Hmmm… electric, gas, solar or heat pump hot water system? When it comes to choosing the best hot water system for your home, a variety of options are readily available to you – and especially in a contemporary market where solar is on offer. When a hot water system blows up, it tends to go suddenly. And when that happens, it’s too late to spend time carefully reviewing the options available to you – that is, unless you love cold showers better than hot ones!

In this situation, some customers would tend to go for the quickest, cheapest, easiest product to order in, install, and forget until it blows up again. But what if you’re missing out on a higher-quality, more cost-effective and sustainable product in lieu? In this article, we look at the types of hot water systems available to you, and the factors to consider when deciding which hot water system is best-fit for your needs.

What types of hot water systems are there?

When choosing the best hot water system for your home, it helps to ask the following questions:

  • How many people need hot water?
  • How much hot water does your household use daily?
  • When are your peak periods for hot water usage?
  • What kind of climate do you live in?

Your answer to each of these will help determine the hot water system that’s best-fit for your needs. Let’s look at the types of systems available and how they can work for you.

Electric hot water systems

There are two main types of electric hot water systems:

  • Storage
  • Instantaneous

In essence, both of these hot water system options heat the water in the same way: electricity is sent through an electric element which generates heat. In turn, this heats the hot water stored in the unit. But what’s the difference between electric storage and instantaneous systems?

The most common hot water system in Victoria tends to be electric storage systems. These work by heating an entire tank of hot water, then storing it in the system’s associated water tank until it’s needed. While the tank is always insulated (and at G Store, we sell only the highest quality hot water tanks), it’s inevitable that some heat is still lost to the outside ambient air. This makes it important to note that even if you’re not using the hot water, the system will compensate for the lost heat by reheating the water and using electricity – not the most sustainable option, is it!

Instantaneous systems, on the other hand, use a much higher-powered element to heat water when it’s needed – aka “on demand”. Since the water is only heated when needed, no heat is lost through the tank walls. Note, however, that instantaneous systems tend to struggle if required to run a larger house – or, when the demands of your hot water system are varied (e.g. you have a large family with varying schedules, or large groups of guests staying intermittently).

Got a small house or holiday home, however? Instantaneous systems can be a great solution for smaller or intermittently used buildings or dwellings – like cabins, granny flats, kitchenettes, and tiny homes.

Gas hot water systems

Guess what – gas hot water systems come in both storage and instantaneous models too! The benefits and drawbacks are similar to those mentioned above for electric systems – however, it’s important to note that gas hot water systems do, of course, use a gas burner to heat your water.

As such, your gas hot water system will require an Energy Rating Label. This is a special label that gives you some information regarding how efficient the system is to a maximum of seven stars. The label also includes notification of the system’s Comparative Energy Consumption, a figure that lets you know just how much has the system would use each year to heat 200L of water each day in your home.

But is gas right for you?

While gas is often cheaper than electricity (like at the time of publishing this article), it’s certainly not thought of to be as sustainable. While your upfront costs of installing a gas hot water system might generally be lower than solar, it’s important to note that Bass Strait natural gas supplies are in fast decline and the price is expected to increase as a result. As such, have you considered that it might be time to consider a solar hot water system or heat pump?

Solar hot water systems

Solar hot water was once seen as the single-most efficient and environmentally friendly way of heating your home’s hot water. However, since the time when this thinking was dominant, heat pump hot water systems have most certainly taken over as the preferred option for efficiency.

There are two types of solar hot water systems:

  • Close-coupled
  • Pumped

A close-coupled system has the water tank on the roof and can heat water either directly, or indirectly. With direct heating, solar collectors allow the water to pass through where it becomes hotter and heads to the water tank. The cycle continues as the collectors make way for new, cold water to be drawn through the system and become heated as a result. With indirect heating, heated water is kept separately from the tank and mixed with an antifreeze agent. A heat exchanger then passes the heat from the water into the tank. This is a great option where frost is a concern, particularly given frozen water sitting in the collectors or tubes can cause great damage to the system.

A pumped solar hot water system also has its collectors located on the roof, but the storage tank is located on the ground, using a powered pump to move water around the system. You might see now that space is a big consideration for whether or not you decide to go with a close-coupled or pumped system. If you’ve got space for an on-ground tank, pumped systems can be the go. However, if space is at a premium, many of our clients opt for G Store’s high-quality close-coupled systems with the water storage tank being located on the roof.

Likewise, however, a building’s design might make roof space difficult to come by. Your choice will then be based on whatever degree of space you’re dealing with, and where. It’s important to note that the solar collectors on your roof won’t generate electricity like regular solar panels do, so by choosing a close-coupled system, you may be reducing the amount of roof space you have for panels as well. We suggest keeping this in mind, or giving our friendly team a call today on 1300 766 940 if you need to discuss what’s best for you. Okay – so what about heat pump hot water systems?

Heat pump hot water systems

By far the most efficient, cost-effective (over the long-term) and sustainable hot water systems are those driven by a heat pump. Hot water heat pumps work like a fridge, but in reverse: hot air is collected by a refrigerant, sent through the system, then passed into the water storage tank. What’s most impressive about heat pumps is their incredible efficiency. Standard electric heating has around 100% efficiency – this means that it takes 1kW of electricity to create 1kW of heat energy. The highest quality heat pumps, such as those stocked by G Store, average around 500% efficiency – a huge saving!

Think about it. This means that if you switched from your current electric hot water system to a quality heat pump system, you’d be using about 20% of your current electricity and paying only 20% of its cost. Marry this with a solar system by SunPower and you might even be getting your hot water virtually free of cost. Note too that heat pump systems don’t require an electric booster, so you can rest easy knowing that your reliable, efficient and beautifully sustainable hot water supply is in the best of hands.


Which hot water system is cheapest? Electric hot water systems are by far the cheapest to install but end up costing you more over time (as well as being less optimal for the environment). How about the question of which hot water system is the most efficient? This is by far the heat pump option – see our explanation above which gives you a great overview of all the reasons why we suggest going the way of a heat pump.

Still unsure about which hot water system is the best for you and your needs? If you’re ready to explore ways of integrating both passive cooling and low-energy cooling systems into your home ahead of summer’s hottest days, give our friendly team a call today on 1300 766 940, or visit our Learning Centre to read more.

Get in touch

Ready for your obligation-free consultation call?

Give our friendly team a call today on 1300 766 940. We can’t wait to meet you