Hot water systems

Key points

  • Over a quarter of the average household’s energy is used to heat water for the bathroom, kitchen and laundry. In some homes, it may be much more.
  • Hot water systems may use gas, electricity, or the sun as an energy source, and many different systems are available.
  • You can save significant energy and money by choosing an efficient model that suits your household size and climate.
  • Heat pump systems and high-performance solar hot water systems cost more to buy than other options, but are cheap to run and low in greenhouse gas emissions. Incentives may be available to lower the purchase cost.
  • The rooftop collectors required for solar hot water systems must be carefully positioned to maximise solar access.
  • Heat pumps do not require rooftop collectors, making them ideal in situations where solar access is poor. If they use electricity from a solar photovoltaic system (or GreenPower), they can be virtually free of greenhouse gas emissions.
  • You can also save energy and money by reducing how much hot water you use. For example, choose low-flow showerheads and water-efficient appliances, take shorter showers and use eco settings on appliances.

Understanding hot water systems

Water heating is a major source of household energy use in Australia, after heating and cooling and appliances: 23% of the energy used in an average Australian home is used to heat water, in some homes this is much greater (Energy Consult, 2022). More than half of hot water use is in the bathroom, a third in the laundry and the rest is used in the kitchen.

You can save money and reduce greenhouse gas emissions by installing the most appropriate and efficient water heater for your household. You can also save money and energy simply by reducing hot water use; for example:

  • installing water-efficient showerheads and taps
  • using mixer taps in the cold water position when hot water is not required
  • taking shorter showers
  • choosing water-efficient appliances
  • using eco settings for clothes and dish washing.

A close up image of a low-flow showerhead. The water is turned on and is flowing through it.

Water-efficient showerheads save water and energy

Photo: Getty Images


Choosing a hot water system that minimises greenhouse gas emissions

Heat pump systems are generally one of the lowest emitters of greenhouse gas emissions and one of the cheapest to run. They use only around a third of the energy used by electric storage systems. They are an ideal choice when solar access is poor.

If you have roof space with good solar access, high-performance solar hot water systems are low in greenhouse gas emissions, especially in sunny climates with good solar radiation.

Heat pumps that run on electricity from your solar photovoltaic system (or GreenPower from your electricity retailer), can be virtually free of greenhouse gas emissions.

After these options, consider high efficiency instantaneous gas. The best instantaneous gas systems use less energy and generate less emissions than the best gas storage systems. The best choice for your home will depend on a number of factors. For more advice, refer to Choosing and using a hot water system below.

Storage or continuous flow

There are 2 basic types of hot water systems: storage systems and continuous flow (or instantaneous) systems. Both can use one or more energy sources to heat water, including gas (LPG and natural gas), electricity, and solar power.

Storage water heaters

In a storage water heater, water is heated and stored in an insulated tank for use when it is required. Storage tanks may be made of copper, glass (enamel) lined steel, or stainless steel. Copper and glass-lined tanks typically have a sacrificial anode to reduce tank corrosion, which needs to be replaced every few years. Warranties offered for tanks typically range from 5 to 10 years.

These systems can use mains pressure or a gravity feed (constant pressure) tank to move water:

Mains pressure — Hot water is delivered at a similar pressure and flow rate to cold water so more than one outlet can usually be turned on without affecting pressure. The storage tank is usually located at ground level inside or outside the house.

Gravity feed or constant pressure — Hot water is delivered at lower than mains pressure from a tank located in the roof of the house. Pressure depends on the height difference between the tank and the point of use. Gravity feed systems are most common for older properties and properties not connected to mains water.

Storage water heaters are the most popular systems, but heat losses from storage tanks and their associated fittings and pipes can be substantial.

Continuous flow water heaters

Continuous flow or instantaneous systems heat only the water required and do not use a storage tank, so do not suffer the same amount of heat or energy losses as storage systems. They can operate on natural gas, LPG, or electricity. Gas models are available with either electronic ignition or a pilot flame. They can be mounted externally or internally if suitable ventilation is available.

