We believe that heat pumps are the best technology when it comes to delivering hot water. But by no means is it your only option. In order to give you the most information so you can make an informed choice, we’ve put together this guide to the pros and cons of traditional electric water heating.

How electric hot water systems work

Before we can go into the pros and cons of these systems, we have to understand how they work.

When an electrical current runs through a material, it generates heat – this is called resistive heating. You can take advantage of this with an electric element, which is designed to generate plenty of heat whenever a current runs through it.

Electric hot water systems use resistive heating to generate hot water and are close to 100% efficient. If you run 1kW of electricity through the system, you’ll get 1kW of heating power.

There are two different types of electric systems. The first, electric storage systems, heat a tank of water to the desired temperature and then leave it over the day. While the tank is insulated, some heat is still lost to the outside air, which means the system has to run every now and then to keep it topped up. These “standing losses” contribute to high running costs for electric storage systems.

The other type is instantaneous. This uses a high-powered electric element to heat water as you use it. This eliminates standing losses and makes the system cheaper to run. However, these systems struggle with high demand, and are typically only suitable for single bathrooms and kitchenettes.

The pros of electric hot water

By far the biggest selling point for an electric system is the upfront cost. Electric storage systems are the cheapest to buy and install, which is the reason you likely have one in your home today (electric storage is the most common type in Victoria).

Electric instantaneous systems aren’t that much more expensive, so no matter what type of electric system you get, you’re going to pay a comparatively cheap price.

Since they are the most common, it’s easy to find an installer and servicer that are familiar with them. When someone comes out to fix any problems you might have, you can be pretty much certain that they’ve worked with an electric system before. It also means the install will be cheap and easy.

Unlike gas hot water systems, which require a flue if installed inside, electric systems can be installed either inside or outside without any issues of special equipment.

A storage system has a unique advantage over instant ones, which is that some systems can be run on a cheaper off-peak tariff. This lets you heat water during the designated off-peak time and only use peak electricity to top up the water temperature throughout the day. This will save you money, but it’s worth mentioning that this still tends to be more expensive than some other systems.

The advantage of instant is, as mentioned before, that it doesn’t need to run constantly. If you’re on a power plan that doesn’t include an off-peak tariff, it’s likely better to get an instant system and only pay for as much as you use. (Although, it’s worth noting that energy retailers are working to remove flat rates and push more people onto time of use plans.)

The cons of electric hot water

But there are drawbacks. Despite being some of the cheapest to buy and install, they tend to be the most expensive to run. Right now, electricity is more expensive than gas, so an electric hot water heater just costs more than its most common alternative.

To get it cheaper, you’d need to find a way to use less electricity. You can do that with a heat pump – which uses significantly less thanks to its efficiency – or solar hot water with an electric booster – which can heat water with the sun for much of the day. A simple electric system just isn’t going to cut it.

For the environmentally conscious, this large power draw means that electric systems contribute significantly higher greenhouse gas emissions than their more efficient alternatives. The only real way to mitigate that environmental impact is to run the system off of solar panels, which has its own drawbacks.

Even if you have a solar system on your roof – as more and more Australians do – then much of its production will be used by your electric water heater. A different system, one which uses less electricity, would free up the electricity generated by your solar panels to power the rest of your home.

Storage and instantaneous each have their own unique drawbacks. If you have an improperly sized tank, you might find yourself running out of hot water, as the system fails to keep up with demand. Plus, to take advantage of off-peak tariffs, you’ll need a rather large tank anyway – it has to store a whole day’s worth of usage.

As noted previously, an instant system will struggle with high, simultaneous use. If you need to provide hot water to an entire household, it’s likely not going to cut it.


Chances are you’re already familiar with an electric system – and all the pros and cons that come with that. If your system supplies you with reliable hot water, and you’re happy with the amount you’re paying, there’s not much reason to upgrade. But if you’ve had problems or feel like you should be paying less, then you should look into the other articles on our Learning Centre.

We go into gas, solar hot water, and heat pumps, so you have as much information as possible to make your choice.

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