Energy for water heating is one of the biggest line items on Australian power and gas bills. For many homes and businesses, hot water can account for 20 to 30 per cent of total energy use. With electricity and gas prices changing regularly, choosing the right hot water technology and energy plan can make a meaningful difference to your budget.
This page explains the main types of hot water systems in Australia, how they affect your ongoing running costs, and what to consider when reviewing tariffs and energy retailers. It also outlines how Zembl can help you compare energy plans that support cheaper hot water, whether you use electricity, gas, or solar.
How hot water systems affect your energy costs
Hot water systems turn energy into stored hot water. The way they do this, and the fuel they use, determines how much you pay each billing cycle.
Common types of hot water systems in Australia
Across Australian households and small businesses, the most common technologies are:
- Electric storage systems: These use an electric element to heat water in an insulated tank. They are often cheaper to install but can be more expensive to run, especially on standard anytime tariffs.
- Gas storage systems: A gas burner heats water in a tank. These typically have faster recovery times than older electric models. Running costs depend heavily on gas tariffs and daily supply charges.
- Gas continuous flow (instantaneous) systems: Water is heated on demand rather than stored. These can be efficient for households or businesses with variable hot water usage, since you are not constantly maintaining a hot tank.
- Heat pump hot water systems: These work like a reverse cycle air conditioner. They extract heat from the surrounding air and use it to warm the water. Although they run on electricity, they usually use much less energy than a traditional electric storage system.
- Solar hot water systems: Roof mounted solar collectors pre‑heat or fully heat the water, usually backed up by an electric or gas booster. These can significantly reduce the grid energy required for hot water.
Each technology has different upfront costs and efficiencies. The wrong match between your system and your tariff structure can leave you paying more than you need to.
Key cost drivers for hot water
When you receive your electricity or gas bill, hot water running costs are shaped by:
- Tariff type: For electricity, this might be a flat rate, time of use, or controlled load tariff dedicated to hot water. For gas, you will usually see a combination of usage charges and a daily supply fee.
- System efficiency: Older electric storage systems can have high standby losses. Modern heat pumps and high efficiency gas units typically use less energy to deliver the same amount of hot water.
- Hot water demand: Larger families or busy commercial sites such as hospitality venues will naturally use more energy for hot water than smaller households or offices.
- Location and climate: In cooler regions, heat pumps may work harder and solar systems may require more boosting in winter.
Understanding how these factors interact is the first step to reducing hot water costs without compromising comfort or service.
Australian regulations and initiatives affecting hot water
Hot water systems in Australia are subject to a mix of national and state based rules. These standards are designed to protect consumers, improve safety, and encourage more efficient technologies.
Minimum performance standards
Australia applies minimum energy performance standards and labelling to many water heaters. When you purchase a new system, certificates and product information usually indicate compliance with Australian standards and help you compare efficiency between models.
For electric systems, water temperature settings must comply with plumbing and health regulations that aim to reduce the risk of bacteria growth. Installers also need to manage the risk of scalding by using appropriate tempering valves on outlets.
Building and plumbing codes
The National Construction Code and supporting plumbing standards set out when particular types of water heaters can be used in new homes or major renovations. In some jurisdictions, traditional electric resistance storage heaters are being phased down or restricted in new builds in favour of more efficient alternatives such as solar or heat pumps.
These requirements can vary by state and territory, so it is important to check local rules before replacing a system or planning a new development.
State based incentives and schemes
Several Australian states and territories support the installation of high efficiency water heaters through energy saving schemes. While the details change over time, common features include:
- Rebates or discounts for eligible heat pump or solar hot water systems
- Additional incentives when replacing inefficient electric storage units
- Approved installer lists and product registers
Because these programs are reviewed regularly, it is wise to confirm current eligibility and rebate levels with local authorities or accredited installers before committing to an upgrade.
Choosing a hot water system for your home or business
Selecting the right system involves weighing upfront costs against long term energy savings. The right choice for a family home might differ from the ideal solution for a small business or a large commercial site.
Considerations for households
When reviewing options for a home, you might consider:
- The age and condition of your current system
- Available space for a tank, outdoor units, or roof collectors
- Whether your property has existing gas, three phase power, or good solar exposure
- How many people live in the home and when they use hot water
- Whether you already have rooftop solar and want to maximise self consumption
In many cases, replacing an old electric storage system with a modern heat pump or solar hot water unit can reduce electricity use for water heating by a significant margin. However, the best solution always depends on the property and usage pattern.
Considerations for small and medium businesses
For small businesses, hot water is often essential but not always front of mind. Hospitality venues, cafes, hairdressers, health practices, and accommodation providers typically rely on consistent hot water.
