Cheap Hot Water Systems: How to Choose Affordable Hot Water Without Buying the Wrong Unit

Mar 8, 2024

Looking for a cheap hot water system can be risky if you only compare the upfront price. The lowest-cost unit may not be the cheapest option long term once running costs, sizing, valves, electrical work, gas work, installation access and compliance requirements are included.

The best affordable hot water system is the one that suits your household size, energy source, shower habits, installation location and budget. For some homes, that may be a standard electric storage unit. For others, a gas storage system, instant gas unit or heat pump may make more sense.

Installed Today makes it easier to compare and order hot water systems online, with supply-only ordering available across major Australian metro areas and selected supplied-and-installed options available on eligible products in Brisbane and Gold Coast service areas.

Quick Answer: What Is the Cheapest Hot Water System?

The cheapest hot water system upfront is often a standard electric storage hot water system. However, the cheapest system to buy is not always the cheapest system to run.

As a general guide:

Electric storage hot water is often affordable upfront and simple to replace
Gas storage hot water can suit homes already connected to natural gas or LPG
Instant gas hot water can suit homes wanting continuous flow hot water without a large storage tank
Heat pump hot water usually costs more upfront but can reduce energy use in the right location
Instant electric hot water can suit small point-of-use applications, but may not suit whole-home demand
Solar hot water can reduce grid energy use where roof space, sun exposure and booster setup suit

If you are buying supply only, confirm the correct model, size, gas type, electrical requirements and installation suitability with your licensed installer before ordering.

Cheap Hot Water System vs Best Value Hot Water System

A cheap hot water system is not always good value.

A system may look affordable online, but the real cost can change once you include:

Installation labour
New valves
Electrical upgrades
Gas upgrades
Pipework changes
Drainage requirements
Tempering valve compliance
Old unit removal
Disposal
Access issues
Different gas type requirements
Rebate eligibility
Long-term running costs

For supply-only products, the listed product price generally does not include installation, valves, electrical work, gas work, pipework changes, drainage, old unit removal, disposal or compliance upgrades unless those options are clearly selected or shown.

The best value system is usually the one that gives you reliable hot water at the right size, with running costs and installation requirements that make sense for the home.

Main Affordable Hot Water System Options

Electric Hot Water Systems

Electric hot water systems are often one of the most affordable options upfront. They are common in Australian homes, especially where natural gas is not available or where the existing system is already electric.

Electric storage systems heat water inside a tank and keep it ready for use. They are simple, familiar and available in a wide range of sizes.

They can suit:

Homes without gas
Like-for-like replacements
Rental properties
Small-to-large households
Homes already wired for electric storage hot water
Customers wanting a straightforward supply-only product

Common size categories include 250L electric hot water systems, 315L electric hot water systems and 400L electric hot water systems.

A 250L unit may suit many small-to-medium households, while larger families may need 315L or 400L depending on usage. If your old electric system was already running out of hot water, do not automatically replace it with the same size.

Gas Hot Water Systems

Gas hot water systems can be a good-value option where the home already has a suitable natural gas or LPG setup.

Gas systems usually fall into two main groups:

Gas storage hot water
Instant gas hot water

Gas storage systems heat and store water in a tank. Instant gas systems heat water as it flows through the unit.

Gas may suit homes that:

Already have natural gas or LPG
Want fast hot water recovery
Prefer gas over electric storage
Have a suitable outdoor location
Need an option for higher hot water demand
Want to compare storage and continuous flow options

Gas work must be completed by a licensed gas fitter. Natural gas and LPG units are not interchangeable, so the correct gas type must be selected before ordering.

Gas Storage Hot Water Systems

Gas storage systems can be a practical option for homes that already use gas and want stored hot water ready for household use.

Common gas storage categories include 130/135L gas hot water systems, 160/170L gas hot water systems and 5-star 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.

Premium gas storage options such as the Rheem Stellar 330 Natural Gas Hot Water System and Rheem Stellar 360 Natural Gas Hot Water System may suit homes wanting stronger performance, but they may not be the cheapest upfront.

Instant Gas Hot Water Systems

Instant gas hot water systems, also called continuous flow systems, heat water only when hot water is being used.

They can suit:

Homes wanting hot water on demand
Properties without space for a large storage tank
Homes with suitable gas supply
Families wanting higher hot water flow
Replacements from older gas systems
Outdoor gas hot water installations

Common instant gas sizes include 16L, 20L and 26L. Larger households often compare 26L instant gas hot water systems.

For bigger instant gas units, the gas pipe sizing and water pressure must support the system. A 26L unit may not perform properly if the property’s gas supply or water pressure is unsuitable.

Heat Pump Hot Water Systems

A heat pump hot water system usually costs more upfront than a basic electric storage unit, but it can offer better long-term value where the home suits the technology.

Heat pumps use heat from the surrounding air to help heat the water. This can reduce electricity use compared with standard electric storage in the right location.