Because continuous flow systems heat the water as it is used, they cannot run out of hot water. Continuous flow water heaters can be fitted with sophisticated temperature controls, including controls that allow the user to set the desired water temperature at the point of use (for example, in the shower). Water is not overheated and hot water does not need to be diluted with cold water to achieve a suitable temperature, thus saving energy and reducing the risk of burns or scalding. However, there are heat-up and cool-down losses associated with using small and frequent amounts of hot water from a continuous flow system.

Heat pumps

Heat pumps use electricity to move heat from one place to another instead of generating heat directly. Energy use for heat pump hot water systems is much less than for electric systems that directly heat the water.

Heat pump water heaters cost more to buy than hot water systems that directly heat the water, but save energy and can reduce energy bills and greenhouse gas emissions.

Small-scale technology certificates (STCs) are available from the Australian Government to assist with the purchase cost of heat pumps. Find out more about STCs on the Clean Energy Regulator website and find out how many STCs you can claim for your product using the online calculator. Additional or energy saver incentives may also be available from your local government - search for ‘heat pump’ at

Unlike solar hot water systems, heat pumps do not need roof-mounted collectors. They also avoid any risk of overheating, or dumping of water in hot weather, as the compressor switches off when the stored water reaches the required temperature. As heat pumps have a fan on the outdoor unit they can produce noise, so consider where the outdoor unit is to be sited to avoid potential impacts on neighbours.

The cost of running a heat pump may increase if it is required to operate its compressor on high cost electricity tariffs, or operate an electric booster. Electricity tariffs differ across the states and territories, and some heat pump water heater models are more suited to operation under restricted hours tariffs.

Because your heat pump uses electricity to drive the pumps, if you have solar PV installed, consider timing your use to maximise the use of the free renewable energy. Smart controllers are also available that can manage this for you if the system does not have an inbuilt timer.

Types of heat pumps

Heat pumps may be air sourced (which is more common) or ground sourced.

Air-sourced heat pumps extract heat from the air to heat water. The pumps operate like a fridge, but in reverse. Ambient air is used to heat a refrigerant, which converts to a gas. The gas is then compressed, expelling heat, which is transferred to the water. The refrigerant is expanded back to a liquid and the cycle repeats.

Air-sourced heat pumps work best in warm, humid climates. In cold climates, the efficiency of a heat pump decreases as the refrigerant is less able to absorb heat. However, some heat pumps are designed to operate efficiently in cold climates and in frequent freezing or cold and dry conditions. Some heat pumps have an electric boost element installed to help boost the water temperature in regions where it is cold or during periods of high hot water use.

Ground-sourced heat pumps (also known as geothermal heat pumps) use heat sourced from a waterbody, shallow trench, or deep bore, instead of the air. Electricity is used to pump water or refrigerant around a loop buried in the ground or immersed in a waterbody. The enclosed water absorbs heat from the surroundings. These pumps usually provide both space heating and water heating for a home. Geothermal heat pumps can produce more than 4 units of heat energy for every unit of electrical energy used. They can work well in multi-residential applications, where plenty of space is available and the high capital costs can be spread over several users.

Heat pump configurations

Air-sourced heat pumps can either be integrated or split.

In an integrated system, the heat pump is fixed to the hot water storage tank, which has similar characteristics to a standard electric hot water system and is connected in the same way. Installation of an integrated system can be straightforward, especially when replacing an existing electric system. It is also a more compact solution if space is limited.

A detailed diagram shows the inner workings of an integrated heat pump water heater. The unit draws warmth from the air through a vent on one side. This air then heats refrigerant (gas) which in turn heats the cold water inside a large tank. The hot water is then pumped throughout the home.

Integrated heat pump water heater with a wrap-around condenser and heat exchanger

Source: Department of Resources, Energy and Tourism

In a split system, the heat pump (evaporator, compressor, fan) unit is placed away from the hot water tank. This can be useful in circumstances where more flexibility is required due to the available space. For example, if there is not enough ventilation space then the tank can be installed inside a cupboard with the evaporator installed outdoors. Split systems are generally capable of higher efficiencies due to their heat exchange size. Integrated systems need heat exchangers that can be fitted on top of the tank and therefore must be smaller.

A diagram demonstrates the two types of heat pump configurations. The first drawing has a tank integrated into the system. In the second drawing of a split system, the water tank sits beside the unit.

