How to Choose a Hot Water System

Last updated: Monday, 25 May 2026

Choosing the right hot water system is not just about replacing the unit that was already there.

Your hot water system affects your comfort, running costs, energy use and long-term reliability. The wrong system can leave your household running out of hot water, paying more than necessary or dealing with avoidable repairs.

The right system should suit:

• how many people live in the home
• when hot water is used
• how many showers, taps and appliances may run at once
• whether the home has gas
• whether the home has solar power
• available space
• ventilation and installation requirements
• long-term running costs
• warranty and servicing needs
• household plans over the next few years

At RJT Plumbing & Gas Solutions, we help homeowners compare their options properly so they can choose a hot water system that suits how the household actually uses hot water.

We have also built a Hot Water Cost Calculator to help estimate potential savings when switching from one system type to another. It gives you a clearer starting point before getting site-specific advice.

The Main Types of Hot Water Systems

In Australia, hot water systems generally fall into two broad categories: storage systems and continuous flow systems. Storage systems heat and hold water in a tank, while continuous flow systems heat water when it is needed. Both can use different energy sources, including electricity, gas and solar.

The main options homeowners usually compare are:

• electric storage hot water
• gas storage hot water
• instantaneous gas hot water
• heat pump hot water
• solar hot water with booster

Each option has strengths and trade-offs. There is no single best system for every home.

Electric Storage Hot Water Systems

Electric storage systems are one of the most familiar hot water options.

They heat water using an electric element and store it in a tank until needed. They are simple, common and usually straightforward to understand.

Pros

Electric storage systems are generally familiar, reliable and relatively simple to install where the electrical setup is suitable.

They can work well for smaller homes, rental properties or households with predictable hot water usage.

Cons

Traditional electric storage systems can be expensive to run compared with more efficient options, especially if they are older or not connected to a suitable tariff.

Because the system keeps a tank of water hot, energy can be used even when the household is not actively using hot water.

Best suited to

Electric storage may suit homes where simplicity and upfront affordability are priorities, but many homeowners now compare it against heat pump systems because of long-term running cost differences.

Gas Storage Hot Water Systems

Gas storage systems heat and store water in a tank using gas.

They are often chosen by households that already have gas infrastructure and want strong hot water performance without switching to a completely different system type.

Pros

Gas storage systems can provide reliable hot water and generally recover faster than standard electric storage systems.

They may suit families with consistent hot water demand, especially where the home already has gas connected.

Cons

Gas storage still requires a tank, so the system must be sized properly. If the tank is too small, the household may run out during peak use.

Running costs also depend on gas prices, household demand and the efficiency of the unit.

Best suited to

Gas storage may suit households that already use gas and want a reliable, familiar system with better recovery than some traditional electric storage options.

Instantaneous Gas Hot Water Systems

Instantaneous gas hot water systems, also called continuous flow systems, heat water only when it is needed.

There is no storage tank. When someone turns on the hot tap, the system heats water as it passes through the unit.

Pros

Instantaneous gas is known for speed and continuous hot water.

A correctly sized system can suit:

• larger families
• homes with multiple bathrooms
• back-to-back showers
• households with high peak demand
• homes where space for a storage tank is limited

Because the system heats water on demand, it does not need to keep a tank hot all day.

Cons

The home needs suitable gas infrastructure.

Some properties may require gas pipe upgrades, ventilation checks or changes to meet the requirements of the selected unit.

Performance also depends on choosing the correct flow rate for the household. If the unit is undersized, it may struggle when multiple outlets are used at once.

Best suited to

Instantaneous gas is often a strong option for households that value fast recovery, compact installation and continuous hot water during busy periods.

Heat Pump Hot Water Systems

Heat pump hot water systems are becoming one of the most popular options for homeowners looking to reduce running costs.

They work like a reverse-cycle air conditioner for water. Instead of generating heat directly through an electric element, they draw warmth from the surrounding air and use that heat to warm the water.

Pros

Heat pumps are highly energy efficient and can significantly reduce electricity use compared with traditional electric storage systems.

They can work particularly well in warmer climates and may be even more cost-effective when paired with rooftop solar and configured to run during the day.

