Hot and cold water taps being turned on in shower.

Gas Hot Water System Prices & Usage Costs

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In this Canstar Blue guide, we take a look at gas-powered hot water systems, and see what they have to offer you in regards to pricing, usage costs and energy efficiency.

From electric to gas and now even solar, there are several options for homeowners when it comes to water heaters. Arguably one of the most popular forms of hot water systems though is gas-powered. But is this system type necessarily the best for you? Read on as we uncover the benefits, usage costs and standard pricing of gas hot water systems to help you decide.

What is a gas hot water system?

A gas hot water system uses natural gas or LPG to heat water for use within the home. There are three main types of systems that fall under the gas hot water category – storage systems, instantaneous or continuous flow systems and solar hot water heaters with instantaneous gas boosting. Gas hot water systems are the second most popular type of hot water system in Australia, with 39% of Aussies sharing that they had this kind of system in a recent Canstar Blue survey.

How does a gas hot water system work?

Man's hand turning on hot water system.

The way a gas hot water system works will vary depending on the type of system being used. Storage gas hot water systems, for example, use a gas burner to heat water stored within a tank. These systems usually have a continuously burning pilot flame which keeps the water at a set temperature throughout the day, waiting for use as needed.

With an instantaneous or continuous system however, water is only heated as it is used. Unlike a storage system, there are no tanks with an instantaneous or continuous system. Instead, these systems rely on coiled pipes, also known as heat exchangers, to keep the water warm as it moves directly to the relevant tap, after being heated by the gas burner. Because of this, instantaneous gas systems are typically considered to be the more energy and cost-efficient option as they don’t carry the same risk of heat loss as a tank or storage unit does.

As for solar hot water systems with gas boosters, these rely first and foremost on solar energy to heat the water, only using gas as a backup energy source when sunlight is scarce, e.g., rainy or cloudy days.

Best gas hot water systems

Below we have listed some of the best hot water system brands as per our most recent hot water system survey findings and ratings report. This survey is conducted on a yearly basis and only asks customers who have recently purchased a new hot water system. The brands listed below are those who were included in our 2022 recent report and offer a gas hot water system to consumers in Australia:

Gas hot water system prices

The price of gas hot water systems varies between each kind of system; however, you can generally expect a storage gas hot water system to be cheaper to buy upfront than an instantaneous system.

Based on pricing for Dux hot water systems, the best-rated brand in our 2022 Canstar Blue Most Satisfied Customer ratings, across various retailers, customers can expect a gas hot water system to leave them between $850 and $2,500 out of pocket, depending on the system type – instantaneous or storage – size, gas connection, and number of taps or devices their system may need to serve.

Gas hot water system installation costs may come at an additional charge on top of the system purchase price though, however, this will be dependent on the type of job (e.g. new install or replacement) and the system being installed. For more information around gas hot water system installation costs, it is best to get in contact with a licensed installer.

Looking to install a new hot water system in your home? Compare pricing, tips and leading brands in Canstar Blue’s hot water system installation guide.

What are the benefits of a gas hot water system?

There are a few advantages when it comes to installing a gas hot water system, particularly if your home is already connected to the gas mains in your area.

Hot water running from shower head.

  • Energy and cost efficient: Gas-fired systems can typically heat water quicker and more efficiently than an electricity-fired system. They can also heat larger quantities of water in a particular time period, thanks to their higher recovery rate.
  • Easy to install: As long as you have a connection to the gas mains, a gas hot water system is generally pretty quick and easy to install within the home.
  • Some have off-grid capabilities: If you are using a traditional hot water system that is 100% gas-powered, e.g. it does not rely on electricity supply for temperature control, then you may find that in the event of a power outage your household won’t be left without hot water. Please note however, that this is typically only applicable to older system types.

How much does it cost to run a gas hot water system?

The usage costs associated with a gas hot water system will rely on a number of factors from household size, system type and the cost of gas in your distribution area. That being said, instantaneous systems will generally cost less to run than a storage system.

To give you an idea of what you could expect to pay on your energy bill for using a gas hot water system we have collated the annual estimated cost for both instantaneous and storage systems across the country.

Gas Hot Water Annual Cost Estimates

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Type Average Annual Gas Consumption (MJ) National Average Brisbane Sydney Adelaide Perth Melbourne Canberra Hobart
Instantaneous 18,521 $667 $908 $611 $630 $722 $611 $648 $963
Storage 21,309 $767 $1,044 $703 $725 $831 $703 $746 $1,108

Source: – 19/06/2023. Average energy consumption figures based on gas hot water heaters listed in the Commonwealth of Australia E3 Program’s Registration database, which assumes delivering 200L of hot water per day. Annual gas usage cost estimates based on the average annual gas usage rate of 3.6 c/MJ, 3.5 c/MJ in Canberra, 3.3 c/MJ in Sydney, 4.9 c/MJ in Brisbane, 3.9 c/MJ in Perth, 3.4 c/MJ in Adelaide, 3.3 c/MJ in Melbourne and 5.2 c/MJ in Hobart. Average gas usage rate based on summer rates of single-rate plans on Canstar’s database, available for an annual usage of 36,305 MJ.

From this data we can see that it’s households in Hobart that often cop the highest bills for using a gas hot water system, while Sydneysiders and Melbournians come off significantly cheaper.

Worried about how much hot water you are using at home? Compare your bills against the average water bill costs of everyday consumers, with Canstar Blue’s average water billing data report.

Picking the right hot water system for your home will be dependent on a number of factors such as household size, location and energy connections within the home. If you already have a mains gas connection at your home, then you may find some value in connecting a gas hot water system. Larger households may also find some benefit in gas hot water due to these systems’ higher recovery rates.

If you don’t have a gas mains connection though, it may be worth considering whether it’s worth paying the additional costs to install one before making a purchase decision. While a gas hot water system can also be powered by LPG, a new gas connection can cost anywhere between $50 and $100, which is something to keep in mind.

For further reading on hot water systems and which option may be best for your home, be sure to check out our annual hot water systems ratings report. Here’ll you find a number of brands that everyday Aussies have rated as best in the biz, as well as tips for choosing the right system, pricing guides and more.

Best-Rated Hot Water Systems

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Kelseigh Wrigley
Energy Specialist
Kelseigh Wrigley was a content producer at Canstar Blue for three years until 2024, most recently as an Energy Specialist. She holds a Bachelor of Journalism from the Queensland University of Technology.

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