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How to reduce the cost of your hot water bill

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In this Canstar Blue guide we give an overview of different hot water systems and what they could cost you to run each year. We also take look at how you can save on hot water bills.

Water heaters are generally thought to be one of the most significant contributors to household energy usage and expenditure – second only to heating and cooling. In fact, between 15% and 27% of Australian household energy usage is thought to be contributed from water heating, depending on location, according to the Federal Government’s energy website.

While this figure may seem daunting to some, there is no need to immediately resort cold showers in the morning in an effort to reduce your power bills. There are plenty of ways to reduce hot water costs without ditching the joys of a warm, hot shower – that’s what this article is all about. So, keep reading to find out what you could be doing to slash your hot water bills.

Types of hot water systems in Australia

To understand just how much you can expect to pay for hot water, you’ll first need to know your options when it comes to hot water systems in Australia.

There are two basic types of water heaters available for domestic use; storage and instantaneous (continuous) flow systems. Storage systems, as the name suggests, heat hot water and store it for use as needed. An instantaneous flow system however, only heats water as it is needed. Storage 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:

A storage hot water system can use any one of the above power methods. An instantaneous system however, 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 such as; the number of people in a household, what you use hot water for, the type of system, energy tariff and the insulation of connection pipes.

According to Canstar Blue’s calculations, gas hot water can cost households from $667 to $767 on average, annually in energy costs, depending on the type of gas hot water system they have installed. Individual costs may fluctuate significantly depending on location and energy usage.

Systems powered by other fuel types, such as solar or electric, however may appear more cost efficient than gas hot water. According to the Victorian Government’s sustainability website, average annual energy costs can differ from $155 and $795 for solar, electric or heat pump hot water, depending on the energy efficiency rating of the system and the applicable energy tariff for a four-person household.

How can I reduce hot water costs?

Perhaps the reason many of us overlook our water heating costs is because it seems rather difficult to manage – after all, you can’t just switch off the hot water system when you’re not using it. That’s not to say there isn’t still room to save. Below we’ve shared five easy things you can do to save on your hot water bill.

Find ways to use less hot water

Seems an obvious answer but the fact remains – if you’re looking to reduce your hot water bill, it will probably help to reduce your hot water usage. Now this doesn’t mean you have to go cold turkey. Some quick ways to cut down on usage could be:

Ensure you have the right sized system

If you have a storage hot water system that always seem to run out of hot water, then it’s probably time to upsize. Not just because running out of hot water is a tragedy that no one should have to endure, but also because the more your hot water system has to fill and heat a tank of water, the more energy it will consume. With that said, you shouldn’t get a water heater that’s larger than necessary either, as it will take more energy to heat the larger volume of water despite you not even using it.

It might also be worth considering a more energy-efficient model too, if you are the market for a new system. Although, keep in mind, this may cost you more upfront.

Consider if you are on the right electricity tariff

Ensuring you’re not spending more than necessary for hot water requires an understanding of your energy tariff.

  • 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 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 your hot water is metered and charged at a lower rate to the rest of your home 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 if you have access to it.

Cheap 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.

Insulate the pipes and heater

It might also help reduce costs if you insulate the pipes running off your hot water system. This can help to keep the water at maximum heat as it makes its way to you. Most insulation jobs can be done fairly cheap and easy as a DIY, but if in doubt, it may be best to reach out to a handyman for assistance. For more information on insulating your hot water system pipes, check out Energy.gov’s guide.

Keep your system well maintained

Hot water systems might be sturdy, but they still need maintenance. In storage models for example, if the sacrificial anode (which attracts rust inducing minerals) inside the hot water tank is not replaced, the system will 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.

Like many things, the hot water system that’s right for you will depend on a number of factors – there’s no ‘one-size-fits-all’ solution. If it comes time to buy a new system though, it might be worth considering an energy efficient model. It may end up costing you more upfront but hopefully with time, you’ll start to see some noticeable savings on your next hot water bill.

If you’re spoilt for choice when it comes to hot water system brands and models though, be sure to check out our annual ratings of hot water systems. Here we list the brands everyday Aussies have rated best in the biz across a range of categories – from reliability to effectiveness, value for money and overall satisfaction. Just click the link below to find out more.

Best-Rated Hot Water Systems

Kelseigh Wrigley
Energy Specialist
Kelseigh Wrigley covers Australia's retail energy market, growing her industry specific expertise over the last 2 years. She holds a Bachelor of Journalism at the Queensland University of Technology and has contributed her skills to online publications Hunter & Bligh and local radio station 4ZZZ.

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