Heat Pump vs Instant Gas Hot Water: Which System Is Better for Your Home?

Heat pump and instant gas hot water systems are two of the most popular choices for Australian homes looking to replace an older hot water unit. Both can be efficient options, but they suit different properties, household habits and installation setups.

A heat pump hot water system is usually best for homes that want lower electricity use, have suitable outdoor space, clear airflow and enough tank capacity for daily demand. An instant gas hot water system is usually best for homes with natural gas or LPG already available, limited space and a preference for continuous flow hot water without a storage tank.

There is no single best system for every home. The right choice depends on household size, number of bathrooms, shower habits, energy source, gas availability, electrical supply, water pressure, gas pipe sizing, outdoor space, noise placement, drainage and whether your current system is being replaced like-for-like.

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 where shown.

Quick Answer

Choose a heat pump hot water system if you want an efficient electric storage-style option, have outdoor space with good airflow, want to pair hot water with solar where suitable, and can allow for recovery time between heavy hot water use.

Choose an instant gas hot water system if you already have natural gas or LPG available, want a compact wall-mounted unit, prefer continuous flow hot water, and have suitable gas pipe sizing and water pressure.

For larger homes comparing continuous flow gas, 26L instant gas hot water systems can be suitable, but bigger is not automatically better. Gas pipe sizing and water pressure should be checked before ordering.

How Heat Pump Hot Water Systems Work

A heat pump hot water system uses electricity to move heat from the surrounding air into water stored in a tank. It works a little like an air conditioner in reverse. Instead of generating heat directly like a standard electric element, it extracts heat from the air and transfers it into the water.

Heat pumps can be a strong option for homes that want an efficient electric hot water system without relying on gas. They are commonly installed outdoors because they need clear airflow and space around the unit.

A heat pump may suit homes with:

• Suitable outdoor space

• Good airflow around the unit

• A practical location for condensate drainage

• Adequate electrical supply

• Enough space for a storage tank

• A household usage pattern that suits tank recovery time

• Solar PV where timer operation and daily usage line up well

• A location where operating noise will not disturb bedrooms or neighbours

Heat pumps are not automatically the best choice for every property. They need the right location, airflow, access and tank size to work properly.

Customers comparing sizes can browse medium heat pump hot water systems from 200L to 280L or large heat pump hot water systems over 280L, depending on household demand.

How Instant Gas Hot Water Systems Work

An instant gas hot water system, also known as continuous flow gas hot water, heats water when a hot tap is turned on. Cold water passes through the unit, a gas burner heats the water, and hot water flows to the fixture.

Instant gas systems do not store hot water in a tank. This makes them compact and useful for homes with limited outdoor space. Most domestic external instant gas systems are wall-mounted outdoors.

Instant gas may suit homes with:

• Existing natural gas or LPG

• Suitable gas pipe sizing

• Suitable water pressure

• Outdoor wall space

• Multiple bathrooms, depending on system size

• A preference for continuous flow hot water

• Limited ground space for a storage tank

• A like-for-like replacement from an existing instant gas unit

Gas type is critical. Natural gas and LPG are not interchangeable. A natural gas unit must be connected to natural gas, while an LPG unit must be connected to LPG. Gas work must be completed by a licensed gas fitter.

Common instant gas sizes include 16L, 20L and 26L systems. For example, customers may compare a Rinnai Infinity B16 Natural Gas Hot Water System, Rheem 20L Natural Gas Hot Water System, Rinnai Infinity B26 Natural Gas Hot Water System or Rheem 26L Natural Gas Hot Water System.

Heat Pump vs Instant Gas: Main Differences

Energy Source

Heat pump systems use electricity to move heat from the air into a storage tank. They can be a practical choice for homes without gas, homes moving away from gas, or homes with solar PV where usage and timer settings suit.

Instant gas systems use natural gas or LPG to heat water on demand. They suit homes that already have a suitable gas supply and want a compact continuous flow system.

Storage Tank vs Continuous Flow

A heat pump stores hot water in a tank. This means tank size matters. If the tank is too small or recovery time does not suit the household, the home may run short during heavy demand.

An instant gas system heats water as it flows through the unit. This means there is no storage tank, but the unit still has a maximum flow capacity. Running multiple showers or fixtures at once can exceed the unit’s capacity.

Space Requirements

Instant gas systems are usually more compact because they are wall-mounted and do not need a tank. This can suit homes with tight side access or limited ground space.

Heat pumps need room for the tank and compressor section, plus airflow clearances. They also need a suitable outdoor location, drainage for condensate and reasonable access for delivery and future servicing.

Hot Water Recovery

Instant gas systems heat water on demand while the tap is running, provided the unit, gas supply and water pressure are suitable.

Heat pumps heat stored water over time. Recovery can be slower than some traditional systems, especially during heavy usage periods or in cooler conditions. The right tank size and usage pattern are important.