A heat pump may suit homes that:

Want lower energy use
Have suitable outdoor space
Have good airflow around the unit
Can manage condensate drainage
Have a suitable electrical setup
Want to pair hot water heating with rooftop solar where the timer and usage pattern suit
Are planning to stay in the property longer term

A heat pump is not automatically best for every home. It needs the right location, airflow, access, drainage and noise placement.

Many households compare products in the medium heat pump hot water systems 200L–280L category. Larger households may need to compare large 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.

Instant Electric Hot Water Systems

Instant electric hot water systems heat water on demand without a storage tank.

They may suit:

Small sinks
Compact kitchens
Offices
Granny flats
Low-demand fixtures
Point-of-use hot water needs

They are not always the best option for whole-home hot water because electrical demand can be high. Before ordering, confirm whether the property’s electrical supply can support the unit and whether the system suits the intended use.

Solar Hot Water Systems

Solar hot water can be a strong efficiency option in the right home, but it is not always the cheapest or simplest replacement. It needs suitable roof space, sun exposure, booster setup and installation conditions.

Solar hot water may suit homes with:

Good north-facing or suitable roof space
Minimal shading
Long-term energy efficiency goals
Space for the tank and collector arrangement
Suitable booster options

If roof space or installation complexity is a concern, a heat pump may also be worth comparing as an energy-efficient alternative.

Cheapest Upfront vs Cheapest to Run

When comparing cheap hot water systems, separate the purchase price from the lifetime cost.

System Type	Upfront Cost	Running Cost Potential	Best Suited To
Electric storage	Usually lower	Can be higher depending on tariff and usage	Simple replacements, homes without gas
Gas storage	Moderate	Can be suitable where gas is already available	Homes with natural gas or LPG
Instant gas	Moderate	Can be efficient where gas supply is suitable	Homes wanting continuous flow gas hot water
Heat pump	Higher	Can be lower in the right location	Efficiency-focused homes with outdoor space
Instant electric	Varies	Depends heavily on usage and electrical setup	Small point-of-use applications
Solar hot water	Often higher	Can be low where conditions suit	Homes with good roof space and sun exposure

The cheapest hot water system for one home may be the wrong choice for another.

Choosing the Right Size

Correct sizing is one of the biggest factors in hot water value.

A system that is too small may run out of hot water. A system that is too large may cost more than necessary to buy and operate.

When sizing a hot water system, consider:

Number of people in the home
Number of bathrooms
Shower length
Morning and evening peak use
Bath use
Kitchen and laundry habits
Whether multiple showers run at once
Existing system size
Whether the old system ran out of hot water
Available energy source
Recovery rate of the new system

For electric storage, common family-size categories include 250L, 315L and 400L.

For instant gas, common sizes include 16L, 20L and 26L, with larger households often comparing 26L units.

For heat pumps, many homes compare 250L to 280L models, while larger households may need more capacity.

Cheap Electric Hot Water Systems: When They Make Sense

A cheap electric storage hot water system can be a good option when:

The old system was electric
The existing electrical setup is suitable
The household hot water demand is moderate
The customer wants a straightforward replacement
Gas is not available
The budget is focused on upfront cost
The installation location already suits a storage tank

However, check the running cost. Standard electric storage may cost more to run than a heat pump depending on the tariff, usage pattern and household demand.

If your electricity plan includes off-peak or controlled-load options, your installer or electrician can help confirm whether the selected system suits the setup.

Cheap Gas Hot Water Systems: When They Make Sense

A gas hot water system can be good value where:

The home already has natural gas or LPG
Gas pipework is suitable
The current gas hot water location is compliant
The household wants fast recovery or continuous flow
Outdoor installation is practical
The correct gas type is selected

Gas systems are not one-size-fits-all. Natural gas and LPG models are different and must not be swapped. Gas work requires a licensed gas fitter.

For instant gas, do not choose a larger 26L system without confirming the gas pipe sizing and water pressure.

Heat Pump Hot Water: When Paying More Upfront Can Be Better Value

Heat pumps are not usually the cheapest systems upfront, but they can be better value for some homes over time.

A heat pump may be worth considering if:

The household uses a lot of hot water
The home has suitable outdoor airflow
Condensate drainage is available
Noise placement can be managed
Electrical supply is suitable
The household has rooftop solar and wants to use more daytime energy
Rebates, STCs or incentives may apply
The customer wants to reduce electricity use compared with standard electric storage

Rebates and incentives can change, so confirm current eligibility before relying on them in your budget.

Brand Options for Affordable Hot Water

Installed Today offers a range of major hot water brands, including:

A known brand can be helpful, but the right size, system type, gas type, installation location and running cost are more important than brand alone.

Installation Costs Can Change the Real Price

A hot water system may look cheap until the site requirements are checked.

Installation costs can change because of:

Tight access
Indoor-to-outdoor relocation
Old valve replacement
Tempering valve requirements
Drainage upgrades
Electrical upgrades
Gas pipe sizing
Gas type changes
Old unit removal
Disposal
Non-compliant existing setup
Slab or base requirements
Heat pump condensate drainage
Longer pipe runs

This is why supply-only customers should confirm product suitability with their licensed installer before ordering.

