Water heating accounts for around 25% of the average Aussie household energy bill, making it one of the biggest contributors to your utility costs. Choosing the right hot water system impacts not just the upfront price but also ongoing energy expenses and savings over time.
This 2025 guide breaks down current costs and installation tips and reveals smart savings available across different states. Prices vary depending on system type, brand, and postcode, so understanding these factors helps you make a choice that suits your budget and household needs.
Hot Water System Prices Across Australia
Knowing the current price hot water system range makes planning efficient when it comes to heating water. Below is a quick look at what you can expect to pay for supply and installation.
1. Electric Water Systems
• Electric storage units: $450 to $2,500 for supply
• Installation: $1,000 to $2,000
• Simple to install, but higher running cost in the long term
2. Gas Hot Water Systems
• Gas water heaters: $750 to $2,000 for supply
• Installation: $1,500 to $3,000
• Popular in homes with access to natural gas, offering faster recovery times
3. Heat Pump Systems
• All-in-one pricing: $2,500 to $7,000, including installation
• Lower energy use makes them ideal for reducing bills
4. Solar Hot Water System
• Solar hot water units: $3,600 to $7,000+ for supply
• Installation: up to $10,000
• Best suited for sunny regions aiming to cut running cost over time
What Affects Hot Water System Installation Costs?
No two installations are the same, and the cost of setting up a hot water service can vary based on several key factors. Here’s what shapes the final price.
- Type of heating system: Electric, gas, heat pump or solar, each system suits different needs and impacts the base price.
- Brand and model: A brand-new hot water system from a reputable brand often delivers better performance, with a cost to match.
- Size and capacity: The system size should match your household’s hot water usage. Being too big or too small affects cost and efficiency.
- Labour rates: The cost of hiring a licensed professional varies depending on your location.
- Access and layout: Tight areas, steep slopes or complex plumbing make installation more time-consuming and costly.
- Rebates and incentives: Some states offer rebates for upgrading to a storage hot water system or selecting the right hot water system for energy savings.
Comparing System Types: Which Hot Water System is Best?
Several different types of hot water systems are available across Australia. Each offers distinct benefits depending on your home, energy goals, and water supply setup.
- Electric Water Heaters
• Lower upfront cost
• Higher running costs over time
• Suits small households or properties without gas access
• Works well with off-peak tariffs for day hot water - Gas Hot Water Systems
• Heats water faster than electric models
• More reliable during high demand
• Available as a continuous flow system or a storage water unit
• Needs a natural gas or LPG connection - Heat Pump Hot Water Systems
• Energy-efficient and eco-friendly
• Performs best in warmer climates
• Higher upfront cost, lower long-term bills
• Ideal for homes with moderate tank size needs - Solar Water Systems
• Long-term savings with low running costs
• Uses solar panels and may require an electric or gas booster
• Higher initial investment
• Great for homes with strong sunlight exposure
The right hot water solution depends on budget, energy preference, household size, and whether you’re looking to install a new unit or upgrade an old one.
Hot Water System Costs by State and Territory
The cost to install a brand-new hot water system varies across the country. Factors like labour rates, rebates, and climate all influence the final bill. Some states offer higher incentives for energy-efficient upgrades, while others have regional surcharges or access fees.