Noise

Instant gas systems make noise when operating, but only when hot water is being used.

Heat pumps can run for longer periods while heating the tank. Noise placement matters, especially near bedrooms, fences, windows or neighbouring properties.

Running Costs

Heat pumps can be efficient because they move heat rather than generating all heat directly through an electric element. Running costs can be lower than standard electric storage in suitable conditions.

Instant gas systems only use gas when hot water is being used, which can reduce standby losses compared with older storage systems. However, running costs depend on gas prices, usage, system efficiency and whether the property uses natural gas or LPG.

No system should be chosen on running cost alone. The right option depends on the property and installation requirements.

Upfront Price and Installation Costs

The product price is only one part of the total cost.

A heat pump may have a higher upfront product price than some standard electric or gas options, but may suit homes looking for an efficient electric alternative. Installation requirements can include electrical suitability, clear airflow, condensate drainage, access and location planning.

An instant gas system can be cost-effective where the home already has a suitable gas supply, suitable pipe sizing, suitable water pressure and an existing compliant location. Costs can increase if gas pipe upgrades, water pipe changes, valve replacements or relocation are required.

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, old unit removal, disposal or compliance upgrades unless clearly selected or shown.

Which System Is More Efficient?

Heat pump hot water systems are often the more efficient choice compared with standard electric storage because they use electricity to move heat from the air into the tank.

Instant gas systems can also be efficient because they heat water only when required and do not keep a large tank hot throughout the day.

For many homes, a heat pump may offer the strongest efficiency advantage where the outdoor location, airflow, tank size, electrical supply and usage pattern are suitable. For other homes, instant gas may be more practical, especially where natural gas or LPG is already available and the household wants a compact system with continuous flow hot water.

Which System Is Better for Solar Homes?

Heat pump hot water can work well with solar PV when the household can run the system during solar generation times and the tank size suits the home’s hot water use.

However, solar pairing is not automatic. It depends on:

• Solar system size

• Timer settings

• Household hot water usage

• Tank capacity

• Daytime energy generation

• Whether the system needs boosting outside solar hours

• The home’s electrical setup

Instant gas does not directly use solar PV to heat water, but it may still suit homes where gas is already available and space is limited.

Customers wanting a solar-compatible electric option may compare heat pump hot water systems with electric hot water systems and instant electric hot water systems, depending on the property.

Which System Is Better for Larger Families?

Larger families often need more hot water capacity, but the best system depends on how the home uses hot water.

A larger heat pump tank can suit homes with high daily usage, especially where showers, laundry and kitchen use are spread across the day. Larger households may compare products such as the iStore 270L Heat Pump Hot Water System, Rinnai Enviroflo GR-Series 280L Heat Pump Hot Water System or Rinnai Enviroflo GR-Series 300L Heat Pump Hot Water System.

A 26L instant gas system can suit higher-demand homes, but only where gas pipe sizing and water pressure are suitable. Multiple outlets can still exceed capacity if too many fixtures are used at the same time.

Larger homes should avoid choosing only by advertised size. Number of bathrooms, shower habits and simultaneous use matter more.

Which System Is Better for Small Homes?

For smaller homes, townhouses or units, instant gas can be attractive because it is compact and wall-mounted. It may suit properties with an existing compliant gas setup and limited space for a storage tank.

Heat pumps can still suit smaller homes, but the outdoor location must have enough room, airflow and noise clearance. A smaller or medium tank may be more appropriate than a large model.

For lower-demand homes, a 16L or 20L instant gas unit may be enough, depending on fixtures and usage. Examples include the Rinnai Infinity B16 LPG Gas Hot Water System or Rheem 16L Natural Gas Hot Water System.

Natural Gas, LPG and Electrical Supply

Energy source is one of the biggest decision points.

Choose instant gas only if the correct gas type is available and suitable. Natural gas and LPG units are different, and the property’s gas supply must match the unit. Gas pipe sizing should be checked, especially for larger systems.

Choose a heat pump only if the electrical supply, location, drainage and airflow are suitable. Electrical work must be completed by a licensed electrician where required.

If the home does not have gas, a heat pump may be easier to consider than adding gas infrastructure. If the home already has gas and a compliant instant gas location, instant gas may be a practical replacement.

Heat Pump Pros and Cons

Pros

• Efficient electric hot water option

• Can suit homes without gas

• Can work well with solar PV where timer settings and usage suit

• Good option for households wanting to reduce reliance on gas

• Available in medium and large tank sizes

• Can suit high daily hot water usage when sized correctly

Cons

• Needs outdoor space and clear airflow

• Requires condensate drainage

• Tank recovery time matters

• Noise placement needs to be considered

• Not automatically suitable for every home

• Upfront product price can be higher than some basic systems

• Electrical suitability should be checked

Instant Gas Pros and Cons

Pros

• Compact wall-mounted design

• No storage tank

• Heats water on demand

• Good for homes with existing natural gas or LPG

• Can suit limited-space properties

• Popular for like-for-like gas replacements

• 16L, 20L and 26L options available

Cons

• Requires correct natural gas or LPG model

• Gas pipe sizing must be suitable

• Water pressure must be suitable

• Gas work must be completed by a licensed gas fitter

• Running costs depend on gas prices and usage

• External units must be installed outdoors unless specifically approved as internal flued models

• Multiple outlets can still exceed system capacity

Heat Pump vs Instant Gas: Which Should You Choose?

