When it comes to heating hot water, gas and electric hot water systems have long been seen as the more traditional and most affordable choices for Victorian homes.

However, as energy prices continue to rise and the need for sustainable solutions becomes glaringly apparent, homeowners just like you are beginning to consider the long-term implications of their hot water system choices.

Because how much is your cheap hot water system really costing you in the long run?

In this article, we’ll unravel the complex issue of upfront cost vs long-term savings, exploring some of the “cheaper” methods of heating hot water, as well as examining the benefits and drawbacks of all kinds of hot water systems, including:

  1. Gas and electric hot water systems
  2. Solar hot water systems
  3. Heat pump hot water systems

Ready? Let’s get stuck in.

Gas and electric hot water systems: a traditional but less cost-effective choice

Gas and electric hot water systems have long been the go-to options for Victorian households, often due to their affordability in terms of upfront costs. Let’s take a closer look at each:

About gas hot water systems

Gas hot water systems operate by heating water using natural gas or liquefied petroleum gas (LPG). Available in both storage (with storage tank) and instantaneous (no storage tank) options, these systems are known for their quick heating ability and consistent supply of hot water.


  1. Cost-effective installation: Gas hot water systems may offer a budget-friendly advantage with lower upfront installation expenses, making them an appealing choice for homeowners seeking affordability
  2. Rapid heating and uninterrupted supply: With their swift water heating capabilities, gas systems ensure a constant flow of hot water, even during peak hours when multiple family members require hot water simultaneously
  3. Ideal for areas with limited electricity access: In regions facing electricity supply challenges or residing off-grid, gas hot water systems emerge as a dependable and practical solution


  1. Ongoing expenses: While gas hot water systems offer lower upfront costs, homeowners should be prepared for ongoing expenses associated with gas supply and consumption, which can add up over time.
  2. Greenhouse gas emissions from burning natural gas: Gas hot water systems emit copious greenhouse gases during operation

And what about their electric counterparts?

About electric hot water systems

Electric hot water systems utilise an electric element to heat the water. Of course “electric” hot water systems should not be confused for vastly more energy-efficient alternatives (often called “all-electric solutions”) such as solar hot water and heat pump hot water.

The key difference? While the element in an electric hot water system is, of course, electric, electric hot water systems may still utilise fossil fuels to produce the energy required for the heating of the element.


  1. Lower initial installation costs: Like their gaseous cousins, electric hot water systems generally have lower upfront costs compared to gas systems, making them a popular choice if you’re keeping to a specific budget
  2. Ease of installation and maintenance: Electric hot water systems in Victoria are relatively straightforward to install and maintain, reducing the hassle and potential costs associated with their ongoing maintenance


  1. Higher ongoing energy costs due to electricity consumption: Electric hot water systems consume significant amounts of electricity during their operation, which can lead to higher ongoing energy expenses. As electricity prices continue to rise, this can also impact the long-term affordability of your system.
  2. May not be cost-effective for large households or regions with high electricity prices: Electric hot water systems (both storage and instantaneous options) may not be the most cost-effective option for larger households or areas with high electricity prices, as the energy consumption can result in significant monthly bills – particularly so over time.

A cost-effective alternative: solar hot water systems

Solar hot water systems are wonderful examples of modern technology that harness the sun’s energy to your heat water.

These systems offer a sustainable and cost-effective alternative to the traditional gas/electric hot water systems, and one that’s likely to make a significant difference to your back pocket over time.


  1. Significant long-term savings on your energy bills: The choice to install a solar hot water system can often lead to significant long-term savings on your energy bills, as most of the energy used for heating water comes from the sun
  2. Reduced emissions and steps towards an all-electric home: By relying on solar energy instead of burning fossil fuels, solar hot water systems can significantly reduce your greenhouse gas emissions
  3. Various government incentives, rebates, and schemes to support installation: The Victorian state government offers financial various incentives and rebates to help encourage the adoption of solar hot water systems – you can read more here


  1. Higher upfront costs: It’s important to note that solar hot water systems require a higher initial investment than gas/electric systems, which can be a deterrent for some homeowners, though especially those focused solely on upfront costs (rather than long-term savings)
  2. Requires adequate sunlight for optimal performance: Solar hot water systems rely on sunlight to operate efficiently

Striking the balance: heat pump hot water systems in Victoria

Move over gas, electric and solar – there’s a new kid in town!

Heat pump hot water systems are an incredible, innovative technology that extracts heat from the air (air-source heat pumps) and transfers it to the water, consuming far less electricity than traditional electric systems.

Heat pumps can not only facilitate your hot water system, but also power a range of systems throughout your home, including everything from hydronic heating/cooling to the heating of your outdoor swimming pool.

Let’s take a look at the pros and cons of heat pump hot water systems:


  1. Lower energy consumption and reduced ongoing costs: Heat pump hot water systems are more energy-efficient than standard electric systems, resulting in lower ongoing energy expenses
  2. Environmentally friendly and high-efficiency: By using ambient heat from the air, heat pump hot water systems have a lower carbon footprint compared to traditional electric systems
  3. Suitable for locations with limited sunlight for solar systems: Heat pump hot water systems provide an effortlessly viable alternative for areas with limited sunlight exposure in which solar hot water systems may not be as effective.


Higher upfront costs than gas and standard electric systems: Heat pump hot water systems have higher initial installation costs, which can be a consideration for budget-conscious homeowners.

But if you’re focused solely on upfront costs when installing your brand-new hot water system, have you considered what your “cheap” hot water system is really costing you?

Understanding the issue of upfront cost vs. long-term savings

When choosing a hot water system, the decision often boils down to (see what we did there?) balancing upfront costs with long-term savings.

While gas and electric hot water systems usually offer lower initial expenses, these kinds of systems can often lead to higher ongoing energy bills – and especially so within the context of rising electricity and gas prices.

We suggest that you should also consider the available Victorian state government rebates and incentives that are likely to make your new, high-efficiency hot water system much more affordable than you thought. It really does pay to do the comparison!

Beyond the all-important financial aspects here, it’s also crucial to recognise the environmental impact of hot water systems. Gas and standard electric systems readily contribute to greenhouse gas emissions and a less-sustainable future for us all, while solar and heat pump systems offer a significantly lower carbon footprint plus all the benefits of long-term savings on your energy bills.

By incorporating more sustainable options into your home, it’s getting easier and easier to actively participate in reducing your environmental impact.

Do not miss this opportunity to upgrade your hot water system to a system of great quality, efficiency and cost-effectiveness. Your back pocket will thank you for it.

Wrapping up

To learn more about the solar hot water and heat pump hot water solutions available to you in Victoria, browse the range of articles available at our Learning Centre, or contact our friendly, award-winning G Store hot water team today on 1300 137 567 to discuss your next steps.

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