Split system configuration system (left) and integrated heat pump configuration (right)

Source: Scott Dwyer


Heat pumps can use various refrigerants in their systems but the majority use hydrofluorocarbons (fluorinated hydrocarbons - HFCs). These refrigerants can have very high global warming potential (GWP), which is a relative measure of how much heat a greenhouse gas traps in the atmosphere. Because many HFCs have high GWP, leakages (through faults, poor installation, equipment failure or illegal disposal) contribute to greenhouse gas emissions. Under Australian law the import of HFCs is being phased down, and lower GWP refrigerants are becoming more common in new equipment. These include new lower GWP HFCs and natural refrigerants such as carbon dioxide.

Solar hot water systems

Most solar hot water systems use solar collectors or panels to absorb energy from the sun. Water is heated by the sun as it passes through the collectors. It then flows into an insulated storage tank for later use.

Depending on your climate, a solar hot water system can provide up to 90% of your hot water. Solar hot water systems do cost more to buy and install than conventional hot water systems but save energy, and reduce bills and greenhouse gas emissions.

Small-scale technology certificates (STCs) are available from the Australian Government to assist with the purchase cost of solar hot water systems. Find out more about STCs on the Clean Energy Regulator website, and find out how many STCs you can claim for your product using the online calculator. Additional state-based rebates or energy saver incentives may also be available - search for ‘solar’ at

There are various system options available, allowing a choice of:

  • collector types
    – flat plate panels or evacuated tube collectors
    – open or closed circuit
  • system configuration
    – passive (thermosiphon)
    – active (pumped)
  • booster options
    – gas (natural or LPG)
    – electric.


Expert advice can help you choose the most cost-effective solar water heater for your needs.

Consider the energy source for boosting (gas or electricity), energy efficiency, energy tariffs, ease of installation and product cost.

A photo shows roof mounted flat plate solar collector panels and an attached hot water tank.

Rooftop thermosiphon solar water heater (integrated system: collector and tank on roof)


Collector types

Solar collectors trap and use heat from the sun to raise the temperature of water. The 2 main types are flat plate and evacuated tube collectors. Flat plate systems are typically less expensive than evacuated tube systems, but are not as efficient.

Both flat plate and evacuated tube collectors can be open- or closed-circuit collectors.

Flat plate solar collectors

Flat plate solar collectors are the most common type of solar collector and comprise:

  • an airtight box with a transparent cover
  • a dark-coloured, metallic absorbing plate containing water pipes
  • insulation to reduce heat loss from the back and sides of the absorber plate.

One disadvantage of flat plate collectors is that they only operate at maximum efficiency when the sun’s rays strike perpendicular to the flat plate. They also suffer some heat loss in cold weather.

Evacuated tube solar collectors

Evacuated tube solar collectors consist of a series of transparent outer glass tubes that allow light rays to pass through with minimal reflection. The curved surface of the tubes allows the sun’s rays to strike perpendicular to the water pipes for a greater part of the day. Each tube contains an inner water pipe coated with a layer that absorbs the sun’s rays. Water runs through the pipe and is thus heated. A vacuum between the outer tube and the water pipe acts as insulation, reducing heat loss.

Evacuated tube systems are more efficient than flat plate systems, particularly in the cooler months and on cloudy days. This makes them a more popular choice for colder climate regions. Evacuated tube systems weigh much less than flat plate systems. Tube systems are susceptible to damage, especially from hail, but individual tubes can be replaced, making long-term maintenance potentially less costly.

A bracket supporting an array of parallel tubes stands at an angle of about 70 degrees to the roof.

Evacuated tube solar collectors are more efficient than flat plate systems (split system: collector on roof, tank on ground)


Open- versus closed-circuit collectors

Collectors may also be open or closed circuit. In an open-circuit system, water flows directly through the solar collectors, into the storage tank and then through pipes into your home. In a closed-circuit system, a fluid other than water flows through the collectors, picks up heat from the sun and transfers this heat to water in the storage tank through a heat exchanger.

Closed-circuit systems are most commonly used for frost protection. A fluid with a lower freezing point than water is used to prevent ice forming in the solar collectors and damaging them as it expands. Choose the fluid carefully as some become ‘gluggy’ and reduce efficiency. Most fluids need to be checked or replaced every 5 years.