- New South Wales (NSW)
• Heat pump rebates range from $110 to $240
• Annual savings on hot water system running costs can reach $2,200
• Popular in areas switching from electric to water on demand units - Victoria
• Similar rebate offerings as NSW
• Labour costs are generally lower than Sydney
• Ideal for storage-based system types or day hot water service setups - Queensland
• Heat pump rebates sit between $504 and $540
• Warm climate supports efficient running hot water from heat pump systems
• Water unit access costs may apply in remote areas - Australian Capital Territory (ACT)
• Average cost to run electric: $1,511.84/year
• Heat pump systems cost just $471.41/year
• Efficient systems provide hot water while slashing energy use - WA, SA, TAS
• Regional cost variation due to distance, labour, and limited access
• Rebates available but eligibility depends on postcode - Sydney Example
• Gas hot tap installation may exceed $4,500 without a pre-existing gas connection
| State/Territory | Rebate Range | Notes |
|---|---|---|
| NSW | $110–$240 | High energy savings, moderate labour cost |
| VIC | $110–$240 | Lower labour costs, rebate match |
| QLD | $504–$540 | Warm climate, regional variations |
| ACT | N/A | Low running cost with heat pump |
| WA, SA, TAS | Varies | Access fees, remote pricing |
| Sydney (example) | N/A | $4,500+ if gas line needed |
Choosing the Right Hot Water System Size
Finding the ideal hot water system isn’t a one-size-fits-all scenario. Matching the right tank size to your household ensures you have enough hot water without wasting energy or money.
Sizing Guidelines by Household
Here’s a straightforward guide to help you pick the right tank size based on the number of people in your home and your daily water habits:
1 to 2 People: 25 to 80 Litres
If it’s just you or you and your partner, a smaller, compact system between 25 and 80 litres does the trick comfortably.
3 to 4 People: 125 to 250 Litres
For average-sized households, a medium-sized tank around 125 to 250 litres is generally suitable, providing enough hot water for daily showers, dishes and laundry.
5 or More People: 250 to 400+ Litres
Bigger families and busy households usually need larger tanks, ranging from 250 up to 400 litres or more, to avoid fighting over the hot water.
Impacts of Incorrect Sizing
Picking an undersized tank means running out of hot water regularly, leaving you with chilly showers and frustrated family members. It also forces your system to constantly heat water, pushing up energy usage and costs. On the flip side, an oversized tank unnecessarily heats excess water, wasting energy and inflating your bills.
Get Tailored Advice from a Licensed Plumber
Every household has unique habits and needs, so it’s wise to consult with a licensed plumber. They’ll offer personalised advice to ensure your hot water system is perfectly sized, energy-efficient, and cost-effective for your specific situation.
What to Expect When You Install a New Hot Water System
Installing a hot water system involves more than swapping out the old for the new. The total cost depends on several moving parts, affecting homes differently, even within the same suburb.
Typical Installation Tasks
- Removal of old unit: Technicians will safely disconnect and dispose of your outdated model.
- Pipe rerouting: Plumbing may need realignment to suit the size hot water system or new layout.
- Gas and electric fitting: If switching between hot water system types, expect additional costs of new fittings.
- Compliance certification: Licensed trades will issue certificates to meet regulations.
- Labour: Time, access, and experience all affect pricing.
Why Costs Vary
The hot water system you choose, along with water consumption levels and how you plan to heat your water, shapes complexity. Homes without pre-existing gas or power points may see higher costs. Even the most efficient hot water setup can cost more to install in tight spaces or on steep blocks. Well-known water heater brands and quality hot water systems also influence your quote.
Running Costs and Annual Energy Use: The Long-Term Equation
While upfront prices matter, it’s the running costs that hit your wallet year after year. Using ACT data as a guide, it’s clear how system choice affects long-term energy use.
- Electric systems average around $1,511.84 per year to run, making them the most costly over time.
- Gas systems come in slightly cheaper at $1,478.31 per year, with steady performance and faster heating.
- Thanks to their energy efficiency, heat pump systems are the standout, running at just $471.41 per year.
- Solar systems also perform well, averaging $575.13 per year, especially when backed by a booster.
For households still using electric storage, switching to a heat pump or solar system could slash annual bills by up to $2,200. These savings stack up quickly, especially for families with higher water use. Over a decade, that’s a significant return on choosing a more efficient system.
Which System Is Best for Your Home? Making the Smart Choice
There’s no one-size-fits-all answer when it comes to hot water systems. Choosing the right setup depends on a few key household factors.
1. Climate Matters
In sunnier states, solar systems heat water inside the tank using natural energy. They’re perfect for households wanting to reduce long-term costs and emissions.
