Hot Water Systems

Hot water is one of the most important household appliances. Here's how to navigate the complexities of hot water systems, focusing on energy efficiency and safety.

Hot Water Systems

Hot water systems are a significant contributor to energy consumption, often accounting for a considerable portion of the energy bill. Whether you're using an electric or gas system, storage or continuous flow, there are ways to optimise for energy efficiency. Additionally, we'll delve into the potential of heat pump systems, a rising star in energy efficiency. We'll also cover the vital aspects of water temperature settings to ensure safety and efficiency.

Understanding Hot Water Systems

Storage systems

These systems pre-heat the water and store it in an insulated tank to be used when needed.

Storage system tanks will be made of either stainless steel or mild (low carbon) steel. Mild-steel tanks can corrode, and the better quality mild-steel system tanks will have one or two "sacrificial anodes", which are metal rods inside the tank that attract the minerals and other impurities in the water that would otherwise corrode the tank. Replacing the anodes every five years can add years to the tank's life.

Stainless steel tanks will be more expensive but generally last longer and require only occasional maintenance, like replacing valves and seals.

Continuous Systems

These systems heat water on demand and do not store hot water. They are typically more energy-efficient than storage systems but have a higher initial cost.

Most continuous systems are gas powered. For small households, continuous systems can be cheaper to run. 

Continuous systems are rated in litres per minute of hot water. Sizing for the unit depends more on the number of hot water outlets to be served simultaneously than on the number of people living in the house. A two-bathroom house will require flow rate of about 22–24 L/min.

Electric vs Gas Hot Water Systems

Gas systems operate similarly to electric ones, the key difference being the energy source. Gas systems use a gas burner to heat the water, while electric systems use an electric element to perform this work.

Electric storage systems can be configured to heat the water at off-peak times, so you can benefit from cheaper electricity. Systems designed for overnight heating will generally require larger tank sizes and better insulation so the hot water remains available all day.

Electric continuous models will consume electricity at whatever is the prevailing electricity rates at the time they are in use they're in use, so you cannot take advantage of off-peak or controlled load rates.

Heat Pump Hot Water Systems

A heat pump hot water system is an electric storage system that uses a heat pump rather than a traditional heating element to heat the water. A heat pump works like a reverse refrigerator, extracting ambient heat from the outside air to heat the water.

All heat pumps have four main components: an evaporation and a condenser coil, a compressor, and an expansion valve. The coils are heat exchangers, consisting of a network of pipes containing a refrigerant.

  1. External air is drawn into the evaporator with a fan
  2. The evaporator’s piping contains a refrigerant that turns into gas due to ambient heat absorbed from the warmer outside air. This heat is relative to the temperature of the refrigerant, and heat pumps can still extract heat and create hot water from seemingly 'cold' air.
  3. This gas is then pumped through a valve by a compressor, which generates the heat
  4. The condenser transfers heat from the gas pipes into the water storage tank, which creates the hot water
  5. Condensing the gas turns it back into a liquid. It flows into an expansion valve where it cools further and returns to the evaporator to repeat the cycle.

Although more expensive up front, heat pump hot water systems can be three times more efficient than conventional electric water heaters, offering long-term savings. Hot water consumes around 23% of the average energy bill, so the savings can add up quickly.

Typical heat pump hot water systems prices start at about $2500, and can range as high as $7,000. Government rebates and other incentives are available to help offset the purchase cost.

Heat pumps can be particularly cost-effective if you also have solar PV (ie electricity generating solar, not solar hot water), because you can power the hot water system with your own "free" electricity. 

Heat pump hot water systems are suitable for all locations in Australia.

Heat Pump Hot Water Systems: The Efficient Alternative

Is your hot water system nearing the end of its life? Heat pump systems are gaining popularity in Australia due to their high efficiency, and you should consider a heat pump as your next replacement hot water system.

Solar hot water systems

A solar hot water system is a storage system that uses heat from the sun to heat water directly by pumping the water through rooftop solar collector panels. This is different and separate from solar photovoltaic (solar PV) systems that are used to generate electricity.

Solar hot water installations will usually also have a continuous gas or electric 'booster' system for cloudy and cold weather days, or when all the hot water has been used.

Solar hot water systems are generally very cheap to run because sunlight is free, but if your hot water usage is greater than the system capacity, the booster will have to kick in frequently, which can lead to more expensive hot water than anticipated.

Energy Efficiency Tips for Hot Water Systems

Regular Maintenance

Regularly service your system to ensure it operates efficiently. This includes checking for leaks and insulating hot water pipes.

Optimal Temperature Settings

For any storage hot water system, both gas and electric, the thermostat must be set to at least 60°C. This temperature is high enough to prevent the growth of dangerous Legionella bacteria.

However, 60°C is hot enough to scald you at the tap, so the maximum safe temperature for water at the tap should be around 50°C. There will be some heat loss through the pipes between the tank and the tap, and if necessary, you should install a tempering valve to mix down your 60°C stored water so it is no hotter than 50°C at the tap.

Upgrade Insulation

Insulate hot water pipes, especially those exposed to the elements, to reduce heat loss.

Consider System Size and Usage

Ensure your system size matches your household needs. An oversized system can lead to unnecessary energy consumption.

Use Timers

For storage systems, consider using a timer to heat water during off-peak hours when electricity rates are lower.

Evaluate Your Needs

If your demand for hot water is low, a continuous system might be more energy-efficient.

Water-Saving Fixtures

Install water-efficient showerheads and taps to reduce the amount of hot water used.

The Safety Aspect: Balancing Efficiency with Caution

While optimizing for energy efficiency, it’s crucial to ensure safety, particularly regarding water temperatures. The recommended minimum temperature for stored hot water is 60°C to prevent bacterial growth. However, this temperature poses a scalding risk. Tempering devices can be installed to mitigate this, reducing the water temperature to a safer 50°C at the tap. It's a crucial balance between maintaining health standards and ensuring user safety.

The Financial and Environmental Benefits

Investing in an energy-efficient hot water system or optimizing your current one not only lowers your energy bills but also reduces your carbon footprint. By consuming less energy, you contribute to less greenhouse gas emissions, playing a part in the fight against climate change.


Choosing and maintaining an energy-efficient hot water system is key to reducing both your energy bills and environmental impact. Whether you opt for an electric, gas, or heat pump system, implementing these energy-saving tips can lead to significant savings. Moreover, by adhering to the recommended temperature settings, you'll enjoy the dual benefits of efficiency and safety.

Optimizing your hot water system is more important than ever in the context of increasing energy costs and environmental concerns. By making informed choices and regular maintenance, Australian households can enjoy efficient, safe, and cost-effective hot water all year round.

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