Some closed-circuit systems pump hot water through the collectors when temperatures approach freezing. Avoid systems with this feature if frosts are likely, because this action lowers efficiency significantly in cold weather.

Other types of frost protection include:

  • knock valves (mechanical drain down valves), which can be problematic as they often jam open and drain the tank, or fail to operate, causing severe damage
  • electric heating elements, which are vulnerable in the event of power failure and reduce the system’s energy efficiency.

System configuration

Systems can be passive or active. In passive systems, water flows between the collectors and the tank without the need for mechanical devices due to natural convection. As the water heats in the collectors it becomes less dense and rises to the tank above the collectors while cold water replaces it (this is known as a thermosiphon effect). In active systems, water is mechanically pumped between the collectors and the tank.

Passive (or thermosiphon) systems

In passive (or thermosiphon) systems the tank is placed above the solar collectors so that cold water sinks into the collectors where it is warmed by the sun and then rises into the tank. A continuous flow of water through the collectors is created without the need for pumps.

A diagram of a passive (or thermosiphon) system. The tank is placed above the solar collectors so that cold water sinks into the collectors, where it is warmed by the sun, and rises into the tank in a continuous flow.

Passive solar systems create a continuous flow of water through the collectors


Passive systems come in 2 types: close coupled and gravity feed.

In a close-coupled system, the horizontal storage tank is mounted directly above the collector on the roof and supplies heated water at mains pressure. The roof must be strong enough to hold the weight of the tank of water. This arrangement is the most cost effective to install but efficiency is reduced in cool and cold climates by heat loss from the tank. Additional insulation of tanks is desirable in these climates. Alternatively, tanks can be detached and moved inside the roof space, although this increases the cost.

In a gravity fed system, the storage tank is installed in the roof cavity. These systems are cheapest to purchase but household plumbing must be suitable for gravity feeding, including larger diameter pipes between the water heater and taps. A common alternative is to use a closed-circuit gravity feed system to heat mains pressure water using a heat exchanger (refer to Open versus closed-circuit collectors above).

A diagram shows how a flat plate solar close-coupled system works. The system combines the storage tank and the solar panels together. Once installed on a roof, the system takes in cold mains water which flows through pipes into panels heated by the sun. Hot water is circulated back into a cylindrical storage tank so it can be piped back into the home as required.

A flat plate solar, close-coupled system supplies heated water at mains pressure


A diagram shows how an insulated hot water storage tank can be mounted inside the roof cavity. Cold water flows into the unit and through pipes in the solar panels to be heated by the sun, before the hot water is circulated back into the storage tank and into the house.

In a gravity feed system, the storage tank is installed in the roof cavity, still above the collectors


Active (or pumped) systems

In active systems (also known as pump or split systems), solar collectors are installed on the roof and the storage tank is located on the ground or another convenient location. Water (or another fluid) is pumped through the solar collectors using a small electric pump.

Because active systems do not require a roof-mounted tank they have less visual impact, particularly when the solar collectors are mounted flush with the roof. However, active systems are usually more expensive to buy and require more maintenance than passive systems.

Active systems can use more energy than passive systems because extra energy is required for pumping. There are also additional heat losses in the pipes between the tank and solar collectors. However, if renewable energy is used to power the pump and the pipes and tank are well insulated, active systems can reduce greenhouse gas emissions more than passive systems, especially in cooler climates. The vertical alignment of the tank also allows them to store heat more efficiently than a horizontal thermosiphon system.

Careful checking of an active system is required to ensure that it is working as designed. If the pump or sensors fail, it may not be obvious as the booster (gas or electric) continues to heat the water. Turn off the boost in summer to check if the pump is still working as designed. If the water temperature is cold, call the service agent to check the system. Higher energy bills may also indicate a faulty system. If possible, select a product with a warning light that shows when the pump is not working.

Active systems are often used for solar conversions when solar collectors are added to an existing hot water system or when the roof cannot support the weight of a passive system.

A diagram shows flat solar collector cases mounted on the roof connected to a storage tank on the ground next to the wall below the collectors. Cold water enters the bottom of the storage tank and is pumped up to the bottom of the collectors. Heated water flows from the top of the collectors back to the tank which also contains a booster element.

