a tank that stores the water with a burner at the bottom which is thermostatically controlled by the gas valve. This heats the water in the tank to a predetermined temperature.

When hot water is drawn out of the top of the tank, cold water fills the bottoms which the thermostat recognises and turns the gas burner on to reheat the tank.

  • Most electric, gas, solar and pump systems use storage tank.
  • Tanks come with installation but are still best in a sunny or insulated space.
  • Stainless steel tanks last longer but are more expensive than mild-steel tanks. Stainless steel comes with a 10 year warranty, mild-steel around 5 years.

Continuous hot water system: works by heating the cold water as it passes through the unit to a predetermined temperature when the hot tap is turned on. When there is no hot water running the unit saves energy as no hot water is being stored.

  • Most systems use gas, though there are electric systems available.
  • Due to the fact these systems have no heat losses like stored water in a tank, they can be cheaper to run.
  • The size or flow rate per minute you need should taker into account the number of hot water outlets rather than the number of people in a household.
  • A typical rule for this is a flow rate of around 22-24 litres per minute for a 2 bathroom house.

Who fixes hot water systems?

A gas plumber is your best option to fix any issues with your hot water system. Any errors or short term fixes by the wrong trade may end up costing you a lot more. Its not just the system itself that may cost money with the wrong work, but you pay water and gas bills prices made up in part from your hot water system usage. A gas plumber works day in, day out on these systems and can advise of the issue, offer an accurate price and resolve the issue. Get it done right the first time and save yourself time, hassle and money!

Where do I buy a hot water system?

A hot water system can’t be purchased with your local plumber. There are also regulations to be followed and certificates issued on install. Plumbers purchase them on your behalf as part of the installation process. The plumber will discuss your needs and offer advise on the best system to buy. Because it is a licensed trade it must be installed by a professional.

How much does it cost to install a hot water system?

This varies depending on many factors. Such as the site conditions, the unit being installed and size of unit. This is why Harley Plumbing provides a free quote – you can get an accurate price and know up front what it will cost.

Can I change from storage tank to continuous flow?

Yes this is definitely possible. First up you would need a plumber to attend your home to size up your gas and water systems correctly. You don’t have to worry about being without hot water for days as the job can (in most cases) be completed in a single day.

You also need an electrician to install a new power point for the continuous hot water system as they have an electronic ignition system to ignite the burners.

How to understand the Energy star ratings

Gas hot water systems use an energy efficiency star ratings system. The more stars the more energy efficient the system. The rating system is unregulated by the government and a voluntary system. The highest rating is six stars

What does the Future hold for Hot water Systems?

In today’s world improvements tend to be driven in trying to make products that use less energy and rely in green energy. Using batteries to store solar power seems to be the next step forward.


Quick post update: I recently needed a new hot water service which broke on our Melbourne property. Being interstate we looked for someone with good reviews and close to our investment. We went with Harley Plumbing. You can check out their hot water repair service