Key questions for business owners include:
- Does the current system ever run out at busy times
- Are energy bills increasing faster than expected
- Is the system approaching the end of its expected life
- Could more efficient equipment help meet sustainability goals
An energy review that looks at both your equipment and your electricity or gas tariffs can reveal whether an upgrade could be cost effective. Even if you are not ready to replace equipment, changing to a more suitable plan can still lower overall energy spend.
Considerations for larger commercial and industrial users
Larger sites such as manufacturing facilities, hospitals, aged care homes, and education campuses may have complex hot water infrastructure, including multiple boilers, centralised plant rooms, and circulation loops.
For these users, reviewing hot water efficiency forms part of broader energy management. Strategies might include:
- Heat recovery from industrial processes
- Upgrading to condensing boilers or commercial heat pumps
- Optimising controls and insulation to reduce losses
Because these projects interact with broader electricity and gas procurement decisions, many organisations choose to work with specialist advisers.
The role of your electricity and gas tariffs
No matter which technology you use, the tariff structure on your bill has a direct impact on hot water running costs.
Electricity tariffs for hot water
Many Australian homes and businesses can access controlled load tariffs for electric water heating. Under this arrangement, the hot water system is metered separately and supplied at a lower per kWh rate, in exchange for the network controlling when the system runs.
If your property has a controlled load option but your system is currently connected to a standard anytime tariff, you may be paying more than necessary. On the other hand, some newer technologies such as heat pumps benefit from running during daylight hours when rooftop solar is generating. In that case, a time of use or flexible plan that aligns consumption with solar output may be preferable.
Gas tariffs and hot water
For customers using gas storage or instantaneous systems, it is important to understand both usage charges and daily supply fees. If hot water is your only gas load, the fixed component of your bill can make gas less attractive than an efficient electric option, especially in smaller dwellings.
Comparing offers from multiple retailers can clarify whether your current contract still makes sense or whether an alternative plan would better match your usage pattern.
How Zembl helps you compare energy plans
Reviewing hot water options can quickly lead to broader questions about electricity and gas plans. Many customers want to know whether changing energy retailers could support cheaper or greener hot water over the long term.
Zembl focuses on simplifying this comparison process so that households, small businesses, and large organisations can make informed decisions without having to become energy experts themselves.
Free energy bill comparisons
If you are a residential customer or operate a small business, you can request a no obligation energy bill comparison through Zembl. Our team will:
- Review your recent bill and usage information
- Identify your current tariff and any controlled load arrangements
- Compare this against offers available from our panel of Australian retailers
- Highlight options that could support lower hot water running costs
Where we find a suitable plan and you decide to proceed, we help handle the process of switching retailers so you can focus on day to day priorities.
Support for commercial and industrial organisations
Larger users with more complex hot water and energy needs can access specialist assistance through Zembl. Our energy advisers work with commercial and industrial customers to:
- Review multi site portfolios where hot water contributes significantly to load
- Test whether current network tariffs and contract structures are appropriate
- Explore the timing of equipment upgrades in conjunction with contract renewals
- Incorporate sustainability objectives into procurement decisions
This support helps organisations avoid bill shock, manage risk in volatile markets, and identify practical opportunities to improve efficiency.
Getting started with an energy review
Taking action on hot water costs does not need to be complicated. A structured review typically follows three simple steps.
1. Gather your recent bills
Locate a recent electricity or gas bill, ideally from the past three months. This will contain key information such as your tariff type, usage history, and meter details. If you operate multiple sites, gather bills for each location so that usage patterns can be compared.
2. Request a comparison with Zembl
Visit Zembl's business energy page and submit your contact details along with copies of your latest bills. Our Energy Experts will assess your information and outline whether there are opportunities to move to a more competitive plan with one of our retailer partners.
If you manage a larger portfolio or have complex hot water installations, you can also contact our specialist team to discuss a tailored procurement review.
3. Decide on next steps
Once you understand how your current plan compares to alternatives, you can decide whether to:
- Switch energy retailers
- Change tariff structures or move hot water onto a controlled load
- Investigate equipment upgrades such as heat pumps or solar hot water
You stay in control of the final decision, and our team is available to explain any points that are unclear.
Why work with Zembl
Energy reviews and procurement can be time consuming when handled internally. Zembl exists to take that complexity off your plate while still keeping you fully informed.
With over 15 years of experience and tens of thousands of customers across Australia, our team combines market knowledge with practical tools to help you access competitive electricity and gas plans. We work with a panel of leading retailers and adhere to industry codes of conduct that promote transparency and fair treatment.
Whether you are a homeowner exploring more efficient hot water options or a business looking to control rising energy costs, an obligation free review can be a practical starting point.
To learn more about how Zembl supports Australian businesses, visit our business energy services and about us pages, or request your free energy review today.
.svg)
.svg)
