Water heating is one of the biggest sources of CO2 emissions in Australian homes, accounting for approx. 25% of all energy usage

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Source: Rewiring Australia

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While hot water is a major energy consumer, it is also one of the most flexible household loads on the electricity grid, enabling it to play a key role in creating a more efficient and sustainable energy system

Energy-efficient heat pump systems use over 70% less energy than traditional storage systems, leading to significant savings on annual household electricity bills

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Upgrading to an energy efficient system also helps to reduce CO2 emissions

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Want to learn more?

Download our free Hot Water 101 Guide today

Hot Water System Comparison

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Hot Water | FAQs

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General

What are the different options for Hot Water?

There are four main types of hot water systems in use in Australia today:

• Continuous Flow Gas
• Gas Storage
• Electric Storage; and
• Electric Heat Pump

These are discussed further in the above Hot Water 101 Guide.

​How does the cost of different systems compare?

Pinpointing the exact cost savings and emissions impact of a new hot water system can be tricky. Factors like tank size, household size, and hot water usage all play a role. The basis of the above analysis is actual real-world data from a five-person household that recently switched from Continuous Flow Gas to an Electric Heat Pump system (with some assumptions made for Electric Storage and Gas Storage). 

The good news? This switch to a Heat Pump, powered by solar, will result in significant cost and emissions savings when compared to the Continuous Flow Gas system.
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Don’t have solar?  You can still reap the benefits of an Electric system if your home is eligible for super off-peak rates.  For example, at the time of writing, Ovo offers a plan with free power between 11am and 2pm everyday.  The grid generally has a high percentage of renewable energy during these hours, compared to overnight when it is almost exclusively powered by fossil fuels, resulting in emissions benefits as well as cost savings.  ​

How does the efficiency of the different systems compare?

Hot water systems vary significantly in their energy use and efficiency. Traditional Electric and Gas Storage systems tend to consume the most energy, as they directly heat the water in a tank, making them less efficient compared to alternatives.

Continuous Flow systems, while more efficient than storage heating, still generate emissions from burning natural gas, and use significantly more energy than Heat Pump systems.
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Heat Pump systems, use electricity more efficiently by transferring heat from the air, often requiring 70+% less energy than storage systems.  These are generally the most efficient systems and, when combined with solar or low carbon grid power, can significantly reduce both a household’s emissions and expenditure. 

What are the typical emissions of different systems?

Heat Pumps

​How does a heat pump work for hot water?

A heat pump transfers heat from the outside air to the water in a storage tank, similar to how a refrigerator works in reverse.  This process is highly energy efficient.        

What are the benefits of using a heat pump for hot water?

• ​​Energy efficiency: Heat pumps can save you significant energy costs compared to traditional electric or gas hot water heaters.   
• Environmental friendliness: They have a lower carbon footprint due to their energy efficiency.   
• Long lifespan: Heat pumps are generally durable and can last for many years.   

Can heat pumps be used in cold climates?

Yes, modern heat pumps are designed to operate efficiently in various climates, including colder regions. They have advanced technologies to extract heat from the air even at lower temperatures.   

How much does a heat pump cost to install and run?

​The initial cost of a heat pump is typically higher than a traditional electric or gas heater. However, the long-term energy savings can often more than offset the upfront cost. Operating costs are significantly lower due to the efficiency.   

What are the key factors to consider when buying a heat pump hot water system?

• Size: Ensure the heat pump is sized appropriately to meet your household's hot water needs.
• Efficiency rating: Look for a high energy efficiency ratio (EER) to maximize savings.   
• Noise level: Consider the noise level, especially if the outdoor unit will be near living areas.   
• Installation location: Ensure there's adequate space for the outdoor unit and proper ventilation.   

What rebates are available?

Federal Heat Pump Rebate
Rebates on qualifying heat pumps are available to all Australians under the Short-Term Certificate or STC scheme.  The amount received varies but it is currently worth around $500-$700 depending on the heat pump you choose.  The installer will typically net the rebate off against the price you pay them.  The STC scheme is reducing each year until 31 Dec 2030 when it is scheduled to end.

You can see the list of heat pumps approved for the STCs here.
State Heat Pump Rebates

In addition to claiming STCs a number of states may also offer additional rebates.  Like the STCs, these are typically net off against the price you pay your installer.

• Victoria.  Victorian Energy Upgrades (VEU) Program. The program provides rebates for energy-efficient appliances, including heat pump hot water systems. The amount of the rebate depends on the type of system installed and the size of the household.
• NSW. Energy Savings Scheme (ESS). This program offers incentives for households and businesses to switch to energy-efficient technologies, including heat pump hot water systems.  It is typically worth between $250-$500 depending on the system being acquired and the system being replaced.
• QLD. Energy Efficient Appliance Rebate Program: While this program was active in previous years, it has not been renewed recently. However, new programs may emerge through state or local initiatives focused on clean energy.
• South Australia. Retailer Energy Productivity Scheme (REPS): Households and businesses in South Australia can receive financial incentives for upgrading to energy-efficient systems, including heat pump hot water systems.
• TAS. Energy Efficiency Loan Scheme: While not a rebate, Tasmania offers interest-free loans for energy-efficient upgrades, including heat pump systems.
• ACT. Actsmart Energy Efficiency Improvement Scheme: Rebates and incentives are available for installing energy-efficient appliances, including heat pump hot water systems.
• NT. No specific rebates for hot water heat pumps, but energy efficiency programs may occasionally provide incentives.

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