An active system can place the tank conveniently at ground level


Booster systems

To provide hot water on cloudy days or when demand exceeds supply, most solar water heaters come with a gas or electric booster.

Electric boosters use an electric element inside the storage tank to heat water. Gas boosters use a natural gas burner to heat water either in the storage tank or more commonly in a separate unit downstream from the storage tank.

Boosters can be manually operated or automatically controlled by a thermostat that cuts in when tank temperatures fall below desired levels. If boosters are not appropriately designed and operated they can reduce the benefits of having a solar water heater by reducing the solar contribution. Controls such as override switches and timers can also be used to manage boosters and gain maximum benefit from solar contribution.

Solar hot water system storage tanks

Tanks are manufactured from stainless steel, copper, or steel coated with vitreous enamel. Copper tanks are suitable only for low-pressure systems while the other tanks are suitable for mains pressure.

Vitreous enamel tanks are fitted with a ‘sacrificial anode’ that needs to be replaced every few years to protect against corrosion (more frequently where water quality is poor). Other tanks do not require this protection unless noted by the manufacturer.

Outdoor storage tanks can suffer frost damage and significant heat losses in cool climates. In such climates, they should be located indoors whenever possible.


The solar collector is generally located on the roof of your home, and the storage tank can be located on, or inside, the roof, or at ground level.

For optimum performance throughout Australia, a solar collector should face true north. However, the orientation can deviate up to 45° from north without significant loss of efficiency. For maximum efficiency, ensure that the solar collectors are not shaded by trees or nearby buildings for long periods during the day, particularly in winter when the sun is low in the sky.

For best performance, install solar collectors at an angle to the horizontal to maximise the annual amount of sunlight falling on the panels. The recommended angle to the horizontal for installing solar collectors is the same as the angle of latitude at that location. In Australia, the angle varies from 17.5° in Darwin to 53° in Hobart. In some cases, it may be desirable to increase the angle somewhat to improve winter performance and reduce overheating in summer.

In practice, many solar water heaters are installed at the roof pitch angle as this is cheaper. It can also be more aesthetically pleasing when solar collectors are flush with the roof rather than supported by tilt frames. Roof pitch angles in Australia are commonly between 20° and 30° so this approach may reduce performance in winter and increases the risk of summer overheating. In new homes, roof areas can be designed to accommodate a suitable solar collector angle.

A rural house with a wide north-facing frontage has pergolas with fixed louvres to provide shade to full-length windows and glass doors. There are two solar hot water units on the roof.

Solar hot water services work best on a northern aspect with little shade

Photo: Solar Solutions Design and Drafting


Solar hot water systems are required to comply with Section 8 of Australian Standard AS/NZS 3500.4:2003 Plumbing and drainage — heated water services. For more information, see the National Construction Code Volume II, Part 3.12.5.

A complete thermosiphon system full of water can weigh several hundred kilograms. Most roofs can support a storage tank without reinforcement, but check with your builder, designer or engineer before installation.

Be sure to insulate all components, including pipes and valves, to get the best performance from your system. This is particularly important for thermosiphon systems where there is a long distance between the tank and hot water taps. Insulation is critical in cold climates. Make sure the booster control is in an accessible location and has an indicator light you can see from inside to remind you to turn the booster off when not required.

Installation of a solar hot water system is often more complicated than for a traditional system or heat pump, and may incur time delays. In urgent situations, it is possible to install the solar tank and booster unit quickly, which can deliver reasonable hot water supply from just the booster. The solar collector can then be added a few days later. Some suppliers also offer to install a temporary hot water system, which is removed when the solar hot water system is installed.

Operation and maintenance

Set the temperature of your booster thermostat to a minimum of 60°C. A lower setting may allow growth of harmful Legionella bacteria. Make sure you turn the booster off when going on holidays. When you return, ensure that the water is heated to a minimum of 60°C for at least 35 minutes before use. This will kill any bacteria that may have grown. It could take several hours for the water to heat to 60°C.

Follow the manufacturer’s maintenance recommendations. Regularly clean solar panels to remove dust. Flush out solar collectors to remove sludge.

It is a good idea to carry out activities that need hot water early in the day, so that the water left in the tank will be reheated by the sun, ready for use at night.

