Heating Water at Home: Electric, Gas, Heat Pump and Solar Hot Water Compared

Choosing the right system for heating water at home can make a major difference to your running costs, hot water reliability and long-term energy use. The best option is not the same for every property. It depends on your household size, number of bathrooms, shower habits, energy source, installation location, budget, electrical setup, gas availability and whether you want a straightforward replacement or a more efficient upgrade.

For many Australian homes, the main options are electric storage, gas storage, instant gas, instant electric, heat pump and solar hot water. Each system has a different upfront cost, running cost profile, space requirement and installation consideration.

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 Best Way to Heat Water at Home?

The best way to heat water depends on the home.

As a general guide:

• Electric storage hot water can suit homes wanting a simple, familiar replacement

• Heat pump hot water can suit homes looking for better energy efficiency, where the location and airflow are suitable

• Gas storage hot water can suit homes already connected to natural gas or LPG that want stored hot water

• Instant gas hot water can suit homes wanting continuous flow hot water without a large storage tank

• Instant electric hot water can suit small point-of-use applications, but may not suit whole-home demand

• Solar hot water can suit homes with good roof space and solar access, but upfront costs and booster setup need to be considered

If you are replacing an old system, do not automatically buy the same type or size. A system that was too small, poorly located or expensive to run may repeat the same problem unless you compare the alternatives first.

Why Water Heating Choice Matters

Hot water is one of the most important services in a home. It affects showers, baths, kitchen use, laundry, cleaning and daily comfort. Because hot water systems run all year, choosing the wrong system can lead to higher energy bills, poor performance or hot water shortages during busy periods.

A good hot water system should match:

• Number of people in the home

• Number of bathrooms

• Shower habits

• Available energy source

• Installation location

• Access for replacement

• Drainage and overflow requirements

• Gas type, if choosing gas

• Electrical requirements, if choosing electric or heat pump

• Budget for product and installation

• Long-term running cost goals

For supply-only orders, always confirm product suitability with your licensed installer before buying. Supply-only product pricing 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.

Main Types of Hot Water Systems

Electric Storage Hot Water Systems

Electric hot water systems are one of the most common options for Australian homes. They use an electric element to heat water inside a storage tank, then hold that hot water ready for use.

They can suit:

• Homes without gas

• Like-for-like replacements

• Rental properties

• Small-to-large households

• Homes wanting a simple storage tank setup

• Properties already wired for electric storage hot water

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

A 250L system may suit many smaller households, while larger families or high-demand homes may need 315L or 400L. However, bigger is not always better. The right size depends on actual usage, tariff setup and how much hot water is needed at peak times.

Heat Pump Hot Water Systems

A heat pump hot water system is an electric hot water system that uses heat from the surrounding air to help heat the water. In the right location, this can make it more efficient than a standard electric storage system.

Heat pumps can suit homes that:

• Want to reduce electricity use for water heating

• Have suitable outdoor space

• Have good airflow around the unit

• Can manage condensate drainage

• Have suitable electrical supply

• Want to pair hot water heating with rooftop solar where the setup and timer suit

A heat pump is not automatically the best choice for every home. It needs the right location, airflow, access and noise placement. If the unit is boxed in, poorly drained or installed too close to sensitive living areas, performance and comfort can suffer.

For many family homes, products in the medium heat pump hot water systems 200L–280L range are commonly compared. Larger households may need to review large heat pump hot water systems.

Gas Storage Hot Water Systems

Gas hot water systems use natural gas or LPG to heat water. Gas storage systems heat and store water inside a tank, ready for household use.

Gas storage can suit homes that:

• Already have natural gas or LPG available

• Want stored hot water

• Prefer gas over electric storage

• Have a suitable outdoor installation position

• Want a more traditional replacement option

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

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.

Instant Gas Hot Water Systems

Instant gas hot water systems, also called continuous flow systems, heat water as it passes through the unit. They do not rely on a large storage tank.

They can suit homes that:

• Want continuous flow hot water

• Want to save space compared with a storage tank

• Already have suitable natural gas or LPG

• Have the right gas pipe sizing and water pressure

• Want an outdoor gas hot water option

Instant gas units are commonly compared by flow rate, including 16L, 20L and 26L models. Larger homes often compare 26L instant gas hot water systems, especially where multiple bathrooms or higher flow demand are involved.

A 26L system can be a strong choice for some family homes, but only if the gas supply, water pressure and installation location support it. Gas pipe sizing is especially important and should be confirmed by a licensed gas fitter.

Instant Electric Hot Water Systems

Instant electric hot water systems heat water on demand without a large storage tank. They are often best suited to small or point-of-use applications rather than whole-home hot water demand.

