Best Hot Water System for Your Home: Gas, Electric, Heat Pump, Solar or Continuous Flow?

Nov 24, 2024

Choosing the best hot water system is not just about picking the cheapest unit or the most efficient-looking model. The right system depends on your household size, number of bathrooms, shower habits, energy source, installation location, available space, water pressure, gas type, electrical supply and whether you are replacing like-for-like or changing system type.

For many Australian homes, the main options are electric storage, gas storage, instant gas, instant electric, heat pump and solar hot water. Each type has strengths and limitations, and the best choice for one home may be the wrong choice for another.

Installed Today helps customers compare hot water systems, including electric hot water systems, gas hot water systems, instant gas hot water systems, instant electric hot water systems and heat pump hot water systems.

Supply-only ordering is available across major Australian metro areas, with selected supplied-and-installed options available on eligible products in Brisbane and Gold Coast service areas where shown.

Quick Answer

The best hot water system depends on the property.

Choose an electric storage system if you want a familiar tank-style option and the home does not have gas.

Choose a gas storage system if the home already has natural gas or LPG and you want a like-for-like tank replacement.

Choose an instant gas system if you want compact continuous flow hot water and the home has suitable gas pipe sizing, water pressure and outdoor installation space.

Choose an instant electric system for small point-of-use applications such as sinks, kitchenettes, offices or low-demand fixtures, not automatically for whole-home use.

Choose a heat pump if you want an efficient electric storage-style system and have outdoor space, clear airflow, condensate drainage, suitable electrical supply and acceptable noise placement.

Choose solar hot water only if the roof, orientation, shading, booster setup, access and household usage suit the system.

There is no single “best” hot water system for every home. The best choice is the one that fits your energy source, daily demand and installation conditions.

What to Consider Before Choosing a Hot Water System

Before comparing brands or prices, start with the home itself.

Key factors include:

Number of people in the household
Number of bathrooms
Shower length and frequency
Whether showers run at the same time
Bath use
Kitchen and laundry hot water use
Existing hot water system type
Whether the old system ran out of hot water
Available energy source
Natural gas, LPG or electricity only
Gas pipe sizing
Water pressure
Electrical supply
Outdoor space
Drainage
Access for installation
Noise placement
Budget
Supply-only or supplied-and-installed availability

Replacing like-for-like is usually simpler than changing system type, but it is still worth checking whether the old system actually suited the home. If the old system regularly ran out of hot water, replacing it with the same size may repeat the problem.

Main Types of Hot Water Systems

The main domestic hot water options are:

Electric storage hot water
Gas storage hot water
Instant gas hot water
Instant electric hot water
Heat pump hot water
Solar hot water

Each type works differently and suits different homes.

Electric Storage Hot Water Systems

An electric storage hot water system heats and stores water in a tank using an electric element.

Electric storage is one of the most familiar hot water options in Australian homes. It can suit simple replacements, homes without gas and customers who want a straightforward tank-style system.

Electric storage may suit:

Homes without natural gas or LPG
Like-for-like electric replacements
Smaller to larger households, depending on tank size
Properties with suitable electrical supply
Customers wanting a familiar storage tank system
Homes where gas installation is not practical
Indoor or outdoor locations where the selected model is suitable

Customers comparing electric systems can browse electric hot water systems, including 250L electric hot water systems, 315L electric hot water systems and 400L electric hot water systems.

Pros of Electric Storage

Electric storage systems can be:

Familiar and widely used
Available in common household sizes
Suitable for homes without gas
Practical for like-for-like replacement
Suitable for many indoor or outdoor locations, depending on model
Easier to compare by tank size

Cons of Electric Storage

Electric storage may not suit every home because:

Running cost depends on tariff and usage
The tank can run out if undersized
Larger tanks need more space
Electrical work may be required
It may not be as efficient as a suitable heat pump
Replacing same-size may not fix hot water shortages

A larger electric tank is not always better, but the system must be large enough for daily household use.

Gas Storage Hot Water Systems

A gas storage hot water system heats and stores water in a tank using natural gas or LPG.

Gas storage may suit homes already using a gas storage system and customers wanting a familiar tank-style replacement.

