7 things to consider when calculating the cost of a hot water system


Choosing a new hot water system requires a lot of decision making, but one major factor you need to prioritise is cost. Here are 7 things to consider when calculating the overall cost of a hot water system!

1. System Size and Style

Consider the size and style of system you will require when starting your search for a new hot water system. The size and style of your current system will indicate what you need to look for. Alternatively, if you’re considering a completely different type of system, you may need to account for the cost of minor home renovations to properly and safely house it.

2. System Type

There are different types of systems that come hand in hand with different price tags. The most common are electricity, gas, solar and heat pumps.

  • Electricity – Electric hot water systems hold between 24 and 400 litres of waterand generally cost between $450 and $1,800. The price of tankless electric water heaters rises to between $660 and  $1,309.
  • Gas – gas water heaters tend to have a capacity of between 135 and 360 litres and cost between $850 and $1,500. Tankless gas systems will cost between $750 and $1,600.
  • Solar – eco-friendly, these systems will cost roughly $3,600 for the system.
  • Heat pump – these heaters tend to cost between $3,300 and $4,000.

3. Quality

If you want a better quality system, you’ll find yourself paying more for it. This is to be expected. Speak to a hot water specialist about your options. It’s good to bear in mind that better quality systems do tend to last longer, be more efficient and require less maintenance and repairs, so the cost could even out in the grand scheme of things.

4. Delivery and Installation Costs

All hot water systems come hand in hand with a delivery cost. This will differ depending on the size and weight of the system, as well as the distance it needs to travel to your home. You will also need to factor in the cost of a qualified and experienced plumber whose services will be required to fit and install your new system. 

5. Disposal of Old System

We all know to expect the costs outlined above, but so many of us fail to consider what will happen to our old system once it’s been removed. This service does come hand in hand with a  disposal fee, so make sure to check how much this will cost and factor it into your budget.


6. Rebates and Incentives

The government has the environment and your financial wellbeing at the forefront of its mind, so offers a wide range of rebates and incentives for the installation of new and efficient water heating systems. You should take these into account when calculating the cost of buying and installing your system. The maximum incentive is $1200, so it’s definitely worth looking into!

7. Running Costs

The main cost you’re going to find yourself up against on a regular basis is running costs. This is how much of your monthly budget you’re going to need to dedicate to the ongoing use and operation of your chosen system. Here are the estimated running costs of each system we’ve highlighted, based on the usage of 1 person using 50 litres a day.


Water Heater Type Energy Star Rating Annual Energy Cost 10-Year Greenhouse Gas Emissions
Peak Tariff – Storage N / A $340 8.6
Peak Tariff – Instant N / A $265 6.6
Off Peak Tariff – Storage N / A $290 10.1



Water Heater Type Energy Star Rating Annual Energy Cost 10-Year Greenhouse Gas Emissions
Natural Gas – Storage 5 $250 5.4
Natural Gas – Storage 4 $290 6.2
Natural Gas – Instant 7 $125 2.6
Natural Gas – Instant 6 $135 2.9
LPG – Storage 5 $535 6.2
LPG – Storage 4 $615 7.1
LPG – Instant 7 $250 3.0
LPG – Instant 6 $280 3.3



Water Heater Type Energy Star Rating Annual Energy Cost 10-Year Greenhouse Gas Emissions
Natural gas boosted High Efficiency $50 1.1
Natural gas boosted Standard $60 1.3
Electric boosted – peak tariff High Efficiency $60 1.5
Electric boosted – peak tariff Standard $110 2.7
Electric boosted – off-peak tariff High Efficiency $55 1.7
Electric boosted – off-peak tariff Standard $90 3.1
LPG boosted High Efficiency $65 1.1
LPG boosted Standard $90 1.4


Heat Pump

Water Heater Type Energy Star Rating Annual Energy Cost 10-Year Greenhouse Gas Emissions
Peak tariff High Efficiency $90 2.3
Peak tariff Standard $125 3.1
Off-peak tariff High Efficiency $70 2.3
Off-peak tariff Standard $90 3.1


Hopefully, some of the information above will guide you on your journey to finding the right hot water system for your needs!


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