Choosing the Best Hot Water System for Your Home – Part One

Deciding on a water heating system is no small task. One way or another, your choice will have a huge impact on your long-term finances. An electric hot water system can make up a whopping one third of your energy bill, yet many households could easily avoid it by using a different method. It’s vital to take your time and learn the facts.

One of the most common mistakes when picking a new hot water system is to rush the decision. If your existing water heating isn’t working, there can be a lot of pressure to get things underway as fast as possible. Do your research and carefully consider the long- and short-term pros and cons. A little extra effort now will pay for itself many times over.

The following guide will walk you through all available options to help you pick the most practical, affordable and energy-efficient water heating system for your needs.

Storage vs Continuous Flow

You have two methods of delivery to pick from, both rather self-explanatory in name and function.

  • Storage hot water systems will, of course, store hot water before use. It has the most potential to be practical for larger households with higher water use.
  • Continuous flow (a.k.a. instant or instantaneous) hot water systems will heat as needed. The major perk is that you will never run out of hot water. In many cases, it’s considered the more economical choice for smaller households with lower water use.

Choosing a Power Supply: Gas, Electric or Solar Hot Water?

The following options are presented in a rough order of preference, starting with the ideal option. However, circumstances will vary wildly from home to home, so be sure to read on for other factors that may affect your decision.


By far the best long-term cost-saver, but also the most expensive up-front. If you’re able to meet the extra AU$1500 – $2000 cost in your initial investment, you’ll find yourself making savings after 5-10 years.

In most cases, a solar hot water system will ensure the majority of your water use is free. On cloudy days, a booster (gas, solid fuel or electric) will kick in to cover you.

This is also the ideal choice for the environmentally conscious, as it is by far the lowest-impact system. Gas-boosted solar will give you the biggest energy savings, and depending on your country, you may even be eligible for substantial government rebates.

The major issues besides expense are space and practicality. You may not have the room or clearance to install solar panels facing the right direction, so as always, prior research and consultation is a must.


If you don’t have the room, roof position, sunny environment or budget for the solar option system, this may be your best bet. It’s ideal for bigger households with greater water demand.

Gas hot water will get its fuel from one of two sources. Chances are you’ll already know which category applies to your household.

  • Natural gas. For those with gas piping straight into their home. The most common and practical method.
  • LPG. Buying individual tanks is comparatively expensive, so this is really only an option for those without easy, reliable access to natural gas or electricity. This can be ideal for properties in certain rural areas, as well as for people who simply don’t plan on using much hot water.

Beyond the fuel itself, both options have the same energy efficiency and low environmental impact. Both can also boost a solar hot water system.


These hot water systems are largely obsolete, with comparatively high expenses and the yearly greenhouse gas emissions of a family car! Here in Australia, legislation has effectively banned these less efficient systems, with a gradual phase-out now in effect.

Heat Pump

Heat pump systems are a far more viable alternative to traditional electrical systems. They draw in the natural heat of the surrounding air, making for a more efficient process. By its very nature, heat pump systems are most useful in hot areas (at least where the above two methods are easily available). Note that this will still require some electricity.

Other Factors

Unfortunately, it’s not quite as simple as balancing budget and energy use. Stay tuned for part two, in which we will discuss the importance of considering:

  • Energy rating
  • Size
  • Distance from taps
  • Budget
  • Space
  • Ease of installation
  • Amount of water used

Your decision could substantially affect your future finances and lifestyle, so once more: it’s vital to make sure you’ve chosen the most practical system for your needs. Consult an expert and do your research before moving forward – five years from now, you’ll be very glad you did.