Gas storage may suit:

Like-for-like gas storage replacements
Homes with natural gas or LPG
Customers wanting stored hot water
Properties with suitable outdoor tank location
Homes where gas pipework is already suitable
Households that prefer a tank-style gas system

Customers can compare gas hot water systems, including 130/135L gas hot water systems and 160/170L gas hot water systems.

Product examples include the Rheem 4-Star 135L Natural Gas Hot Water System, Rheem 4-Star 135L LPG Gas Hot Water System, Vulcan 4-Star 135L Natural Gas Hot Water System, Vulcan 4-Star 135L LPG Gas Hot Water System and Vulcan 4-Star 170L Natural Gas Hot Water System.

Pros of Gas Storage

Gas storage systems can be:

Practical for existing gas storage replacements
Familiar for many households
Available in natural gas and LPG models
Suitable where a tank location already exists
Useful where stored hot water is preferred

Cons of Gas Storage

Gas storage may not suit every home because:

Natural gas and LPG are not interchangeable
Gas work must be completed by a licensed gas fitter
Storage tanks can run out if undersized
Gas bottle costs apply for LPG homes
Outdoor location and clearances matter
Pipework, valves or compliance upgrades may be required

If the old gas storage system regularly ran out, check sizing before choosing the same tank size again.

Instant Gas Hot Water Systems

Instant gas hot water systems, also called continuous flow gas hot water systems, heat water only when a hot tap is turned on.

They do not store hot water in a tank. Instead, water passes through a heat exchanger and is heated by the gas burner on demand.

Instant gas may suit:

Homes with natural gas or LPG
Customers wanting a compact wall-mounted system
Like-for-like replacement of an existing continuous flow unit
Homes with suitable water pressure
Properties with suitable gas pipe sizing
Households wanting hot water heated on demand
Homes where ground space is limited

Customers can compare instant gas hot water systems and 26L instant gas hot water systems.

Pros of Instant Gas

Instant gas systems can be:

Compact
Wall-mounted
Useful for continuous flow hot water
Suitable for natural gas or LPG models
Practical where tank space is limited
Good for many like-for-like gas replacements

Cons of Instant Gas

Instant gas may not suit every home because:

Gas pipe sizing must be suitable
Water pressure must be suitable
Natural gas and LPG models are different
Multiple outlets can still exceed capacity
Outdoor location and clearances matter
External units are not for indoor installation unless specifically internal/flued
Gas work must be completed by a licensed gas fitter

For 26L systems, gas pipe sizing and water pressure are especially important. Bigger is not automatically better.

Instant Electric Hot Water Systems

Instant electric hot water systems heat water as it flows through the unit, without a storage tank.

They can be useful for small point-of-use applications, but they are not automatically suitable for whole-home hot water.

Instant electric may suit:

Hand basins
Small sinks
Kitchenettes
Offices
Workshops
Low-demand fixtures
Point-of-use hot water
Compact areas where storage is not preferred

Customers can compare instant electric hot water systems.

Pros of Instant Electric

Instant electric systems can be:

Compact
Point-of-use friendly
Useful where a storage tank is not practical
Suitable for low-demand fixtures
Helpful in offices, workshops or small sinks

Cons of Instant Electric

Instant electric may not suit every home because:

Whole-home models can need high electrical capacity
Dedicated circuits may be required
Some applications may need three-phase power
Flow rate can be limited
It may not suit multiple showers or whole-home demand
Electrical work must be completed by a licensed electrician where required

Before choosing instant electric, confirm electrical supply and fixture demand.

Heat Pump Hot Water Systems

A heat pump hot water system uses electricity to move heat from the surrounding air into water stored in a tank.

It works differently from standard electric storage because the heat pump uses a refrigeration-style process rather than relying only on a standard electric element.

Heat pump hot water may suit:

Homes wanting an efficient electric storage-style option
Customers replacing older electric storage systems
Properties without gas
Homes moving away from gas
Homes with outdoor space
Locations with clear airflow
Properties where condensate drainage can be managed
Homes with suitable electrical supply
Solar PV homes where timer operation and usage suit

Customers can compare heat pump hot water systems, medium heat pump hot water systems from 200L to 280L, large heat pump hot water systems over 280L and Wi-Fi enabled heat pump hot water systems.