Eligible air source heat pump systems may qualify for Small-scale Technology Certificates, commonly known as STCs, but only certain models are eligible and capacity limits apply.

Cons

Heat pumps generally cost more upfront than basic electric storage systems.

They also need correct sizing, suitable placement and good airflow. Poor installation location, poor ventilation or incorrect setup can reduce performance.

Heat pumps are efficient, but they do not suit every home automatically.

Best suited to

Heat pumps are often a strong fit for energy-conscious homeowners, homes with solar power, households wanting lower long-term running costs and properties with suitable installation space.

They are especially worth considering when replacing an old electric storage system.

Solar Hot Water Systems With Booster

Solar hot water systems use roof-mounted collectors to heat water using energy from the sun. They usually include an electric or gas booster for cloudy days or periods of higher demand.

Pros

Solar hot water can provide strong long-term savings when the property has good sun exposure, suitable roof space and the homeowner plans to stay in the property long term.

Eligible solar water heaters may also qualify for STCs, provided the model is approved and system requirements are met.

Cons

Solar hot water systems are more complex than standard systems.

They require suitable roof space, correct orientation, roof access, plumbing connections and a correctly configured booster.

Repairs can also become expensive on older solar hot water systems if the collectors, tank or major components start failing.

Best suited to

Solar hot water can suit homes with strong sun exposure, suitable roof space and long-term ownership plans.

For some households, a heat pump connected to rooftop solar power may be a simpler alternative.

Comparing Speed to Heat

Different hot water systems perform differently when demand is high.

Instantaneous gas is generally strong for fast, continuous hot water because it heats water as needed.

Gas storage can recover faster than many standard electric storage systems.

Electric storage depends heavily on tank size and recovery rate.

Heat pumps are highly efficient, but recovery is usually slower than gas, so correct tank sizing is very important.

Solar hot water depends on solar gain and booster setup.

The key question is not just “how efficient is the system?”

It is also:

Can the system keep up when your household needs hot water most?

Comparing Efficiency and Running Costs

Efficiency matters, but it should be considered alongside household usage.

Heat pumps are often one of the most efficient options because they use electricity to move heat rather than generate it directly.

Solar hot water can also deliver strong savings when the property suits it.

Instantaneous gas avoids storing hot water and heats on demand, but running costs depend on gas prices and usage.

Electric storage can be simple, but may be more expensive to run depending on tariff, age and efficiency.

Energy.gov.au notes that minimum energy performance standards apply to electric and gas storage water heaters and gas instantaneous water heaters, while solar, heat pump and electric instantaneous systems are treated differently under current performance requirements.

For homeowners comparing energy plans, Energy Made Easy is a free Australian Government comparison service available in Queensland and several other states.

How Much Hot Water Do You Actually Use?

Sizing is one of the most important parts of choosing a hot water system.

A system should be sized around peak demand, not just the number of people in the home.

Consider:

• number of people in the household
• number of bathrooms
• back-to-back showers
• baths
• laundry use
• kitchen use
• whether multiple taps or showers run at once
• morning and evening routines
• guests or extended family use

A household of four where everyone showers at different times may need a different setup from a household of four where two showers, a washing machine and kitchen tap are used at once.

Small Households and Couples

Smaller households may suit:

• smaller electric storage systems
• compact gas systems
• correctly sized heat pumps
• entry-level instantaneous gas systems

The decision usually comes down to energy source, available space and long-term running cost goals.

Families

Families usually need more careful sizing.

Options may include:

• mid-sized storage tanks
• larger heat pump systems
• gas storage systems
• instantaneous gas systems with suitable flow rate
• solar hot water with booster

The system must be able to handle busy periods, especially mornings and evenings.

Larger Households and High-Use Homes

Larger households may need:

• bigger storage capacity
• higher flow rate instantaneous gas
• carefully sized heat pump systems
• multiple continuous flow units in some cases
• strong attention to peak load and recovery time

For high-use homes, undersizing is one of the fastest ways to create ongoing frustration.

Repair, Replace or Upgrade?

Sometimes the decision starts because an old system has failed.

Other times, the system is still working but becoming unreliable or expensive to run.