They may suit:

• Small sinks

• Offices

• Compact kitchens

• Granny flats

• Low-demand fixtures

• Space-limited applications

Instant electric systems can have high electrical demand. Before ordering, confirm whether the property has the correct electrical capacity and whether the unit is suitable for the intended use.

Solar Hot Water Systems

Solar hot water systems use roof-mounted collectors to capture heat from the sun and transfer that heat to the water. They usually include an electric or gas booster for cloudy weather or high-demand periods.

Solar can suit homes that:

• Have good roof space

• Receive strong sun exposure

• Want to reduce grid energy use

• Are planning long-term around energy efficiency

• Have a suitable roof orientation and installation area

Solar hot water can offer low running costs in the right home, but it is not always the simplest replacement. Roof suitability, shading, booster type, tank location, maintenance and upfront cost all matter.

For many households comparing energy-efficient options, heat pump hot water is also worth reviewing because it may be easier to place than roof-mounted solar collectors, depending on the property.

Electric vs Gas vs Heat Pump vs Solar Hot Water

The best system is the one that matches your property and usage, not just the one with the lowest product price.

Upfront Cost vs Running Cost

Hot water systems should be compared by both upfront cost and long-term running cost.

A lower-cost system may be cheaper to buy, but more expensive to run. A more efficient system may cost more upfront, but use less energy over time. The right balance depends on how long you plan to stay in the property, how much hot water your household uses and whether the installation location suits the system type.

In general:

• Electric storage is often simple and familiar, but may not be the cheapest to run

• Heat pump hot water can reduce electricity use where installed in the right location

• Gas systems may suit homes already set up for gas

• Instant gas avoids storing a full tank of hot water, but gas supply must be suitable

• Solar can reduce energy use, but needs strong roof suitability and may have higher upfront cost

When comparing products, start with the hot water systems range, then narrow down by system type, size and brand.

Sizing Your Hot Water System Correctly

Correct sizing is one of the most important parts of choosing a hot water system. A unit that is too small may run out of hot water. A unit that is too large may cost more than necessary and may not be the most efficient option.

Sizing depends on:

• Number of people in the home

• Number of bathrooms

• Shower length

• Bath use

• Kitchen and laundry usage

• Peak usage times

• Whether multiple showers run at once

• Existing system size

• Whether the existing system was running out

• Available energy source

• Recovery rate of the system

For electric storage, many households compare 250L, 315L and 400L systems. If your current system was already running out of hot water, replacing it with the same size may not solve the problem.

For gas instant systems, sizing is usually based on flow rate and demand. A larger 26L unit may suit some family homes, but only where gas pipe sizing and water pressure can support it.

Choosing by Household Type

Small Households and Units

Small households may suit:

• Smaller electric storage systems

• Point-of-use instant electric systems for limited applications

• Compact gas storage where gas is already available

• Selected heat pumps if outdoor space and airflow suit

The key is not oversizing. A single-person or two-person household may not need the same storage capacity as a family home.

Family Homes

Family homes often need more careful sizing because hot water demand can spike in the morning and evening.

Common options include:

• 250L electric hot water systems

• 315L electric hot water systems

• 400L electric hot water systems

• Medium heat pump hot water systems 200L–280L

• 26L instant gas hot water systems

The best option depends on shower habits, bathrooms, available energy source and installation requirements.

Larger Homes and High-Demand Properties

Larger homes may need:

• Larger electric storage

• Large heat pump capacity

• High-flow instant gas

• Multiple system planning in some cases

• Installer review of water pressure, pipework and access

High-demand homes should not rely on product capacity alone. The property’s plumbing, electrical or gas infrastructure must also support the system.

Brand Options to Compare

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

• Rheem hot water systems

• Rinnai hot water systems

• Dux hot water systems

• Vulcan hot water systems

• Bosch hot water systems

• Stiebel Eltron hot water systems

• iStore heat pump hot water systems

Brand matters, but the right system type, size, gas type, location and installer confirmation matter more than brand alone.

Brisbane and Gold Coast Hot Water Considerations

For Brisbane and Gold Coast homes, hot water selection often depends on the existing setup and whether the replacement is urgent, planned or part of an upgrade.

Common local considerations include:

• Outdoor space for heat pumps

• Airflow around the system

• Stormwater and drainage points

• Existing gas type

• Older valves and pipework

• Tight side access

• Electrical circuit suitability

• Whether the old system is indoor or outdoor

• Whether the home is on natural gas, LPG or electricity only

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.

Rebates, STCs and Incentives

Some energy-efficient hot water systems may be eligible for rebates, STCs or other incentives depending on the product, location and current program rules.