Product examples include the iStore 270L Heat Pump Hot Water System, Rheem AmbiHeat 270L Heat Pump Hot Water System, Rinnai Enviroflo V2 250L Heat Pump Hot Water System, Rinnai Enviroflo GR-Series 280L Heat Pump Hot Water System, Rinnai Enviroflo GR-Series 300L Heat Pump Hot Water System and Enviroheat 250L Heat Pump Hot Water System.

Pros of Heat Pump Hot Water

Heat pumps can be:

Efficient electric options in suitable conditions
Useful for replacing older electric storage systems
Suitable for homes without gas
A possible option for homes with solar PV and suitable timer use
Available in medium and larger tank sizes
Practical where outdoor space and drainage are available

Cons of Heat Pump Hot Water

Heat pumps may not suit every home because:

Outdoor space is usually needed
Clear airflow is important
Condensate drainage is required
Noise placement matters
Electrical supply must be suitable
Access for servicing is needed
Recovery time and tank size must suit usage
Rebates and STCs can change
They are not automatically best for every property

A heat pump should not be chosen on efficiency claims alone. Location, airflow, drainage and household demand all matter.

Solar Hot Water Systems

Solar hot water systems use roof-mounted collectors to capture heat from the sun and transfer it to stored water. Most systems include electric or gas boosting for cloudy weather, cooler conditions or high-demand periods.

Solar hot water may suit:

Homes with strong roof sun exposure
Suitable roof orientation
Minimal shading
Suitable roof pitch
Suitable roof structure
Safe roof access
Suitable tank location
Correct booster setup
Customers planning long-term energy reduction
Homes where maintenance access is practical

Pros of Solar Hot Water

Solar hot water can be:

Suitable for homes with good roof exposure
Useful where the roof and booster setup suit the property
A long-term efficient option in the right home
Supported by incentives in some circumstances, depending on current rules

Cons of Solar Hot Water

Solar hot water may not suit every property because:

Roof orientation matters
Shading can reduce performance
Roof structure and access must be suitable
Booster setup is still needed
Upfront cost can be higher
Maintenance access matters
STCs, rebates and incentives can change
Not every roof is suitable

If the roof is shaded, difficult to access or unsuitable for collectors, a heat pump hot water system may be a more practical efficient alternative.

Hot Water System Size Guide

Sizing depends on household use, not just the number of people.

Consider:

Number of occupants
Number of bathrooms
Shower length
Shower flow rates
Whether showers run at the same time
Bath use
Kitchen and laundry use
Existing system size
Whether the old system ran out
Recovery time
Energy source
Gas pipe sizing
Water pressure
Electrical capacity
Outdoor space
Daily usage pattern

Small Households

Small households may compare:

Smaller electric storage systems
250L electric systems for regular household use
16L instant gas systems where gas is suitable
Instant electric for point-of-use applications
Smaller to medium heat pumps where whole-home demand exists

A very small hot water system may suit a kitchenette or office, but it may not be enough for regular showers.

Medium Households

Medium households may compare:

250L electric hot water systems
315L electric hot water systems
20L instant gas systems
26L instant gas systems where suitable
Medium heat pump systems
Gas storage systems where the home already uses gas

The right option depends on shower habits and simultaneous use.

Large Households

Larger households may compare:

315L electric hot water systems
400L electric hot water systems
26L instant gas systems where gas supply and water pressure are suitable
Larger heat pump systems
Gas storage systems where appropriate

If multiple showers run at once, sizing and flow capacity become very important.

Electric vs Gas vs Heat Pump vs Solar

Choose Electric Storage If:

The home does not have gas
You want a familiar tank-style system
You are replacing electric storage like-for-like
Outdoor heat pump placement is not suitable
You want a straightforward system type

Choose Gas Storage If:

The home already has natural gas or LPG
You are replacing gas storage like-for-like
You want stored hot water
The existing tank location is suitable
A licensed gas fitter confirms the setup is suitable

Choose Instant Gas If:

You want a compact wall-mounted system
Natural gas or LPG is available
Gas pipe sizing is suitable
Water pressure is suitable
Outdoor location and clearances are suitable
You want continuous flow hot water within the unit’s capacity

Choose Instant Electric If:

The application is a sink, kitchenette, office or low-demand fixture
A storage tank is not practical
Electrical supply is suitable
A licensed electrician confirms requirements where needed

Choose Heat Pump If:

You want an efficient electric storage-style option
Outdoor space is available
Airflow is clear
Condensate drainage is practical
Noise placement is acceptable
Electrical supply is suitable
Tank size suits household demand

Choose Solar If:

Roof orientation and pitch are suitable
Shading is minimal
Roof structure and access are suitable
Booster setup is suitable
Upfront cost and maintenance access are acceptable
Current incentives have been checked

Running Costs: What Actually Affects Them?

