This Canstar Blue guide gives an overview of different hot water systems and what they could cost to run each year. We also investigate how customers can save on hot water bills.
According to the Federal government’s energy website, 15% to 30% of Australian household energy usage is from water heating, depending on location. Hot water systems not only use too much electricity, they are also the largest source of greenhouse gas emissions (up to 25%) from an average Australian home. And while these figures may seem daunting, Canstar Blue has listed some ideas for reducing hot water costs without ditching hot showers.
On this page:
Types of hot water systems in Australia
There are two basic models of water heaters available for domestic use – storage and instantaneous (or continuous) flow systems.
- Storage-based – water stored in a tank and kept hot, ready at all times. Off-peak systems only heat during off-peak times.
- Instantaneous – water is heated only as required and not stored in a tank.
Storage-based systems are typically cheaper to purchase upfront, but consumers may find more long-term savings with an instantaneous system.
Hot water systems are usually powered by one of these methods:
- Electricity
- Natural gas
- LPG
- Solar
- Heat pump
A storage-based hot water system can use any one of the above methods. However, an instantaneous system is typically powered using electricity, natural gas or LPG.
What is the average cost of hot water?
The average cost of heating water will vary greatly depending on a number of factors.
- The number of people in a household
- What hot water is used for
- Electricity tariff
- The insulation of connection pipes
- The type of hot water system.
Prior to making any decisions, invest some time into understanding both models of hot water systems and what the average annual electricity costs could be for your circumstances and location.
For example, Canstar Blue’s calculations show that annual energy costs for gas hot water systems can vary from $611 to $1,108 on average, depending on the type of gas hot water system installed. Individual costs may fluctuate significantly depending on location and energy usage.
Hot water systems powered by other fuel types, such as solar or electricity, may appear more cost efficient than gas hot water. According to the Victorian government’s sustainability website, annual energy costs on average can differ from $170 to $1,105 for solar, electric or heat pump hot water. That average is depending on the hot water system’s energy rating and the applicable electricity tariff for a four-person household.
How to reduce your hot water bill
Unfortunately, this isn’t as simple as turning off the hot water system when it’s not being used. For those readers wondering why their hot water system is using too much electricity, Canstar Blue has compiled the following five things to try to reduce your hot water bill.
1. Use less hot water
Easier said than done, but those who can avoid using unnecessary hot water will reduce hot water costs.
Some quick ways to cut down on usage could be:
- Run washing machine with cold water
- Avoid using the hot water boost function on your smart meter
- Cut back shower time
- Reduce hand-washing dishes
- Run dishwasher on eco or economy setting.
2. Consider your electricity tariff
Understanding electricity tariffs and which one best suits your needs can help avoid expensive peak periods.
- If you own a storage hot water system: A time of use tariff might be a cheaper option, assuming your system is set to refill and heat during off-peak and shoulder periods.
- If you own an instantaneous system: A time of use tariff may be the more expensive option if you shower in the morning and at night. Flat rates or block flat rate tariffs might be the better option.
Another option for those with electric hot water systems is to have it put on a ‘controlled load’. This refers to a tariff where hot water is metered and charged at a lower rate to the rest of a home’s energy usage. Controlled loads won’t be available in all areas or with certain models of water heaters, but it can be a great choice for those with access to it.
Single rate electricity plans in Australia
Here are some of the cheapest published deals from the retailers on our database that include a link to the retailer’s website for further details. These are products from referral partners†. These costs are based on the Ausgrid network in Sydney but prices may vary depending on your circumstances. This comparison assumes general energy usage of 3911kWh/year for a residential customer on a single rate tariff. Please use our comparison tool for a specific comparison in your area. Our database may not cover all deals in your area. As always, check all details of any plan directly with the retailer before making a purchase decision.
Here are some of the cheapest published deals from the retailers on our database that include a link to the retailer’s website for further details. These are products from referral partners†. These costs are based on the Citipower network in Melbourne but prices may vary depending on your circumstances. This comparison assumes general energy usage of 4000kWh/year for a residential customer on a single rate tariff. Please use our comparison tool for a specific comparison in your area. Our database may not cover all deals in your area. As always, check all details of any plan directly with the retailer before making a purchase decision.
