Hot Water System Types: Storage, Continuous Flow, Electric, Gas, Heat Pump and Solar Compared

Oct 8, 2024

Choosing between hot water system types can be confusing because each option works differently. Storage systems keep hot water ready in a tank. Continuous flow systems heat water only when a hot tap is turned on. Electric, gas, heat pump and solar systems all suit different homes, budgets, energy sources and installation locations.

The best hot water system type depends on your household size, number of bathrooms, shower habits, available energy source, outdoor space, gas type, water pressure, electrical requirements and long-term running cost goals.

Installed Today makes it easy 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 Are the Main Hot Water System Types?

The main hot water system types are:

Electric storage hot water systems for simple replacements and homes without gas
Gas storage hot water systems for homes already connected to natural gas or LPG
Instant gas hot water systems for continuous flow hot water without a large tank
Instant electric hot water systems for small point-of-use hot water needs
Heat pump hot water systems for energy-focused homes with suitable outdoor space, airflow and drainage
Solar hot water systems for homes with suitable roof space, sun exposure and booster planning

Before ordering supply only, confirm the correct system type, size, gas type, electrical requirements, water pressure, access, valves, drainage and installation suitability with your licensed installer.

Storage vs Continuous Flow Hot Water Systems

Most hot water systems fall into two broad categories: storage and continuous flow.

System Type	How It Works	Common Examples	Best Suited To
Storage hot water	Heats water and stores it in a tank	Electric storage, gas storage, heat pump, solar	Homes wanting stored hot water ready for peak use
Continuous flow hot water	Heats water as it flows through the unit	Instant gas, instant electric	Homes wanting on-demand hot water without a large tank
Point-of-use hot water	Heats water near one fixture	Some instant electric units	Small sinks, offices and compact applications

A storage system can be practical where a household has predictable morning or evening hot water use. A continuous flow system can be practical where the home has suitable gas supply, water pressure and space for a compact wall-mounted unit.

Electric Storage Hot Water Systems

Electric hot water systems are one of the most common hot water system types in Australian homes. They use an electric element to heat water inside a storage tank.

Electric storage systems can suit:

Homes without natural gas or LPG
Like-for-like electric replacements
Rental properties
Small, medium and large households
Homes already wired for electric storage hot water
Customers wanting a familiar tank-style system

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

A 250L electric system may suit many small-to-medium households, while larger homes or high-demand families may need 315L or 400L. If your old system was already running out of hot water, replacing it with the same size may repeat the same problem.

Popular electric storage options include:

Instant Electric Hot Water Systems

Instant electric hot water systems heat water on demand using electric heating elements. They do not store hot water in a tank.

They may suit:

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

Instant electric hot water is not always suitable for whole-home shower demand because electrical requirements can be high. A licensed electrician or installer should confirm whether the property can support the unit before ordering.

Gas Storage Hot Water Systems

Gas hot water systems include both gas storage and instant gas options. Gas storage systems heat and store water in a tank using natural gas or LPG.

Gas storage can suit homes that:

Already have natural gas or LPG
Want stored hot water
Prefer gas over electric storage
Have suitable outdoor installation space
Want a familiar replacement style
Have household demand that suits a gas storage tank

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

Common gas storage categories include:

Product examples include:

Instant Gas Hot Water Systems

Instant gas hot water systems, also called continuous flow or tankless gas systems, heat water as it passes through the unit.

They do not store a full tank of hot water.

Instant gas can suit homes that:

Want continuous flow hot water
Want to save space compared with a large tank
Have suitable natural gas or LPG supply
Have enough water pressure
Have suitable outdoor wall space
Want to compare 16L, 20L and 26L options

Larger households often compare 26L instant gas hot water systems, but a 26L unit only performs properly if gas pipe sizing and water pressure support it.

Popular instant gas options include:

External gas hot water units are designed for outdoor installation unless the specific manufacturer model is approved for internal flued installation.

Heat Pump Hot Water Systems

A heat pump hot water system is an electric storage-style system that uses heat from the surrounding air to help heat the water.

In the right location, a heat pump can reduce electricity use compared with standard electric storage. It is often considered by households wanting a more energy-efficient electric-style upgrade.

Heat pump hot water can suit homes that:

Want to reduce hot water energy use
Are replacing an older electric storage system
Have suitable outdoor space
Have clear airflow around the unit
Can manage condensate drainage
Have suitable electrical supply
Have a sensible noise location
Want to pair hot water heating with rooftop solar where timing and usage suit

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

Many homes compare medium heat pump hot water systems 200L–280L, while larger households may need large heat pump hot water systems. Customers wanting app or timer features may also compare Wi-Fi enabled heat pump hot water systems.