Hot water running costs vary from home to home. General claims like “gas is always cheaper” or “solar always saves the most” can be misleading because energy prices, usage and installation conditions vary.

Running costs can be affected by:

Household hot water use
Shower length
Shower flow rates
Energy tariffs
Gas bottle pricing
Natural gas supply charges
Solar PV usage
System efficiency
Tank size
Heat loss
Recovery time
Climate
Maintenance condition
Timer settings
Booster use
Whether the system is correctly sized

A system that is too small may reheat often or run out. A system that is too large may cost more upfront and store more hot water than needed.

The best result comes from matching system type and size to actual usage.

Upfront Cost vs Long-Term Value

The cheapest system upfront is not always the cheapest over time, and the most efficient system is not always the best fit for every home.

Consider:

Product price
Installation complexity
Electrical work
Gas work
Plumbing changes
Valve upgrades
Drainage
Access
Old unit removal
Disposal
Ongoing energy use
Maintenance
Warranty terms
Replacement parts
Expected household demand

For supply-only products, the listed product price generally covers the product only. It does not usually include installation labour, plumbing changes, electrical work, gas work, valves, drainage, old unit removal, disposal or compliance upgrades unless clearly selected or listed.

Rebates, STCs and Incentives

Some heat pump and solar hot water systems may be eligible for STCs, rebates or incentives depending on the product, location, installation details and current program rules.

These programs can change.

Before choosing a system based on incentives, check:

Product eligibility
Installation location
Current rebate rules
STC assignment requirements
Installer requirements
Whether the rebate is already included in the advertised price
Whether additional paperwork is required

Do not choose a hot water system based only on a possible rebate. The system must still suit the household, property and installation location.

Brand Comparison

Installed Today offers a range of recognised hot water brands depending on product type and availability.

Rheem Hot Water Systems

Rheem hot water systems include electric, gas storage, instant gas and heat pump options.

Rheem may suit customers wanting a well-known hot water brand across multiple system types.

Product examples include the Rheem 250L Electric Hot Water System, Rheem 26L Natural Gas Hot Water System, Rheem 26L LPG Gas Hot Water System and Rheem AmbiHeat 270L Heat Pump Hot Water System.

Rinnai Hot Water Systems

Rinnai hot water systems include electric, instant gas and heat pump options.

Rinnai may suit customers comparing continuous flow gas or heat pump products.

Product examples include the Rinnai 250L Electric Hot Water System, Rinnai Infinity B26 Natural Gas Hot Water System, Rinnai Infinity B26 LPG Gas Hot Water System and Rinnai Enviroflo V2 250L Heat Pump Hot Water System.

Dux Hot Water Systems

Dux hot water systems may suit customers comparing electric storage options.

A product example is the Dux 250L Electric Hot Water System.

Vulcan Hot Water Systems

Vulcan hot water systems may suit customers comparing value-focused electric or gas storage options.

Product examples include the Vulcan 250L Electric Hot Water System, Vulcan 315L Electric Hot Water System, Vulcan 400L Electric Hot Water System, Vulcan 4-Star 135L Natural Gas Hot Water System and Vulcan 4-Star 135L LPG Gas Hot Water System.

Bosch Hot Water Systems

Bosch hot water systems may suit customers comparing gas continuous flow options.

Product examples include the Bosch 16H Natural Gas Hot Water System and Bosch 16H LPG Gas Hot Water System.

iStore Hot Water Systems

iStore hot water systems are often compared by customers looking at heat pump options.

A product example is the iStore 270L Heat Pump Hot Water System.

Stiebel Eltron Hot Water Systems

Stiebel Eltron hot water systems may suit customers comparing selected electric or instant electric options, depending on availability.