For some systems, overheating of the water can be a problem in summer – water temperatures in a solar water heater can approach boiling point under the summer sun. This can cause safety problems for users. It can also cause pressure build-up and the system may dump hot water to protect itself, increasing water usage. Options to address this include:

  • fitting a mixing valve to reduce water temperatures at the tap to safe levels
  • fitting heat dissipation devices to the system
  • shading a part of the collector during summer.

Gas hot water systems

Natural gas

Natural gas water heaters generate less greenhouse gas emissions than direct electric water heaters that use non-renewable electricity drawn from the grid. However, as a fossil fuel, gas generates more greenhouse gas emissions than renewable electricity.

Gas storage systems are able to heat the water in the tank more quickly and generally use a smaller tank than a comparable electric storage system. For fire safety reasons, there is no insulation at the bottom of the tank because of the burning gas flame. Insulation around the outer layer can also be minimal. This absence of insulation leads to higher heat losses compared with hot water storage tanks that use other sources of energy.

Instantaneous gas systems heat the water as it is used. This requires high gas flow rates when delivering large amounts of hot water, which may necessitate installation of larger gas pipes and even larger gas meters. Standard units can deliver adequate hot water to only 1 or 2 points at the same time but high-performance gas units can supply several points at once.

Some instantaneous flow gas units operate erratically at low flow rates, especially when the inlet water is relatively warm (for example, in warm climates or when pre-warmed by solar). Their burners cannot turn down low enough to avoid overheating the water, so they shut down for safety reasons. Thus, some units may not work well with water-efficient showerheads or solar preheating. Check with your plumber or other people using the same models.

Liquefied petroleum gas

Liquefied petroleum gas (LPG) systems have similar features to natural gas systems but are typically 2 to 3 times more expensive to run.

Instantaneous types (particularly high power electronic control models) use a much larger gas burner and generally need a larger gas supply pipe. If you already have gas connected to supply a stove or room heater, the supply pipe may have to be replaced with a larger one. So, where possible, decide what you are going to buy before having the gas supply pipe installed. LPG units will generally require 2 × 45kg-capacity gas cylinders to avoid frequent replacement of gas bottles.

Electric hot water systems

Electric hot water systems may be storage or instantaneous, and may also be solar powered.

Electric storage water heaters

Electric water heaters sold in Australia must meet Minimum Energy Performance Standards, set by the Australian Government. Standard electric storage water heaters use a heating element inside the tank to heat the water. 

Unless powered by a solar PV system, electric storage water heaters generate the most greenhouse gas emissions of all water heater types and are more expensive to run than other options. However, this is with the exception of Tasmania (current in 2021) where, due to the high percentage of renewable energy in the grid, these systems produce less carbon dioxide compared with gas alternatives. As the Australian electricity grid decarbonises, the carbon footprint of any water heater type that relies on electricity will improve.

Larger electric storage water heaters are generally connected to off-peak electricity tariffs, where available, and heat water when electricity is at its cheapest (usually overnight or early morning).

Electric storage water heaters can be used with solar PV to reduce energy use: refer to Electric PV powered hot water systems below.


Electric storage water heaters of less than 250L usually use peak electricity and are often the most expensive water heaters to run. However, they may be cost effective for households with low hot water use.

Electric hot water system outside a house

Standard electric storage water heaters use a heating element inside the tank to heat the water

Photo: © Rheem Australia

Under the National Construction Code (NCC), greenhouse gas intensive hot water systems cannot be installed in new buildings in Western Australia and South Australia. The Northern Territory, Queensland and Tasmania have not adopted these NCC provisions, while Victoria requires new homes to have either a solar water heater or a plumbed rainwater tank to be installed. The NSW Building Sustainability Index (BASIX) sets an energy budget for new homes and major renovations. Installation of an electric storage hot water system may require the efficiency of other appliances to be upgraded to keep within the overall energy budget.  

Existing houses in South Australia are no longer able to install 250L or larger greenhouse gas intensive systems, such as electric storage water heaters, in metropolitan locations that have access to reticulated (piped) natural gas.

Electric instantaneous water heaters

Electric instantaneous water heaters have to be connected to the day-rate tariff, so the running costs will probably be higher than a storage system that runs off-peak. However, because there is no tank to lose heat, they are cheaper to run than day-rate storage heaters. They can be significantly more expensive than gas instantaneous, solar, or heat pumps. Modern models have better temperature control than older ones and are now being used more in apartments. These types of electric water heaters should be avoided to minimise energy costs and emissions.

