The Definitive Guide to Hot Water Systems

The Definitive Guide to Hot Water Systems

Hot water is one of those things you don’t think about until it’s gone. Water heaters tend to go suddenly and often dramatically, so you don’t want to waste time deliberating over how to replace it when the time comes. Your water heater takes up approximately 25% of your household’s energy usage. Choosing the right one can go a long way in saving you energy and money.

With so many energy sources and types, hot water systems can become overwhelming. Local Technician have been working on hot water systems for over two decades, so we’re going to break down everything you need to know about them. This way you can make an informed choice for your home the next time you need a new hot water system.

What is the Best Hot Water System?

As much as we’d like to be able to recommend one hot water system to rule them all, unfortunately this isn’t the case. Several factors go into how a hot water system will perform for your home. When considering what water heater will best suit your home, you need to consider:

  • How many people live in your home
  • What time people use hot water
  • What energy sources are available to you
  • How much hot water your appliances use
  • The climate of your location
  • Space availability
  • What tariffs are available to you
  • Energy efficiency and environmental impact

For many homes, minimising environmental impact is a big deal. In other homes, however, the ongoing running cost is a bigger deciding factor. You need to balance these elements to choose the best hot water system for your home.

Gas, Electric or Solar?

When choosing a new hot water system, your first choice is to select an energy source – gas, electric or solar. When you have limited options this choice can be easy. Here’s what you need to know about each energy source if you’re spoilt for choice.


Gas is typically more affordable than electricity. This is only true, however, if natural gas can be supplied to your property. While you can use LPG tanks, this is generally more expensive.

Natural gas is readily available in Victoria, Adelaide, Perth, Canberra and metropolitan New South Wales. This makes gas hot water systems an efficient option for these locations. You might need to use a different energy supply if natural gas is not available where you live.

Gas hot water systems are more costly upfront for supply and installation than electric water heaters. When comparing the running costs of gas and electricity, though, you can expect to pay less for gas. Most gas hot water systems are installed outside, but some can be placed inside with a flue.

Most gas water heaters have the benefit of still being able to run even when the electricity has gone out. Some gas hot water systems need electricity to ignite the pilot light, however. This means they won’t work when your power is out.


Over one third of Australian homes use electric hot water systems. These water heaters are less costly than gas hot water systems upfront and have a cheaper installation cost. They can also be installed indoors or outdoors.

Despite being a cheaper unit to install, electric hot water systems have historically been more expensive to run. For older electric water heaters, this is certainly true. Electric water heaters have advanced in technology since then. They can also be run on off-peak electricity. In combination with rising gas prices, electric hot water systems are catching up in affordability. Not only this, but they can be less harsh on the environment!

Heat Pumps

Heat pumps have had a bad reputation for being loud electric water heaters in the past. Advances in technology mean this isn’t always the case though. Modern heat pumps are only slightly louder than a whisper!

Heat pumps harness heat energy from the air and transfer this to your water. They can be up to 3 times more efficient than electric hot water systems. Electricity as an energy source is also more environmentally friendly. These water heaters are one of the more costly types to supply and install. There are many government rebates and incentives to offset this.

According to Sustainability Victoria, heat pumps are second only to solar water heaters for being environmentally friendly. Research by Renew has shown they also release 70% fewer greenhouse gases than electric-resistive water heaters!

These water heaters need to be installed in a well-ventilated area. They also tend to work best in warm climates. That said, there are heat pumps designed to work in cold climates too! Many heat pumps have boosters installed to take over when your heat pump can’t keep up with hot water demand.

Heat pumps can be installed as an integrated unit where the tank and compressor are together, or as a split unit with these components separated. This means they can be installed indoors and outdoors, and can be great for homes with limited space.


If you’re looking for an environmentally friendly water heater with a low running cost, look no further than solar hot water systems. These water heaters use solar panels or evacuated tubes to heat water with the sun’s energy. Relying only on the sun’s rays, this water heater has the smallest environmental impact out of all water heaters.

Solar hot water systems will set you back initially with their high upfront cost. Installation requires specialised work and can be more time-consuming than other water heaters. Like heat pumps, however, there are rebates and incentives in place which help to offset this. The savings over time make up for this in only few years as the running costs are so low.

As the name implies, solar hot water systems require the sun to heat your water. When there isn’t sufficient sunlight, boosters are recommended to be installed. A booster will take over the work for your solar hot water system when it can’t keep up with hot water demand. These boosters can be found in gas and electric variants. Gas boosted solar hot water systems are typically more expensive upfront but have lower running costs than electric boosted solar.

The general rule is that solar hot water systems are the most environmentally friendly hot water system available. This is mostly true, however, there is an exception to this rule. Heat pumps have been shown to release less greenhouse gases than electric boosted solar units in cool climates do. 5-star energy rating gas water heaters even beat electric boosted solar in cool climates as far as the environment is concerned!

If you are considering solar hot water and live in a cool climate, it might be worth looking into heat pumps as an alternative.

Storage Tank or Instantaneous?

So you’ve decided what energy source you want to use for your hot water system. Now it’s time to decide between storage tanks and instantaneous hot water.

Storage Tank

Most gas, electric and solar hot water systems use a storage tank. These units heat water in the tank and store it for use throughout the day. The tank is insulated to minimise heat loss, though this is not perfect. Storage tanks are not particularly energy friendly as they heat water whether you use it or not.

As storage tanks are constantly exposed to water, they will rust over time. Sacrificial anodes are installed to preferentially rust before your tank. If these aren’t replaced often enough, your tank’s structural integrity will be degraded. The type of tank you install can also dictate its lifetime.

When looking at what size storage tank will be appropriate for your home, there are a few things to consider. The average Australian uses 50-75 litres of hot water per day and this can be a good place to start. Beyond this, you need to consider your appliances, water saving fixtures, and more. Tanks are generally available from 125 litres all the way up to 400 litres.

Instantaneous Hot Water

Most instantaneous hot water systems use gas as their energy source. Instant electric water heaters are also available. Rather than heating water and storing it in a tank in preparation for your use, these systems only heat water on demand. This means you only pay for the hot water you use and you don’t experience heat loss while it sits in a tank!

These units are tankless and so are a great option for homes with limited space. The luxury of instant hot water does come with a higher upfront cost, however.

When considering what size instant hot water heater your home needs, you need to consider the flow rate. A two-bathroom home will usually be satisfied with a flow rate of approximately 22-24 litres per minute. Homes with especially large families and a very large water demand might not be suited to instantaneous water heaters. They might require more than one instant water heater or find storage tanks fit their hot water needs better.

About the author

👨‍✈️ Hey there. My name is Mark and I'm the cool plumber (ask anyone) with a passion for plumbing, aircon and electrical stuff. I'm also a handyman who loves to do DIY projects, especially to renovate my home.

😎 I blog about plumbing, aircon and electrical tips, I also get featured on lots of media platforms where I discuss current issues and trends affecting the industry.

🔥 My motto is: Fix it once, fix it right. Fixing it twice usually costs more than fixing it right the first time.

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