2. Household Usage Patterns
Larger families or homes using water throughout the day benefit from systems that heat water instantly, avoiding the hassle of waiting for the hot water to recover.
3. Access and Infrastructure
If you’re without hot water access to solar panels or gas lines, this will influence which system includes the features you need. Consider the cost of your new hot water connection when planning.
4. Energy Future-Proofing
As energy prices shift, choosing efficient systems now could save thousands over time.
If you’re looking to install a brand-new setup, speak to a trusted hot water specialist to match your needs with the best system for your home.
New Hot Water System or Repair the Old One?
Deciding between repairing and replacing isn’t always easy, but there are clear signs that a new system might be the smarter move. Here are some common indicators:
- Leaking tank: A sure sign the unit is failing and likely beyond economical repair.
- Inconsistent hot water: Fluctuating temperatures often mean internal components are on their last legs.
- Over 10 years old: Older systems tend to be less efficient and more prone to breakdowns.
- Rising power bills: Ageing systems use more energy, adding to your monthly costs.
While a quick fix might seem cheaper upfront, older systems often end up costing more in call-outs, parts, and energy use. Investing in a new hot water system can deliver better performance and long-term savings.
Electric Hot Water System Brands to Know
1. Rheem
Rheem stands as Australia’s most trusted brand for replacing your hot water system, offering a wide hot water system range that includes electric systems known for their efficiency and longevity. Their Stellar series features a stainless-steel inner tank and a generous 12-year warranty on the cylinder, providing reliable hot water solutions that use electricity to heat water safely and effectively.
2. Dux
Dux combines over 100 years of Australian quality with Japanese engineering, making it a solid choice for electric systems. Their electric hot water systems are praised for durability and fast recovery, ensuring a steady hot water supply. The brand’s warranty and flexible installation options add value when considering the costs of hot water replacement.
3. Rinnai
Known for innovation, Rinnai offers electric systems that use electricity to heat water with smart technology features. While famous for gas storage systems, their electric models provide consistent hot water supply with smart controls, backed by strong warranties and high efficiency.
4. Thermann
Thermann offers cost-effective electric hot water systems with a reputation for reliability and straightforward installation. Their products deliver dependable hot water supply and come with competitive warranties, making them a practical option for replacing your hot water system.
5. Stiebel Eltron
Stiebel Eltron focuses on energy-efficient electric systems that use electricity to heat water with minimal running costs. Their range is well-regarded for longevity and low maintenance, supported by solid warranty terms, making them a smart choice for those concerned about long-term costs of hot water.
Each brand brings distinct strengths to Australia’s electric hot water market, ensuring you can find reliable hot water solutions tailored to your household’s needs.
Your Hot Water System Journey Starts Here
Getting the right hot water system doesn’t have to feel like guesswork. With modern rebates, better technology, and expert help, Aussies can enjoy reliable hot water without burning through their budget. Whether you’re replacing an ageing unit or planning a full upgrade, the path to efficient water heating is clearer than ever.
All Kind Gas & Plumbing is here to help. Our local team specialises in fast, affordable hot water system services, from heat pumps to solar installations.
Contact us today for a free quote and expert advice tailored to your home.
FAQs: Hot Water Systems in Australia
Q1: How much does a hot water system cost in Australia?
Depending on the type, expect to pay anywhere from $1,000 to $7,000 including installation.
Q2: Which hot water system has the lowest running cost?
Heat pump systems are typically the most efficient, followed by solar. They offer the lowest annual energy costs.
Q3: Can I get a rebate for installing a new system?
Yes. Many states offer rebates for heat pump and solar installations. Check your state’s energy rebate programs.
Q4: How long does a hot water heater last?
Most systems last 8–15 years, depending on usage and maintenance.
Q5: Is it worth switching from electric to gas or solar?
In most cases, yes—especially when long-term energy savings and rebates are factored in.