A repair may make sense when:

• the system is relatively young
• the tank is still sound
• the issue is isolated
• parts are available
• repair cost is reasonable
• the system still suits household demand

Replacement may make more sense when:

• the tank is leaking
• the system is old
• repairs are becoming frequent
• running costs are too high
• the system no longer keeps up
• parts are difficult to source
• the household has changed

The better question is not simply:

Can it be repaired?

The better question is:

Will repairing this system still provide good long-term value?

Water Quality and System Lifespan

Water quality can affect hot water system performance and lifespan.

Mineral build-up, sediment and corrosion risk can affect tanks, valves, elements, heat exchangers and pipework.

This is why system quality, correct installation and maintenance matter.

A cheaper system that does not suit local conditions may not provide the best long-term value.

Recirculation Options

Some larger homes have long pipe runs, meaning it takes time for hot water to reach certain taps.

A hot water recirculation setup can reduce wait time by keeping hot water closer to fixtures.

This can improve convenience, especially in larger homes.

However, recirculation systems need to be designed properly. If they run constantly without controls, they can increase energy use.

Timers, sensors and proper setup matter.

Heat Pump Placement Matters

Heat pumps need good airflow.

Because they draw heat from surrounding air, they should be installed in a suitable location with enough ventilation and space around the unit.

Poor placement can affect:

• efficiency
• noise
• recovery time
• system lifespan
• household comfort

This is one of the reasons heat pump installation should not be treated as a simple like-for-like replacement without proper assessment.

Gas Infrastructure Matters

For gas hot water systems, the existing gas setup matters.

A property may need assessment of:

• gas supply
• pipe sizing
• appliance demand
• ventilation
• clearances
• regulator setup
• compliance requirements

This is particularly important when upgrading to a larger or higher-output unit.

Gas work must be completed by a licensed professional.

Installation Costs Vary for Good Reason

Generic pricing can be misleading because every home is different.

Installation cost can vary depending on:

• existing system type
• system location
• access
• electrical requirements
• gas supply
• pipework changes
• valve upgrades
• drainage requirements
• roof access for solar
• removal of the old unit
• compliance requirements

A cheaper quote may not include everything required for a safe, compliant and reliable installation.

The better question is:

What is the most cost-effective system over its working life?

Comparing Lifetime Value

Lifetime value means looking beyond the upfront installation price.

A proper comparison should include:

• purchase cost
• installation cost
• expected running cost
• expected lifespan
• warranty
• servicing needs
• repair risk
• household comfort
• reliability
• compatibility with solar or gas
• likelihood of future upgrades

A more expensive system upfront may provide better value if it reduces running costs and performs reliably for many years.

A cheaper system may still make sense for some homes, especially where usage is low or the homeowner has shorter-term plans.

Using a Hot Water Cost Calculator

A Hot Water Cost Calculator can help homeowners compare likely running costs between system types.

It can help estimate how different options may stack up based on:

• current system type
• proposed system type
• household size
• usage patterns
• energy source
• efficiency difference

A calculator should not replace a proper site assessment, but it can help homeowners understand which options are worth exploring.

Use the calculator first to get an estimate, then speak with a licensed professional to confirm what is suitable for your home.

How to Choose the Right Hot Water System

The right hot water system should be chosen based on the home, not just the product brochure.

Before choosing, consider:

• Do you currently have gas?
• Do you have solar power?
• How many people live in the home?
• When is hot water used most?
• Do multiple showers run at once?
• Is there space for a tank?
• Is there suitable airflow for a heat pump?
• Is roof space suitable for solar hot water?
• Are running costs or upfront costs more important?
• How long do you plan to stay in the home?

The right answer depends on the full picture.

Get Advice Before Choosing Your Next Hot Water System

Choosing the right hot water system means balancing efficiency, performance, reliability and long-term value.

For some homes, a heat pump will be the best choice.

For others, instantaneous gas may make more sense.

Some homes may still suit storage systems, and others may benefit from solar hot water or a hybrid approach.

At RJT Plumbing & Gas Solutions, we help homeowners understand the options clearly and choose systems based on actual household needs.

If you are replacing an old system, upgrading for efficiency or comparing gas, electric, heat pump and solar hot water options, contact our team to discuss the best setup for your home.