Skip to main content
For Consumers

Water heating

Adult technician adjusting gas water heater

Water heaters

Water heating makes up around one quarter of all energy use in Australian households. Choosing the right water heater can result in big savings on your energy bills.

Electric storage, gas storage, and gas instantaneous water heaters must meet mandatory Minimum Energy Performance Standards but are not required to display an Energy Rating Label.

Solar, heat pump and electric instantaneous water heaters do not have energy efficiency requirements.

Types of water heaters

There are two main types of water heater.

  • Storage systems - which use an insulated tank to keep water hot at all times, ready for when it is required.
  • Instantaneous (continuous) flow systems - which heat water heat only as required, and don't store it in a tank.

Storage water heaters can be gas, electric resistance, solar, and heat pump driven. Instantaneous systems can be powered by gas or electricity

Man turns on the switch on control panel of home electric water heater boiler

More information on water heater types

  • Electric storage water heaters

    An electric storage water heater is usually cheap to buy but expensive to run.

    They consist of an insulated storage tank, usually cylindrical, where hot water is kept ready to be used. The water is heated in the storage tank by one or more electric heating elements.

    Over time, the water temperature decreases through heat losses from the storage tank and from hot water that has been used. This results in the tank being refilled with cold water which in turn lowers the overall temperature of water in the tank.

    This water is then re-heated. How this works depends on your electricity tariff.

    • If you are using a continuous electric tariff for your electric storage water heater, the heating elements will be turned back on when the water temperature drops below a certain point.
    • If you are using a restricted tariff, such as an off-peak or ripple control tariff, the heating elements will only operate at certain times. Larger tanks are often used with restricted tariffs, to make sure you don’t run out hot water.
  • Gas storage water heaters

    Gas storage hot water systems use a gas burner located underneath the storage tank to heat the water. They usually have a continuously burning pilot flame that ignites the main burner when it is needed.

    When hot water is drawn off at the top of the tank, cold water enters the tank at the bottom.

    Most units have an adjustable thermostat to set the water temperature. When the temperature of the water falls below the thermostat level, the pilot flame ignites the main burner to re-heat the water.

  • Instantaneous gas water heaters

    Instantaneous gas hot water systems, also known as continuous flow, don’t have storage tanks and heat water only when required.

    Water is heated by a gas burner as it flows through a coiled pipe called a heat exchanger. The gas burner starts when a hot water tap is turned on. It only heats the amount of water that is required instead of continuously heating a full tank. As they don’t continuously store hot water, there is less heat loss. This means there may be energy and cost savings.

    However, instantaneous units supply hot water at a lower pressure than storage systems, which can be a problem if you use a lot of hot water.

  • Solar water heaters

    A solar water heater uses energy from the sun to heat water for your home, using Australia’s abundant sunshine to save energy, money and greenhouse gas emissions. They may be more expensive up front, but can save money in the long run.

    Solar panels or collectors on your roof use energy from the sun to heat water that flows to a storage tank, which is either installed on the roof or at ground level.

    In areas with less mid-year sun and long cold nights, solar hot water units may require a booster using gas or electricity.

  • Heat pump water heaters

    Heat pump water heaters absorb warmth from the air and transfer it to heat water. They work on the same principle as a refrigerator, but instead of pumping heat out of the fridge to keep it cool, they pump heat into the water. 

    They operate on electricity but are roughly three times more efficient than a conventional electric water heater. While they may cost more up front, their lower running costs can save you money in the long term. 

    If you are in a cold climate and looking at buying a heat pump water heater, choose a heat pump that has been specifically designed for the cold and will still work if there is frost or snow.

  • Instantaneous electric water heaters

    Instantaneous electric water heaters use electricity to heat water on demand, and don't store hot water in a tank.

    They are less common than electric storage water heaters.

    Instantaneous electric water heaters typically require high power inputs, particularly if more than one unit is running at once. In some cases three phase power is required, in others single phase power is adequate.

How do I choose the right water heater?

There are many things that can affect which water heater is best for you. It’s best to do plenty of research, including:

  • reading reviews on websites and talking to different suppliers
  • finding out what type of warranty comes with the system in case you encounter any problems
  • considering where the heater can be installed, including issues such as your climate, access to direct sun, shading, layout of your house and noise
  • the price of the heater (as well as installation, maintenance and running costs)
  • rebates and other cost assistance provided by your state or territory
  • finding a qualified and reputable plumber or installer to install the system
  • discussing your tariff options with your installer or retailer to ensure you have a good understanding of how tariffs will affect the running cost and performance.

Generally speaking:

  • solar and heat pump water systems can cost more upfront but save you money in the long term
  • electric storage water heaters are cheaper to buy but expensive to run when not powered by solar.

Find and compare water heaters

Find and compare the energy ratings and predicted energy use for registered water heaters.

Visit the Energy Rating Registration System
A copy of the Your Home book laying on a coffee table with a mug of coffee

Visit Your Home which provides information on designing new homes and home improvements. There is a dedicated Hot water systems section, that provides information about:

  • understanding hot water systems
  • choosing and using a hot water system.
Was this page useful?