Popular heat pump options include:

Solar Hot Water Systems

Solar hot water systems use roof-mounted collectors to capture heat from the sun and transfer it to water stored in a tank. Most systems include an electric or gas booster for cloudy weather or higher-demand periods.

Solar hot water may suit homes with:

Suitable roof space
Good sun exposure
Minimal shading
Suitable roof orientation
Long-term energy efficiency goals
Space for the tank and collector arrangement
A suitable booster setup

Solar hot water can reduce grid energy use where conditions suit, but it is not always the simplest replacement. Roof suitability, shading, booster type, maintenance and upfront cost all matter.

For some homes, a heat pump may be easier to compare than roof-mounted solar hot water, especially where roof space, shading or access is an issue.

Electric vs Gas vs Heat Pump vs Solar Hot Water

System Type	Upfront Cost	Running Cost Potential	Best Suited To	Key Checks
Electric storage	Often lower	Depends on tariff and usage	Simple replacements and homes without gas	Tank size, electrical supply, drainage
Gas storage	Moderate	Depends on gas type and usage	Homes with natural gas or LPG	Correct gas type, outdoor location
Instant gas	Moderate	Can be efficient where gas supply suits	Continuous flow hot water	Gas pipe sizing, water pressure, gas type
Instant electric	Varies	Depends on usage and electrical setup	Point-of-use applications	Electrical capacity, circuit requirements
Heat pump	Higher upfront	Can be lower in suitable locations	Energy-focused homes	Airflow, drainage, noise, electrical supply
Solar hot water	Often higher	Can be low where conditions suit	Homes with suitable roof space	Roof orientation, shading, booster setup

The best system type is the one that suits the home, not just the cheapest or most popular option.

Choosing by Household Size

Small Households

Small households may suit:

Smaller electric storage systems
16L instant gas where gas supply is suitable
Instant electric for small point-of-use needs
Selected heat pumps if outdoor space and airflow suit

Avoid oversizing unless the household has high shower use, baths or future growth.

Family Homes

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

Common options include:

250L electric storage
315L electric storage
Medium heat pump systems
20L instant gas
26L instant gas
Gas storage where suitable

If the existing system regularly runs out, review the size and system type before ordering a replacement.

Larger or High-Demand Homes

High-demand homes may need:

315L or 400L electric storage
Larger heat pump systems
26L instant gas where gas supply and water pressure support it
Larger gas storage options
Installer review of pipework, gas supply, water pressure and fixture demand

Do not choose a larger system without confirming the site can support it.

Choosing by Energy Source

Electricity Only

If the property does not have gas, compare electric storage, heat pump and some instant electric options.

Electric storage may suit a simple replacement. Heat pump hot water may suit homes wanting lower electricity use where outdoor space, airflow and drainage are suitable.

Natural Gas

If the property has natural gas, compare gas storage and instant gas systems. Natural gas models must match the property’s gas supply.

For larger instant gas units, confirm gas pipe sizing and water pressure before ordering.

LPG

If the property uses LPG bottles, choose an LPG hot water model. LPG and natural gas units are not interchangeable.

LPG may suit rural or semi-rural properties where mains gas is not available, but bottle supply and running cost should be considered.

Rooftop Solar

Homes with rooftop solar may compare heat pump hot water or electric storage timing options. A heat pump can pair well with solar where the timer, usage pattern and electrical setup suit.

This does not mean hot water is automatically free. Product, installation, maintenance and energy use still matter.

Installation Requirements to Check Before Ordering

Hot water systems involve plumbing, water pressure, valves, drainage, electrical work and sometimes gas work. Do not install or modify a system yourself.

Before ordering, confirm:

Correct system type
Correct tank size or flow rate
Correct gas type if choosing gas
Electrical requirements if choosing electric or heat pump
Gas pipe sizing if choosing instant gas
Water pressure
Installation location
Access for delivery and installation
Base or slab condition
Drainage and overflow points
Tempering valve requirements
Pressure limiting valve requirements
Expansion control valve requirements
Existing pipework condition
Heat pump airflow and noise placement
Whether compliance upgrades are needed

A licensed plumber, gas fitter or electrician may be required depending on the system and work involved.

What Is Not Included in Supply-Only Pricing?

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

It does not usually include:

Installation labour
New valves
Electrical work
Gas work
Pipework changes
Drainage changes
Tempering valve upgrades
Pressure limiting valve upgrades
Expansion control valves
Condensate drainage for heat pumps
Old unit removal
Disposal
Compliance upgrades
Concrete bases or slab work
Relocation of the system

Always check the product page and confirm full site requirements with your licensed installer before ordering.