These incentives can change, so do not rely on an old rebate amount when budgeting. Always check current eligibility before ordering, especially when comparing heat pump or solar-style upgrades.

A rebate may improve the value of an efficient system, but it should not be the only reason for choosing one. The system still needs to suit the property, household demand, installation location and long-term use.

Maintenance and System Life

All hot water systems need appropriate maintenance. The exact requirements depend on the system type, water quality, location and manufacturer instructions.

General maintenance considerations include:

• Checking for leaks

• Looking for rust or corrosion

• Keeping the area around the system clear

• Making sure drainage is not blocked

• Replacing valves when required

• Following manufacturer servicing guidance

• Checking heat pump airflow

• Checking solar collectors and booster operation where applicable

• Replacing sacrificial anodes in storage tanks where required

A licensed plumber should inspect and service the system where required. Gas work must be handled by a licensed gas fitter, and electrical work must be handled by a licensed electrician.

Common Mistakes When Choosing a Hot Water System

Choosing Only by Purchase Price

The cheapest product upfront may not be the cheapest over time. Running cost, installation requirements and system suitability all matter.

Replacing the Same System Without Reviewing Usage

If the old system ran out of hot water or cost too much to run, replacing it like-for-like may repeat the same issue.

Ignoring Gas Type

Natural gas and LPG systems are different. They are not interchangeable. Always select the correct gas type.

Choosing a 26L Instant Gas Unit Without Checking the Property

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

Choosing Heat Pump Without Checking Location

Heat pumps need airflow, drainage, access and sensible noise placement. A poor location can reduce performance or create nuisance noise.

Assuming Supply-Only Includes Installation

Supply-only means the product only unless the page clearly says otherwise. It does not include installation, valves, pipework changes, drainage, electrical work, gas work, disposal or compliance upgrades unless selected or shown.

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 can be useful when:

• You have confirmed the correct product with your installer

• You know the required size and model

• You understand what is and is not included

• Your installer has checked access, valves, drainage and compliance needs

• You are comparing product options before installation

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 supply only, confirm the model, size, gas type, electrical requirements and site suitability with your installer.

Before Ordering Checklist

Before choosing a hot water system, confirm:

• How many people live in the home

• How many bathrooms are used

• Whether multiple showers run at once

• Whether the old system ran out of hot water

• Current tank size or system type

• Natural gas, LPG or electric availability

• Installation location

• Access for delivery and replacement

• Drainage and overflow requirements

• Electrical circuit suitability

• Gas pipe sizing, if choosing gas

• Water pressure, if choosing instant gas

• Heat pump airflow and noise location

• Whether rebates or STCs currently apply

• Whether you need supply only or an eligible supplied-and-installed option

Frequently Asked Questions

What is the most efficient way to heat water?

Heat pump and solar hot water systems are often strong efficiency options, but the most efficient choice depends on the home. Heat pumps need suitable airflow, outdoor location, drainage and electrical suitability. Solar hot water needs suitable roof space, sun exposure and booster setup.

Is gas cheaper than electric for heating water?

It depends on local energy prices, system type, household usage and whether the home already has gas available. Gas may suit some homes, while heat pump or electric storage may suit others. Compare both upfront and running costs before choosing.

Should I choose electric or heat pump hot water?

Choose electric storage if you want a straightforward replacement and the running cost is acceptable. Consider heat pump hot water if energy efficiency matters and the property has the right outdoor location, airflow, drainage and electrical setup.

Is instant gas better than gas storage?

Instant gas can provide continuous flow hot water without a large tank, while gas storage keeps heated water ready in a cylinder. Instant gas needs suitable gas pipe sizing, water pressure and the correct gas type. Gas storage may suit homes that prefer stored hot water.

Can I install a hot water system myself?

No. Hot water systems involve plumbing, water pressure, valves, drainage, gas and electrical safety. A licensed plumber, gas fitter or electrician is required depending on the system type and work involved.

What size hot water system do I need for a family?

Many family homes compare 250L, 315L or 400L electric storage systems, medium-to-large heat pumps or 20L to 26L instant gas systems. The right choice depends on people in the home, bathrooms, shower habits and available energy source.

Are rebates available for hot water systems?

Rebates, STCs and incentives may be available for some efficient systems, but rules and amounts can change. Check current eligibility before ordering or budgeting around a rebate.

Final Word

Heating water efficiently starts with choosing the right system for the home, not just the cheapest product or the same model that was already there. Electric storage, heat pump, gas storage, instant gas, instant electric and solar hot water all have a place, but each one suits different households and installation conditions.

Compare the system type, size, energy source, location and long-term running cost before ordering. If buying supply only, confirm suitability with your licensed installer first so the product, property and installation requirements all line up.