Choose a Heat Pump If:

• You want an efficient electric hot water option

• You do not have gas available

• You have suitable outdoor space

• The location has clear airflow

• Condensate drainage can be managed

• Noise placement is suitable

• You want to use solar PV where the setup suits

• You are comfortable with a storage tank system

• Your household usage suits tank recovery time

Start by comparing heat pump hot water systems, including medium heat pump systems and large heat pump systems.

Choose Instant Gas If:

• You already have natural gas or LPG

• You want a compact wall-mounted system

• You do not want a storage tank

• Your gas pipe sizing is suitable

• Your water pressure is suitable

• You want continuous flow hot water

• You are replacing an existing instant gas unit

• You have suitable outdoor wall space

Start by comparing instant gas hot water systems, including 26L instant gas systems for higher-demand homes.

Brisbane and Gold Coast Considerations

In Brisbane and Gold Coast homes, both heat pump and instant gas systems can be suitable, but local property conditions matter.

Heat pumps can work well in warm climates where outdoor airflow, drainage and noise placement are suitable. They may be worth considering for homes with solar PV or for households wanting an efficient electric replacement.

Instant gas can suit homes with existing natural gas or LPG, especially where space is limited or the home already has a compliant external gas hot water location.

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

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

• 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

Always confirm installation requirements with a licensed plumber, licensed gas fitter or licensed electrician before ordering a supply-only hot water system.

Before Ordering Checklist

Before choosing between heat pump and instant gas, check:

• How many people live in the home?

• How many bathrooms are used daily?

• Are showers often used at the same time?

• Does the home have natural gas, LPG or electricity only?

• Is the gas type correct?

• Is gas pipe sizing suitable for instant gas?

• Is water pressure suitable for instant gas?

• Is there outdoor wall space for an external gas unit?

• Is there outdoor space and clear airflow for a heat pump?

• Can condensate drainage be managed?

• Is the electrical supply suitable?

• Will noise placement be an issue?

• Did the old system run out of hot water?

• Is the product supply-only or supplied-and-installed?

• Has a licensed installer confirmed the product is suitable?

Frequently Asked Questions

Is heat pump better than instant gas hot water?

Heat pump can be better for homes wanting efficient electric hot water, especially where the outdoor location, airflow, drainage and electrical setup are suitable. Instant gas can be better for homes with existing natural gas or LPG, limited space and suitable gas pipe sizing. The better choice depends on the property.

Is instant gas cheaper than heat pump?

Instant gas may have a lower upfront product cost in some cases, especially for like-for-like replacements, but running costs depend on gas prices, usage and system efficiency. Heat pumps can have higher upfront costs but may use less electricity than standard electric storage when installed in suitable conditions.

Does a heat pump work with solar panels?

A heat pump can work well with solar PV where timer settings, tank size and household usage suit daytime operation. It should not be assumed automatically. The setup should be checked before choosing a system based on solar compatibility.

Is 26L instant gas enough for a family?

A 26L instant gas system can suit many higher-demand homes, but it is not automatically right for every family. Gas pipe sizing, water pressure and simultaneous outlet use must be checked. Multiple showers or fixtures can still exceed capacity.

Can an external instant gas unit be installed indoors?

No, not unless the model is specifically approved for internal flued installation. External gas hot water units are designed for outdoor installation. Gas work must be completed by a licensed gas fitter.

Do heat pumps need outdoor space?

Yes, most domestic heat pump hot water systems need an outdoor location with clear airflow, drainage, access and suitable noise placement. Poor location can affect performance and comfort.

Should I replace gas hot water with a heat pump?

It may be worth considering if you want an efficient electric option, have suitable outdoor space and want to move away from gas. However, if the existing gas setup is suitable and space is limited, instant gas may still be a practical replacement.

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

Heat pump and instant gas hot water systems can both be good choices, but they solve different problems.

A heat pump hot water system can suit homes wanting efficient electric storage hot water, especially where outdoor airflow, drainage, tank size, solar timing and noise placement are suitable.

An instant gas hot water system can suit homes with natural gas or LPG, suitable gas pipe sizing, good water pressure and limited space for a tank.

Before ordering, compare the system type, size, energy source and installation requirements. For supply-only orders, confirm suitability with a licensed installer first.

You can compare heat pump hot water systems, instant gas hot water systems and 26L instant gas hot water systems online with Installed Today.