Electric PV powered hot water systems

There are generally 2 different types of configuration where electricity from a solar PV system is used for water heating. These are:

  • electric on a timer or diverter
  • electric direct PV.

If the home is fitted with a solar PV system, then the electric storage water heater may be fitted with a timer so that the heating element comes on during the day, when the PV is most likely to be producing electricity. The electric storage water heater will still use grid electricity to heat water if there isn’t adequate solar energy during the set time. 

Alternatively, a diverter may be fitted that allows the electricity from the PV system to be preferentially directed to the hot water system. The benefit of these types of systems is that instead of exporting the excess electricity back to the grid and receiving a small amount of money from your electricity retailer, you can store the energy produced by your solar PV, offsetting the much higher cost of electricity that you would normally purchase from the grid. Grid electricity is also available to supplement water heating on low solar days.

Choosing and using a hot water system

Considerations when choosing a system

Choosing a hot water system is a decision you may only make a few times in your life. Spending time researching your options will ensure you purchase a system that provides enough hot water, saves you money, and reduces your household’s greenhouse gas emissions.

Many people find themselves having to make this decision only after their existing system has failed, and with little time to conduct thorough research into the available options. If you have an ageing system, it can be worth investing time to look at the options, so you are in a better position to make a choice should you need to make a purchase at short notice.

Select a hot water system that suits your needs, where you live, and your budget. Consider:

  • household size — the size of hot water system you need will depend on the number of people living in your home and your hot water consumption patterns (eg whether you all shower at the same time of day; or run the dishwasher, washing machine, and bath at the same time). Typically, one person uses about 50 litres of hot water per day, but assess your own circumstances before making decisions.
  • cost — both the purchase cost and operating costs of your hot water system should be considered. The energy used by your water heater affects your energy bill for years to come, so consider carefully before buying. An efficient hot water system may also increase the resale value of a home.
  • space available — it may not be possible to install some systems in existing homes due to a lack of space or a difficult layout.
  • existing water heater — some existing hot water systems can be converted to more sustainable types. For example, some standard electric storage systems can be attached to a split system, such as a heat pump or solar hot water unit.
  • available energy sources — your choice may also be limited by available energy sources. Solar access and adequate north facing roof space must be available if a solar hot water system is to be installed. Natural gas is not available in some areas.
  • local climate — sunny locations with good solar radiation allow solar hot water systems to operate most effectively.
  • greenhouse gas emissions — the amount of emissions generated by your hot water system depends on the:
    - greenhouse gas intensity of the energy source (for example, electricity or gas)
    - efficiency of the hot water appliance
    - amount of solar radiation available for a solar hot water system
    - amount of heat available in the ambient air for a heat pump hot water system
    - amount of heat lost by hot water storage tanks, fittings, and pipes to the outside air
    - volume and times of day that hot water is consumed.
  • For multi-residential developments, a large, cost-effective central (or several shared) solar water heater can be effectively combined with instantaneous gas boosters, or with highly insulated small electric storage tanks or instant electric boosters in each unit.

Designing and installing a system

Estimate your hot water needs accurately to ensure your system is not oversized or undersized for your household. If storage system tanks are too small for the number of people in the house, hot water can run out. If the tank is too large, operating costs are excessive, unless the tank (as well as fittings and supply pipes) is well insulated. Carefully consider your hot water needs and match the system to your requirements. A smaller system may provide adequate hot water, especially if combined with water-efficient showerheads and taps, and reduce storage heat losses. Consider installing a high-efficiency continuous flow water heater if your hot water needs are small or intermittent.


About 30% of the energy used to heat water in a storage system is wasted in heat loss from the tank and associated pipework. A higher proportion can be lost by householders with low hot water consumption. This loss can be reduced through careful design and installation.

Keep hot water pipes as short as possible to minimise heat loss. In new or renovated homes, locate wet areas close together with the water heater close to all points of hot water use. If this is not possible, locate it close to the kitchen where small, frequent amounts of hot water are used.

