Electric, gas, or solar hot water systems—what’s best for your home?

Hot water: it’s one of life’s little luxuries that we often take for granted—until the dreaded cold shower strikes. 

But behind every blissfully warm shower or soothing soak is a hot water system quietly chugging away, and the choice between gas and electric (or even solar) can have a big impact on your comfort, your wallet, and the planet. 

If you’re considering an upgrade or just want to know if your current system is the best fit, you’re in the right place. 

Let’s break down the real costs, benefits, and pitfalls of gas versus electric hot water systems, and see which one comes out on top for Australian households.

The big decision: Gas, electric, or solar?

When it comes to hot water, most Australian homes are powered by either gas or electricity, with solar hot water systems gaining popularity as we all look for ways to save money and reduce our environmental footprint. 

Rising costs push more homeowners toward electric and solar alternatives. Image Source: brizmaker / Shutterstock

Even within these categories, there are choices to make—storage tanks, instantaneous (continuous flow) systems, heat pumps, and solar boosters. Each has its own quirks, costs, and considerations.

Electric hot water systems: Old faithful gets a makeover

Electric hot water systems have been a staple in Australian homes for decades. The classic version is the resistive storage tank, which works much like a giant kettle—simple, reliable, but not always the most efficient. 

Newer options, like heat pump systems, are changing the game by using the same technology as your fridge (but in reverse) to extract heat from the air and warm your water with far less electricity.

There’s also the instantaneous electric system, which only heats water when you turn on the tap. 

While this sounds efficient, it can require a hefty power supply—sometimes even three-phase power, which most homes don’t have.

Pros of electric systems:

  • Can be powered by renewable energy (think solar panels or green power).
  • Heat pump systems are super energy-efficient and eligible for government rebates.
  • Electricity prices are tipped to fall as renewables take over the grid.
  • If you’ve got solar panels, you can run your hot water system for next to nothing once the panels have paid for themselves.

Cons of electric systems:

  • Old-school resistive systems can be expensive to run if you’re not using off-peak or solar electricity.
  • Instantaneous electric systems may need to be installed at each outlet and can be power-hungry.
  • If your electricity comes from coal or gas, the environmental benefits are reduced.
  • Storage tanks need maintenance every few years (think valve checks and replacing the sacrificial anode rod).

Gas hot water systems: The quick and the convenient

Gas hot water systems come in two main flavours: storage tanks and instantaneous systems. 

The latter only heats water when you need it, making it a popular choice for smaller households or for powering a remote bathroom or granny flat.

Pros of gas systems:

  • Instantaneous systems are efficient for small households and don’t require a big tank.
  • Gas isn’t charged by time of use, so you can shower whenever you like without worrying about peak rates.

Cons of gas systems:

  • Gas is a fossil fuel, so it’s not great for the environment.
  • You can’t generate your own gas (unlike solar electricity), and prices are expected to stay high.
  • Gas appliances can pose health risks if not properly vented, though most hot water systems are installed outdoors.
  • Storage tank systems run a pilot flame 24/7, so they’re always using a bit of gas.
  • Regular maintenance is a must to avoid leaks and ensure safe operation.

Solar hot water: Harnessing the Australian sun

Solar hot water systems use rooftop panels to collect heat and warm your water, with a storage tank either on the roof or elsewhere in the house. Most systems have a booster (electric or gas) for cloudy days or when you’ve used up all the hot water.

Pros:

  • Very cheap to run once installed.
  • Great for the environment—especially if paired with an electric booster powered by solar panels.

Cons:

  • High upfront cost ($4000-$8000 before installation).
  • If the system isn’t sized right or the panels fail, you could end up relying on the booster more than you’d like (and get a nasty surprise on your bill).
  • Maintenance is key to keeping things running smoothly.

What will it cost me?

Here’s a quick look at typical purchase prices (not including installation):

  • Electric storage tank: $650-$2500
  • Electric instantaneous: $600-$2000
  • Electric heat pump: $2200-$6800
  • Gas storage tank: $1000-$7000
  • Gas instantaneous: $700-$3000
  • Solar (any booster): $4000-$8000

But the real cost is in the running. According to Sustainability Victoria, running costs and greenhouse gas emissions vary widely depending on your system, your energy source, and how much hot water you use. 

For example, a heat pump or solar system can slash your bills and emissions, especially if you’re using your own solar electricity. 

Gas systems, on the other hand, are likely to become the most expensive option by 2030.

The health and environmental angle

There’s a growing movement in Australia to ditch gas appliances in favour of electric alternatives. 

Why? Health concerns (gas can release carbon monoxide and other nasties), environmental worries (gas is a fossil fuel), and the fact that electricity is getting cleaner and cheaper—especially if you have solar panels.

Thinking of making the switch?

If you’re considering moving from gas to electric, there are a few things to keep in mind:

  • Government rebates are available in many states for switching to efficient electric or solar systems.
  • Replacing a gas storage tank with an electric or heat pump is usually straightforward, but may need extra electrical or plumbing work.
  • Instantaneous gas systems can be tricky to replace, especially in apartments or homes with limited space or power supply.
  • If you’re ditching gas altogether, you’ll save on the daily supply charge too.

Comparing cost, efficiency, and environmental impact to help you choose. Image Source: CHOICE

Simple ways to save on hot water

No matter what system you have, the easiest way to save money and energy is to use less hot water. 

Take shorter showers, install water-efficient showerheads, and use your dishwasher instead of hand-washing (it’s usually more efficient).

And remember, when it comes to hot water, a little research now can save you a lot of cold showers (and cash) down the track.

Have you recently switched systems, or are you considering an upgrade? Maybe you’ve got a tip for saving on hot water, or a horror story about a cold shower in the middle of winter. Share your experiences or advice in the comments below.

Also read: Evidence yet to back up claimed benefits of cold water therapy

Abegail Abrugar
Abegail Abrugar
Abby is a dedicated writer with a passion for coaching, personal development, and empowering individuals to reach their full potential. With a strong background in leadership, she provides practical insights designed to inspire growth and positive change in others.

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