Here are some of the cheapest published deals from the retailers on our database that include a link to the retailer’s website for further details. These are products from referral partners†. These costs are based on the Energex network in Brisbane but prices may vary depending on your circumstances. This comparison assumes general energy usage of 4613kWh/year for a residential customer on a single rate tariff. Please use our comparison tool for a specific comparison in your area. Our database may not cover all deals in your area. As always, check all details of any plan directly with the retailer before making a purchase decision.
Here are some of the cheapest published deals from the retailers on our database that include a link to the retailer’s website for further details. These are products from referral partners†. These costs are based on the SA Power network in Adelaide but prices may vary depending on your circumstances. This comparison assumes general energy usage of 4011kWh/year for a residential customer on a single rate tariff. Please use our comparison tool for a specific comparison in your area. Our database may not cover all deals in your area. As always, check all details of any plan directly with the retailer before making a purchase decision.
Gas plans in Australia
Here are some of the cheapest gas deals on our database for QLD. These estimated annual costs are based on the Australian Gas Network in Brisbane and yearly gas usage of 6,842MJ, but prices will vary depending on your circumstances. We show one product per retailer, listed in order of lowest estimated cost. These are products from referral partners†. Our database may not cover all deals in your area, and please check retailer websites for up to date information.
Here are some of the cheapest gas deals on our database for NSW. These estimated annual costs are based on the Jemena Gas Network in Sydney and yearly gas usage of 18,542MJ, but prices will vary depending on your own circumstances. We show one product per retailer, listed in order of lowest estimated cost. These are products from referral partners†. Our database may not cover all deals in your area, and please check retailer websites for up to date information.
Here are some of the cheapest gas deals on our database for VIC. These estimated annual costs are based on the Australian Gas Network in Melbourne and yearly gas usage of 29,830MJ, but prices will vary depending on your circumstances. We show one product per retailer, listed in order of lowest estimated cost. These are products from referral partners†. Our database may not cover all deals in your area, and please check retailer websites for up to date information.
Here are some of the cheapest gas deals on our database for SA. These estimated annual costs are based on the Australian Gas Network in Adelaide and yearly gas usage of 11,875MJ, but prices will vary depending on your circumstances. We show one product per retailer, listed in order of lowest estimated cost. These are products from referral partners†. Our database may not cover all deals in your area, and please check retailer websites for up to date information.
3. Insulate the hot water system pipes and heater
Insulating the pipes running off the hot water system will assist in keeping the water heated as it flows into the house. Insulation on hot water systems can be done as an inexpensive DIY, otherwise contact a handyman for assistance. For more information on insulating your hot water system pipes, check out energy.gov’s guide.
4. Keep your hot water system well maintained
Hot water systems might be sturdy, but they still need maintenance. For example, inside the hot water tank of a storage model sits a sacrificial anode (which attracts rust inducing minerals). If the sacrificial anode is not replaced, the hot water system will unknowingly rust from the inside. At first, your hot water system will have to consume more energy to produce the same amount of hot water, but left too long and your hot water system may blow out completely. This task requires a qualified technician, but you should only have to get it checked once every five years.
5. Ensure you have the right-sized system
A storage hot water system that frequently runs out of hot water may need to be upsized. The more a hot water system has to fill and heat a tank of water, the more energy will be consumed. So be careful when upgrading the size of a hot water tank, as it will take more energy to heat the larger volume of water despite not being used.
Which hot water system is best for reducing your bill?
The hot water system that’s best will depend on a number of factors, there is no ‘one-size-fits-all’ option. If it comes time to buy a new system though, it might be worth considering an energy efficient model. It may end up costing more upfront, but with time, you should be able to reduce your hot water bill.
For those needing more clarity on hot water system brands and models, check out Canstar Blue’s annual hot water system ratings. Everyday Aussies have rated best hot water system brands across a range of categories – from reliability to effectiveness, value for money and overall satisfaction. Just click the link below to find out more.
Image credits: nikkytok/Shutterstock.com
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