Brisbane and Gold Coast Considerations

For Brisbane and Gold Coast homes, affordable hot water selection often depends on the existing system, access, drainage, energy source and installation location.

Common local considerations include:

Older electric storage systems
Homes comparing electric storage against heat pump upgrades
Natural gas vs LPG availability
Outdoor gas unit positioning
Tight side access
Drainage and overflow points
Heat pump airflow and noise placement
Solar-friendly heat pump timing
Ageing valves and pipework

Installed Today offers supply-only ordering across major Australian metro areas, with selected supplied-and-installed options available on eligible products in Brisbane and Gold Coast service areas.

How to Reduce Hot Water Running Costs

Choosing a cheaper system is only part of the equation. Hot water habits and system setup can also affect running costs.

Ways to reduce hot water energy use may include:

Choosing the right system size
Fixing leaking hot water taps
Using efficient showerheads where appropriate
Avoiding unnecessarily long showers
Confirming off-peak or controlled-load suitability
Comparing heat pump options where the home suits them
Using timer settings where supported
Keeping pipe runs practical where possible
Maintaining the system according to manufacturer guidance
Replacing an old undersized or inefficient system before it becomes a major issue

Do not make electrical, gas or plumbing changes yourself. Use licensed trades where required.

Common Mistakes When Buying a Cheap Hot Water System

Choosing Only by Upfront Price

The cheapest product upfront may cost more over time if it is expensive to run or does not suit the household.

Replacing the Same Size Without Checking Demand

If the old unit ran out of hot water, the same size may run out again.

Ignoring Installation Extras

Valves, drainage, electrical work, gas work, pipework and compliance upgrades can affect the real cost.

Buying the Wrong Gas Type

Natural gas and LPG systems are not interchangeable. Always order the correct gas type.

Oversizing Instant Gas Without Checking the Property

A 26L instant gas system can suit some larger homes, but gas pipe sizing and water pressure must support it.

Choosing Heat Pump Without Checking Location

Heat pumps need airflow, drainage, outdoor space, access and sensible noise placement.

Assuming Supply-Only Includes Installation

Supply-only generally means the product only unless the product page clearly says otherwise.

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.

Supply-only may suit you if:

You know the correct model and size
Your installer has confirmed suitability
You understand what is not included
You have checked access, valves and drainage
The correct gas type has been selected
Electrical requirements have been confirmed
You are comfortable organising installation separately

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

Before Ordering Checklist

Before buying a cheap hot water system, confirm:

Current system type and size
Whether the old system ran out of hot water
Number of people in the home
Number of bathrooms
Peak shower times
Available energy source
Natural gas or LPG, if choosing gas
Electrical requirements, if choosing electric or heat pump
Installation location
Access for delivery and installation
Drainage and overflow requirements
Whether new valves may be needed
Whether rebates or STCs apply
Whether supply-only or supplied-and-installed is the right option
Installer confirmation before ordering supply only

Frequently Asked Questions

What is the cheapest hot water system to buy?

A standard electric storage hot water system is often one of the cheapest options upfront. However, running costs may be higher than heat pump or gas options depending on the home, tariff and usage.

What is the cheapest hot water system to run?

Heat pump and solar hot water systems can have lower running costs in the right conditions, but they usually cost more upfront. Gas may also be cost-effective for homes already set up for natural gas or LPG.

Is a cheap electric hot water system a good idea?

It can be, especially for a straightforward replacement where the home already has the right electrical setup. However, check sizing and running costs before ordering.

Is gas hot water cheaper than electric?

It depends on energy prices, gas availability, household usage and the system type. Gas can suit some homes, but natural gas and LPG systems must be selected correctly and installed by a licensed gas fitter.

Is a heat pump worth it if it costs more upfront?

A heat pump can be worth considering if the home has suitable outdoor space, airflow, drainage, electrical supply and long-term hot water demand. Rebates or STCs may also affect value, but incentives can change.

What size hot water system do I need?

The right size depends on the number of people in the home, bathrooms, shower habits and peak hot water use. Many households compare 250L, 315L or 400L electric storage, 250L to 280L heat pumps, or 16L to 26L instant gas systems.

Can I install a hot water system myself to save money?

No. Hot water systems involve plumbing, water pressure, valves, drainage, gas and electrical safety. Use licensed trades for installation.

What is not included in supply-only pricing?

Supply-only pricing generally excludes installation, valves, electrical work, gas work, pipework changes, drainage, old unit removal, disposal and compliance upgrades unless selected or clearly shown.

Final Word

A cheap hot water system should still be the right hot water system. The lowest upfront price may be tempting, but the best value comes from choosing the correct system type, size, energy source and installation setup.

Electric storage may be the cheapest upfront. Gas can suit homes already set up for natural gas or LPG. Heat pumps can offer stronger long-term value where the location suits. Instant gas can be practical for continuous flow hot water, but only when the gas supply and water pressure support it.

Before ordering, compare the real cost, not just the product price. If buying supply only, confirm the model, size, gas type, electrical requirements and installation suitability with your licensed installer first.

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