man enjoying hot water shower

How Much Does It Cost To Install A Hot Water System?

Installing a new hot water system for your home can be a significant investment, with costs varying based on the type and size of the system you choose. That puts a bit more stress on choosing the right type of hot water system for your property.

The type of system, be it a storage tank model or a continuous flow design, has a substantial influence on initial setup expenses. Continuous flow systems, although smaller, often come with higher upfront costs due to their complex technology and efficiency.

Property owners also need to crunch the numbers around energy efficiency, another critical factor influencing the cost of a new hot water system. Energy-efficient models may be more expensive at the outset; however, they can provide considerable savings on energy bills over time.

Before you leap in and buy the first option presented, it’s best to step back and research to find a balance between quality and energy consumption that fits your budget and household needs. Buying the cheapest option might cost a lot more in the long run as quality will determine the longevity and performance of the system, potentially reducing long-term costs associated with maintenance and replacement.

Which System?

The best choice of hot water system depends on multiple factors, including geographic location, availability of resources (like natural gas or sunlight), budget constraints, household size, and environmental considerations.


You can choose between various tank sizes where water is heated and stored until needed. For a typical family of four, a system with a capacity of 125–160 litres works well for a 24/7 electric system and 135–170 litres is commonly adequate for gas. However, if you want to access budget-friendly off-peak electricity rates then a tank of 250–315 litres is better to ensure there’s ample hot water throughout the day.

Tankless options (continuous flow), where water is heated as it flows through the pipes, don’t require a large space and you’ll get hot water wherever you need it, regardless of how much is used. Tankless options are technically more complex so upfront purchase and installation costs will be higher than a tank system but they last much longer (as long as 20 years) while a tank system might need to be replaced after 10-15 years.


There are a wide variety of different system types to choose from: Electric, Gas, Solar and Heat Pump. Each type possesses distinct pros and cons for installation ease, expense of operation, and suitability to local climates.

Electric Systems

Electric hot water systems come in both storage tank and continuous flow sizes. They are cost-effective to purchase and install with prices between $400–$1800. They can be more costly to run, options.


  • Generally cheaper to purchase and install
  • Easy to use and maintain
  • Widely available and suitable for many homes


  • Higher running costs – especially without an off-peak energy rate
  • Higher carbon emissions if the electricity is not sourced from renewable energy
  • Tanks can take up more space

Gas Systems

Natural gas is usually cheaper than electricity, reducing operating costs. Gas also has a faster heating time than electric storage systems. Priced at roughly $900–$2000, gas tanks usually have a shorter expected lifespan than electric systems.


  • Lower running costs
  • Fast heating times
  • Compact systems for small spaces


  • Can be more expensive to purchase and install
  • Not suitable for areas without a natural gas supply
  • Needs more maintenance for efficiency and safety

Solar Water Heater

Solar hot water systems cost very little to run but require a considerable investment upfront, approximately $4000–$8000.


  • Solar energy is free and abundant in Australia
  • Reduces carbon footprint
  • Government rebates for eligible customers


  • More expensive to purchase and install
  • Efficiency drops on cloudy days or in areas with less sunlight
  • Needs space for solar panels in addition to the tank

Heat Pump

Heat pumps use the existing air temperature to create heat. They are a great option in the correct temperate climates, with upfront costs ranging from $2000–$7600.


  • Energy efficiency: Uses ambient air to heat water, which is more energy-efficient than traditional electric systems.
  • Reduced running costs: Lower energy use results in lower electricity bills.
  • Eligible for government rebates: Often eligible for similar incentives as solar systems.


  • Higher initial investment
  • Less efficient in colder climates or during colder times of the year.
  • Can be noisier than other hot water systems

hot water systems


When considering a new hot water system, it is best to research different brands to see which are recognised for their quality, efficiency, and customer satisfaction.