A floor plan of a three bedroom house with kitchen, laundry, toilet and bathroom all located side-by-side. The hot water system is well located outside the laundry

Locate water heater close to wet areas to minimise heat loss from hot water pipes

Source: Sustainable Energy Authority Victoria

Storage systems lose heat through the tank walls. Reduce heat loss from storage hot water systems by wrapping the tank with an insulation blanket. However, such blankets are unsuitable for gas storage systems with pilot lights because the stored water may be overheated (especially in hot weather). Adhere to all safety requirements when wrapping a hot water system in insulation.

Insulate hot water pipes, particularly externally exposed pipes leading from the water heater to the house and the pipe leading to the relief valve (on storage systems). The National Construction Code specifies minimum pipe insulation.

The pipes taking hot water from the water heater or storage tank to the tempering valve (required to limit hot water to 50°C to prevent scalding) should also be well insulated. Be sure to comply with your state or territory government requirements for locating a tempering valve.

All hot water systems must be designed and installed in accordance with Section 8 of Australian Standard AS/NZS 3500.4:2018 Plumbing and drainage – heated water services.

Use appropriate controls for timing your water heating to minimise costs. This can include accessing time periods with lower tariffs, by using solar PV-generated electricity, or responding to price signals where demand response programs are available. Refer to Connected home for more information.


Hot water storage systems for residential buildings must be heated to a minimum temperature of 60°C, to prevent the growth of bacteria that can cause harm to humans, such as Legionella.

However, water at 60°C will cause a burn to skin within 5 seconds. The best way of preventing hot water burns is to reduce the delivery temperature of the hot water to 50°C. This can be done by installing a tempering valve or a thermostatic mixing valve that can be set to deliver hot water at a precise, safe temperature. By law, all new hot water systems are required to have a tempering valve fitted to ensure the water temperature at the tap is 50°C.

The exception to these requirements is early childhood centres, schools, nursing homes, or similar facilities, which have a mandated hot water delivery temperature limit of 45°C.

Length of time it takes for skin to receive a major scald or burn from water at a range of temperatures

Water (°C) Major burn in
49 5 minutes
54 30 seconds
60 less than 5 seconds
63 less than 3 seconds
68 1 second

Saving energy and water

Reducing hot water use is a great way to save on energy bills and reduce your greenhouse gas emissions, regardless of the type of water heater.

Changing your habits

Take shorter showers. Use a shower timer to remind everyone in the household to save water and energy.

If you do not need hot water or need it only for short uses, move the mixer tap to the cold position. Mixer taps that remain in the centre position can increase hot water use as they mix hot and cold water together.

Immediately repair dripping hot water taps and leaking appliances, including the relief valve from your water heater. A relief valve protects storage water heaters by relieving excess pressure in the system; if a bucket placed under the valve fills in a day, it needs replacement.

Using smart products

Showering uses the most hot water in an average household. Installing a 3-star rated showerhead (the most efficient type) can reduce this use by about half. State based rebates or incentives may be available for purchasing water-efficient showerheads - search for ‘shower’ at

If you have a continuous flow water heater, make sure that the water-efficient showerhead is compatible and does not reduce flow excessively. Check with the heater manufacturer.

Some instantaneous gas systems have a volume alarm. This alerts the user when a certain volume of hot water has been delivered, potentially saving energy and water.

Buy washing machines and dishwashers that have a cold or economy cycle option and use these cycles as much as possible. Only use the machines when they are full, or do smaller economy washes or half loads if those settings are available.

Insulate all exposed hot water pipes, and insulate your hot water storage tank if you have one.

Changing your settings

Set the thermostat of your hot water storage system to at least 60°C to prevent the growth of harmful bacteria that can cause harm to humans, such as Legionella. But do not set it any higher, as this will use energy unnecessarily.

Continuous flow hot water systems should be set to no more than 50°C. Any higher temperature means that energy is used unnecessarily.

Turn the hot water system off when going on holidays. However, when you return you will need to ensure that the water is heated and stored above 60°C for at least 35 minutes before use. This will kill any bacteria that may have grown. It could take several hours for the water to heat above 60°C.

References and additional reading

Learn more


Original authors: Chris Riedy, Geoff Milne
Contributing author: Paul Ryan

Updated: Philip Alviano 2013, Scott Dwyer 2020