Aquamax Hot Water Systems

Aquamax hot water systems may suit customers comparing selected hot water options depending on product availability.

Best Hot Water System for Different Homes

Best for Homes Without Gas

Homes without natural gas or LPG may compare:

Electric storage
Heat pump hot water
Instant electric for point-of-use applications
Solar hot water if the roof is suitable

A heat pump may be worth considering where outdoor location, airflow, drainage and electrical supply are suitable. Electric storage may be simpler where heat pump placement is not practical.

Best for Homes With Natural Gas

Homes with natural gas may compare:

Gas storage
Instant gas
Heat pump if moving away from gas
Electric storage if gas is not preferred

Gas pipe sizing and water pressure matter for instant gas, especially 26L models.

Best for LPG Homes

Homes using LPG may compare:

LPG instant gas
LPG gas storage
Heat pump as an electric alternative
Electric storage where LPG is not preferred

LPG bottle setup, regulator suitability and gas pipe sizing must be checked before ordering.

Best for Apartments

Apartments may need careful planning because access, body corporate requirements, drainage, indoor/outdoor restrictions and electrical capacity can affect system choice.

Options may include:

Electric storage
Compact electric systems
Instant electric for point-of-use fixtures
Heat pump only where location and approval allow
Gas only where compliant gas setup exists

Best for Granny Flats

Granny flats may need small electric storage, instant electric, gas or heat pump depending on usage.

If the granny flat includes a regular shower, do not undersize the system. A 50L or compact unit may not suit daily shower use for multiple people.

Best for Large Families

Large families should focus on demand and recovery.

Options may include:

Larger electric storage
26L instant gas where gas supply and pressure are suitable
Larger heat pump systems
Gas storage where suitable

Shower timing, bath use and simultaneous outlets matter more than household size alone.

Brisbane and Gold Coast Considerations

In Brisbane and Gold Coast homes, hot water replacement can be affected by property age, access, water pressure, gas availability, electrical supply and outdoor location.

Common considerations include:

Narrow side access
Existing valve condition
Drainage
Tempering valve requirements
Electrical circuit suitability
Natural gas or LPG availability
Gas pipe sizing
Heat pump airflow
Condensate drainage
Heat pump noise placement
Coastal exposure on the Gold Coast
Roof suitability for solar
Old unit removal
Compliance upgrades
Whether the old system kept up with demand

Selected supplied-and-installed options are available on eligible Installed Today products in Brisbane and Gold Coast service areas where shown. Availability depends on the product, address and installation requirements.

Installation Requirements

Hot water system installation can involve plumbing, electrical and gas work.

Licensed trades may be required for:

Plumbing connections
Gas fitting
Electrical work
Temperature control devices
Valve upgrades
Drainage
Gas pipe upgrades
Flue installation where applicable
Heat pump electrical setup
Compliance documentation

Gas work must be completed by a licensed gas fitter. Electrical work must be completed by a licensed electrician where required. Plumbing work should be completed by a licensed plumber where required.

Do not install, modify or connect hot water systems yourself where licensed work is required.

Supply-Only vs Supplied-and-Installed

Installed Today offers supply-only ordering across major Australian metro areas. This can suit customers who already have a licensed installer organised and want to order the product online.

Selected supplied-and-installed options are available on eligible products in Brisbane and Gold Coast service areas. Availability depends on the product, address and installation requirements.

For supply-only products, the listed product price generally covers the product only.

It does not usually include:

Installation labour
Plumbing alterations
Electrical work
Gas work
New valves
Pipework changes
Gas pipe upgrades
Drainage changes
Condensate drainage work
Tempering valve upgrades
Pressure limiting valve upgrades
Expansion control valves
Old unit removal
Disposal
Compliance upgrades
Concrete bases or slab work
Flue kits unless listed
Temperature controllers unless listed
Relocation of the system
Rebate administration
Site assessment

Before ordering supply-only, confirm suitability with a licensed installer.

Common Hot Water System Buying Mistakes

Choosing Only by Upfront Price

The cheapest product may not suit the household or installation requirements.

Replacing the Same Size When the Old System Ran Out

If the old system was too small, choosing the same size may repeat the issue.

Assuming Gas Types Are Interchangeable

Natural gas and LPG are different. The unit must match the gas type.