Based on the latest Canstar Blue survey, some of the top-rated brands for hot water systems in Australia include:

Solahart: Renowned for its solar hot water systems, Solahart offer both rooftop and split system solar water heaters and is recognised for its commitment to renewable energy solutions​​.

Rheem: Known for their innovation in the hot water market, Rheem’s Ambiheat heat pump won the Canstar Blue Innovation Excellence Award. They offer a range of efficient and reliable hot water solutions, including heat pumps and gas continuous flow systems​​.

Bosch: A major player in the hot water market, Bosch has been appreciated for their gas continuous flow hot water systems. They are noted for their high energy efficiency and advanced features like Bluetooth connectivity in some models​​.

AquaMAX: Offer both gas and electric storage hot water systems and are notable for stainless steel water heaters, which do not require a sacrificial anode, making them easier to maintain​​.

Chromagen: A comprehensive range of gas hot water systems, heat pumps, and solar hot water systems, known for value for money and overall customer satisfaction.

Delivery Cost And Accessibility

A straightforward delivery to an easily accessible site will generally only incur minimal fees, however, challenging access due to factors like narrow passages, stairs, or a significant distance from the parking area to the installation site may result in additional charges.

Delivery charges vary depending on the supplier and the distance from their facility to the delivery location. Metropolitan areas are usually less expensive than remote or rural locations.

The site layout where the system will be placed determines the ease of installation, affecting the total installation cost.

Prospective buyers should ask suppliers for a detailed quote that includes these factors to be aware of the full financial commitment before they buy.

plumber installing hot water system

Hot Water Installation

The price of installing a hot water system can vary widely based on the type chosen and the complexity of the job. Engaging a licensed plumber is a mandatory step for the fitting and connection of the system. A professional plumber will ensure that the installation complies with local regulations and safety standards, as well as meet insurance and warranty requirements.

Installation Costs

Labour: Hiring a licensed plumber typically ranges from $70 to $150 per hour, while labour for electricians can be slightly higher.

Materials and Fittings: The cost of additional valves, connections, and other materials generally adds $50-$200 to the total bill.

System Type Impact: Choosing a gas, electric, solar, or heat pump system affects the cost due to varying equipment and labour requirements.

Gas and electric systems often require simpler connections but can involve significant layout or design changes. More sophisticated systems like continuous flow or solar may demand more time to set up properly. Heat pump installations may require both plumbing and electrical work, potentially raising costs.

When planning an installation, homeowners should consider obtaining multiple quotes from qualified technicians to compare costs and services.

Disposal Of Old System

Old hot water systems often contain materials that are harmful if released into nature. Mercury, lead, and insulation fibres pose serious threats to public health and wildlife when not disposed of correctly which is why proper disposal sites must be used. In some cases, the old system can be taken away by the installation team for a fee.

Government Rebates And Running Costs

Government rebates can significantly reduce the cost of the purchase and installation of a new hot water system, making an energy-efficient system more accessible. These incentives are offered to encourage the use of environmentally friendly appliances that contribute to lower greenhouse gas emissions.

Replacing an outdated system with a solar-powered model can be costly which is why government rebates exist; to alleviate this financial burden, making them a cost-effective choice in the long run. For example, with a heat pump, a typical rebated system could reach a break-even point within five years.

Table showing results from Canstar Blue average annual energy costs for a three-person home by water heater type.

Water Heater Type Annual Energy Cost
Gas Storage $550
Gas Continuous Flow $400
Electric Storage (off-peak) $750
Solar (gas-boosted) $150
Heat Pump $300


To choose the right hot water system, assess your household size and water usage patterns to know whether a storage tank or a continuous flow system fits your needs better. Along with the size and type, consider energy sources and rebates that are available, and balance upfront costs with long-term energy savings.

Ready to upgrade your hot water system? Explore our services to find the perfect solution for your home. Whether you’re in Sydney, Melbourne, or Adelaide, we have you covered.

Don’t wait any longer to enjoy the benefits of an efficient and reliable hot water system. Contact us today.