The types side by side
| How it heats | Tank? | Rules and discounts that touch it | |
|---|---|---|---|
| Gas storage | Burns gas to heat water held in a tank | Yes | Victoria's end-of-life rule for existing homes from 1 March 2027 |
| Gas continuous flow | Burns gas to heat water as it passes through | No | Victoria's rule too: it's worded as gas hot water, tank or not |
| Electric storage | An element heats water in a tank | Yes | In NSW, an Energy Savings Scheme discount when you swap it for a heat pump |
| Heat pump | An air source heat pump heats water in a tank | Yes | STCs for models under 425 L; Solar Homes in Victoria; the NSW scheme; ACT loans |
| Solar | The sun heats the water; some have an electric booster | Yes | STCs for models under 700 L; Solar Homes in Victoria; ACT loans for evacuated tube systems |
Gas: what has changed
Victoria. From 1 March 2027, an existing home's gas hot water system must be replaced with an efficient electric alternative once it reaches end of life. Until then it can be repaired. We haven't found the regulation itself, so check current rules. The Victorian Government has also said that from 1 January 2027, all new homes will be built all electric. See Victoria's 2027 rule.
ACT. New gas network connections have been blocked since 8 December 2023. Existing connections aren't affected, and no ACT rule yet forces gas appliances out.
Elsewhere. Our research found no other state with an end-of-life rule for gas hot water. Rules change, so ask your plumber what applies when you replace.
Electric storage
An electric storage unit heats water in a tank with an element. In NSW, replacing one with a heat pump can attract an Energy Savings Scheme discount. NSW calls its published amounts indicative only: see the NSW page for what they are and why they may be out of date.
Heat pumps
A heat pump is an electric water heater that uses an air source heat pump to heat water in a tank. Most of the discounts on our rebates page are aimed at heat pumps and solar.
Queensland adds a licensing step for heat pumps and solar: the hot water installer needs a QBCC solar and heat pump endorsement. A heat pump also needs a spot where its noise won't bother anyone: see noise and common problems.
Solar
Solar water heaters use the sun, and some are boosted by electricity. Consumer Affairs Victoria names an electric-boosted solar water heater as one of two options for a Victorian rental whose system fails for good. The ACT loan scheme covers evacuated tube solar hot water systems.
South Australia requires a temperature control device on all new solar water installations, including solar water heater replacements.
What rules options in or out for your house
- Your state's rules, such as Victoria's gas rule or the ACT's block on new gas connections.
- Space for a tank, and for a heat pump unit or roof collectors.
- What energy you have: mains gas, bottled gas or electricity only.
- How many people use hot water at once. See what size you need.
- Whether you rent or own. Victorian rentals have their own standard from 1 March 2027.
- Which discounts you qualify for, and whether they're in the quote.
Questions to ask the plumber
- Which types suit this house, and which would you rule out?
- What would each option cost to run for our household, and how did you work that out?
- Which discounts or rebates apply to the model you're quoting, and are they already in the price?
- Is that model on the STC register?
- Does a replacement here need a tempering valve?
What we would do
Rule options out before you compare them. Your state's rules, the space you have and whether you own the home often narrow it to two choices. Then ask one plumber who specialises in hot water to price both for your house, with running costs explained and every discount on its own line. That beats comparing brochure claims, which are written to sell.