Choosing 26L Instant Gas Without Checking Pipe Sizing

A 26L instant gas system may need gas pipe upgrades if the existing pipework is not suitable.

Choosing Heat Pump Without Checking Airflow

Heat pumps need outdoor space, clear airflow and suitable drainage.

Assuming Solar Suits Every Roof

Solar hot water depends on roof orientation, pitch, shading, access and booster setup.

Using Instant Electric for Whole-Home Demand Without Checking Electrical Supply

Instant electric can require significant electrical capacity and may not suit whole-home showers.

Ignoring Installation Exclusions

Supply-only product pricing does not usually include installation, valves, trades, old unit removal or compliance upgrades.

Before Ordering Checklist

Before choosing a hot water system, check:

How many people live in the home?
How many bathrooms are used daily?
Are showers used at the same time?
Does the household use a bath?
Did the old system run out of hot water?
Is the home electricity only, natural gas or LPG?
Is the selected gas model natural gas or LPG?
Is gas pipe sizing suitable?
Is water pressure suitable?
Is electrical supply suitable?
Is there outdoor space for a heat pump?
Does the heat pump location have clear airflow?
Can condensate drainage be managed?
Will heat pump noise placement be an issue?
Is the roof suitable for solar hot water?
Is installation access suitable?
Are new valves likely to be required?
Is old unit removal included or separate?
Is the product supply-only or supplied-and-installed?
Has a licensed installer confirmed suitability?

Frequently Asked Questions

What is the best hot water system?

The best hot water system depends on your household size, energy source, number of bathrooms, shower habits, installation location and budget. Electric, gas, instant gas, heat pump and solar systems all suit different homes.

Is gas hot water better than electric?

Gas hot water can suit homes with natural gas or LPG, especially where instant gas or gas storage is already installed. Electric storage may suit homes without gas or simple like-for-like replacements. The better choice depends on the property.

Is a heat pump hot water system worth it?

A heat pump may be worth considering if you want an efficient electric storage-style system and have suitable outdoor space, clear airflow, condensate drainage, electrical supply and noise placement.

Is solar hot water still worth considering?

Solar hot water may suit homes with suitable roof orientation, minimal shading, safe roof access and the right booster setup. If the roof is unsuitable, a heat pump may be a more practical efficient option.

What size hot water system do I need?

Size depends on the number of people, bathrooms, shower habits, bath use and whether hot water outlets run at the same time. Do not choose based only on household size.

What is continuous flow hot water?

Continuous flow hot water systems heat water as it passes through the unit. Instant gas systems are common continuous flow options. They do not store water in a tank, but they still have maximum flow limits.

Can instant gas run multiple showers?

It may, depending on the unit size, gas pipe sizing, water pressure and simultaneous demand. Multiple outlets can still exceed capacity, even with a 26L system.

Is instant electric good for a whole house?

Instant electric is often best for point-of-use applications such as sinks, offices and kitchenettes. Whole-home instant electric can require high electrical capacity and should be checked carefully.

Are rebates available for hot water systems?

Some heat pump and solar systems may be eligible for STCs, rebates or incentives depending on current rules, product type, location and installation details. Eligibility can change and should be checked before purchase.

Does supply-only pricing include installation?

No. Supply-only pricing generally covers the product only. It does not usually include installation labour, plumbing work, gas work, electrical work, valves, pipework changes, drainage, old unit removal, disposal or compliance upgrades unless clearly listed.

Final Word

The best hot water system is the one that matches your home, not just the one with the biggest tank, lowest advertised price or highest efficiency claim.

Electric storage can suit simple replacements and homes without gas. Gas storage can suit like-for-like gas tank replacements. Instant gas can suit compact continuous flow demand where gas pipe sizing and water pressure are suitable. Instant electric can suit small point-of-use fixtures. Heat pumps can suit homes wanting an efficient electric storage-style option where outdoor location requirements are met. Solar can suit homes with the right roof and booster setup.

Installed Today makes it easy to compare hot water systems, electric hot water systems, gas hot water systems, instant gas hot water systems, instant electric hot water systems and heat pump hot water systems online.

For supply-only orders, confirm system type, sizing, energy source, installation location and compliance requirements with a licensed installer before purchasing.

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