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:

Your installer has confirmed the correct product
You know the right size and model
The correct gas type has been selected
Electrical requirements have been checked
Access and drainage are suitable
You understand what is not included in the product price

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.

Brisbane and Gold Coast Considerations

For Brisbane and Gold Coast homes, hot water system selection often depends on the existing unit, outdoor space, access, drainage and energy source.

Common local considerations include:

Older electric storage replacements
Homes comparing electric storage with 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
Larger family hot water demand

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 hot water system types, especially heat pumps and solar-style systems, may be eligible for rebates, STCs or other incentives depending on the product, location and current program rules.

These incentives can change, so check current eligibility before ordering or budgeting around a rebate.

A rebate may improve the value of an upgrade, but the system still needs to suit the household and installation location. Do not choose a product only because it has an incentive attached.

Brand Options to Compare

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

Brand matters, but the right system type, size, gas type, installation location and site suitability matter more than brand alone.

Common Mistakes When Comparing Hot Water System Types

Choosing Only by Product Price

The cheapest unit upfront may not be the cheapest long term once running costs, installation extras and suitability are considered.

Replacing the Same Size Without Checking Demand

If the old system ran out of hot water, the same size may not be enough.

Ignoring Gas Type

Natural gas and LPG units are different. Always choose the correct gas type.

Choosing 26L Instant Gas Without Checking the Site

A 26L instant gas unit can suit some family homes, but only where gas pipe sizing and water pressure support it.

Choosing Heat Pump Without Checking Location

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

Assuming Instant Electric Suits the Whole Home

Instant electric systems can have high electrical demand and may be better suited to point-of-use applications.

Assuming Supply-Only Includes Installation

Supply-only generally means product only unless installation is selected or clearly shown.

Before Ordering Checklist

Before ordering a hot water system, confirm:

Number of people in the home
Number of bathrooms
Shower habits
Peak hot water demand
Existing system type
Existing system size
Whether the old system ran out of hot water
Electric, natural gas or LPG availability
Correct gas type
Electrical requirements
Gas pipe sizing for instant gas
Water pressure
Heat pump airflow and drainage
Outdoor or indoor suitability
Access for delivery and installation
Drainage and overflow requirements
Whether new valves may be needed
Whether rebates or STCs may apply
Whether supply-only or supplied-and-installed is the right option
Installer confirmation before buying supply only

Frequently Asked Questions

What are the different types of hot water systems?

The main hot water system types are electric storage, gas storage, instant gas, instant electric, heat pump and solar hot water.

What is the best hot water system type?

The best type depends on your home. Electric storage can suit simple replacements, gas can suit homes with natural gas or LPG, heat pumps can suit energy-focused homes, and instant gas can suit continuous flow hot water where the site supports it.

What is the difference between storage and continuous flow hot water?

Storage systems heat and store water in a tank. Continuous flow systems heat water as it passes through the unit, without storing a full tank.

Is electric or gas hot water better?

Electric hot water can suit homes without gas or simple replacements. Gas hot water can suit homes already set up for natural gas or LPG. Natural gas and LPG systems are not interchangeable.

Is a heat pump a type of electric hot water system?

Yes. A heat pump is an electric hot water system, but it uses heat from the surrounding air to help heat the water rather than relying only on a standard electric element.

Is solar hot water better than heat pump hot water?

It depends on the home. Solar hot water needs suitable roof space and sun exposure. Heat pumps need suitable outdoor space, airflow and drainage. Both can be efficient in the right property.

What size hot water system do I need?

The right size depends on people in the home, bathrooms, shower habits, bath use, peak demand and whether the old system ran out. Common options include 250L, 315L and 400L electric storage, 250L to 280L heat pumps and 16L to 26L instant gas systems.

Can I install a hot water system myself?

No. Hot water systems involve plumbing, water pressure, gas, electrical work, valves, drainage and compliance requirements. Use licensed trades.

What is not included in supply-only hot water 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

Understanding hot water system types makes it easier to choose the right product for your home. Electric storage can suit simple replacements. Gas storage and instant gas can suit homes already set up for natural gas or LPG. Heat pumps can suit energy-focused homes with suitable outdoor locations. Instant electric can suit small point-of-use applications. Solar can suit homes with strong roof suitability and booster planning.

The best system is not the cheapest or most advertised option. It is the one that matches your household demand, energy source, installation location and long-term running cost expectations.

Before ordering supply only, confirm the size, model, gas type, electrical requirements, access, drainage and compliance needs with your licensed installer. That way, your chosen hot water system type is matched properly to the home before it arrives.

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