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There is a range of hot water systems now available in todays market.

Heat pump systems

Heat pumps are electric hot water systems though more efficient that electric storage or instant systems. There are some very efficient heat pump systems on the market. Heat pump systems have a storage tank and use a similar principle to your refrigerator. Instead of pumping heat out of the fridge to keep it cool, they pump heat into the water. They use electricity far more efficiently than a traditional electric water heater.

Consider changing to a heat pump if you have solar power or intend to install solar power in the future. You can offset some the energy used by the heat pump with the solar system.

There is no star rating system for heat pump water heaters. Note that some heat pump hot water systems can be noisy to run.

Solar hot water systems

Solar hot water systems are an efficient way to heat water. Depending upon the time of year, most of your water can be heated free by energy from the sun.

Solar hot water systems use solar collectors, either flat panels or glass tubes, to heat the water. The hot water is then stored in a tank, which may be on the roof or on the ground.

Solar hot water systems will usually need boosting from another energy source on cloudy days and cold nights. Boosting can be from gas, electricity, or sometimes wood fuel. You can even retrofit a solar system to some existing hot water systems.
There is no star rating system for solar water heaters.

Electric systems

Electric hot water storage systems can be very costly to run. Systems under 250 litres usually run on peak electricity rates which makes them expensive to run. This applies to many flats and smaller homes, these can be found under kitchen benches or in cupboards. Larger units over 250 litres often run on off-peak or controlled load electricity tarrifs and generally heat up overnight, which makes them cheaper to run.

Electric instantaneous systems are generally more efficient  than electric storage heaters, and modern models have better temperature control than older models. These units require dedicated wiring due to the high currents involved, so can be more costly to install.

If you have a solar power you may be able to offset some the energy that electric hot water systems use, making electric systems cheaper to run.

There is no star rating system for electric storage or instant water heaters.

Gas systems

Gas hot water systems can be a good option, especially if you have mains gas.

Instantaneous, or continuous flow, gas hot water systems heat only the water that you require as they don’t have a storage tank. Some models let you control the delivery temperature, and these can be different in different parts of the house, which provides safety advantages. These systems can be a good choice if you have variable hot water use as you will always have enough hot water. Instantaneous systems often require large gas pipes, which can increase the cost of installation.

Gas storage hot water heaters store hot water in a tank. Storage systems can be less efficient than instantaneous systems because of the energy lost through the walls of the tank. You may find you run out of hot water if the system is undersized or are heating too much water if it is oversized.

Gas hot water systems have a star rating. Try to choose a system with 5 or more stars if you are upgrading.
A list of current models with star ratings is available from the Australian Gas Association:

Wood fuel systems

Wood fuel systems are occasionally used to heat water, often as part of heating the home. These are more often found in rural areas where wood fuel is plentiful and mains gas is not available.

The performance of wood fuelled systems can be highly variable. The type and quality of fuel, the age and maintenance of the system all impact on efficiency. Wood fuel must also be cut and stored appropriately. It is very important to manage air quality impacts by operating the system efficiently as smoke can be unhealthy and inconvenient for you and your neighbours.

Learn more

For more information about the impact hot water systems can have, download the Hot water improvements factsheet.

Please contact the team to request an accessible version of this factsheet: scorecard@delwp.vic.gov.au

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Page last updated: 20/09/22