Water heating accounts for between 15% and 27% of the average household’s energy use in Australia, depending on location, and in many homes it’s the largest single source of greenhouse gas emissions. The system you choose has a direct bearing on how much your home contributes to those emissions year after year.
In most Australian homes, heat pump hot water systems and solar hot water systems tend to have the lowest environmental impact, particularly when paired with solar PV or renewable electricity. That said, the best choice still depends on your roof, your climate, your usage, and what’s already connected.
The type of system you choose is only part of the equation. What’s actually powering it can be just as decisive.
A heat pump drawing from a coal-heavy grid can have a higher emissions profile than an electric storage unit running off solar panels during the day. With a gas storage system, the pilot light is burning fuel around the clock regardless of demand.
Beyond energy source, the factors that shape real-world impact include system efficiency, tank insulation, how much hot water the household uses, climate zone, sizing, and installation quality. None of those shows up on a product label.
The other thing worth understanding is that most of a hot water system’s carbon footprint is in the running, not the making. An Australian lifecycle study found operating energy accounted for between 87% and 99% of total emissions across all system types, so that’s where better choices pay off.
| System type | Typical environmental impact | Best suited to | Main drawback |
| Heat pump hot water | Low to very low | Homes with solar PV or renewable energy | Noise, outdoor space needed |
| Solar hot water systems | Low to very low | Sunny climates with good roof access | Needs gas or electric booster |
| Gas instantaneous | Moderate | Homes already on gas, compact installs | Still a fossil fuel |
| Gas storage systems | Moderate to high | Established gas connections | Standby losses, pilot light waste |
| Electric storage with solar PV | Low | Homes with solar PV and timers | Requires solar to offset emissions |
| Electric storage on grid | High | Budget replacements | Highest emissions on coal grid |
Electric storage water heaters are in roughly 50% of Australian homes. They are simple, affordable to install, and widely available. The problem is that conventional electric water heaters running on grid electricity generate more greenhouse gas emissions than almost any other system type, particularly older units with poor insulation that lose heat from the storage tank around the clock.
That changes when you add solar. Pairing an electric storage system with solar panels and a timer or diverter to heat water during peak generation hours can significantly reduce emissions. Tasmania is a notable exception due to its cleaner hydro-heavy grid. Elsewhere, an electric storage water heater drawing from the grid without solar backing tends to carry a high carbon footprint.
Electric instantaneous water heaters avoid storage heat loss entirely since there is no tank. However, they draw significant power on demand, so the emissions picture still depends heavily on the energy source.
Natural gas produces fewer greenhouse gas emissions than conventional grid electricity in many situations, but it is still a fossil fuel. Gas hot water systems burn it directly, so they are not emissions-free, regardless of efficiency. Gas storage systems add standby heat loss to combustion emissions, with energy wasted to keep a full storage tank hot between uses.
Gas instantaneous systems, also called continuous-flow water heaters, heat water only when you turn on a hot water tap. This eliminates the storage heat-loss problem and reduces energy waste. High-efficiency continuous-flow systems are a better environmental option than older gas storage systems, though they still produce combustion emissions. Gas water heaters connected to natural gas lines are also becoming less future-proof as more homes move toward electrification.
Solar hot water units use rooftop solar panels or evacuated tubes to collect heat energy from the sun and transfer it to water stored in a tank. In suitable climates, a well-sized system can cover up to 90% of a household’s hot water needs, significantly reducing reliance on grid electricity or gas.
But solar hot water systems almost always need a gas or electric booster for winter, overcast periods, and high-demand days. The emissions from booster use can add up in cooler southern regions.
Homes in Queensland, Western Australia, and coastal NSW tend to get the most value from solar hot water. For homes with limited roof space, shading issues, or poor orientation, the performance drop can be significant.
Heat pump water heaters do not generate heat directly. They use a refrigeration cycle to extract heat from the surrounding air and transfer it into the water via a heat exchanger. This process uses far less electricity than resistive heating. According to energy.gov.au, heat pump water heaters use around 30% as much energy as conventional electric water heaters, which translates directly to lower running costs and emissions.
Heat pumps deliver their greatest environmental benefit when powered by solar PV or other renewable energy sources. Running them during daylight hours, when solar generation is strongest, using a timer or smart controller, can make heat pump hot water systems nearly emissions-free in operation.
Heat pumps are worth considering for most homes, but there are a few things to factor in before buying:
Replacing your existing hot water system with a heat pump or solar system may qualify for small-scale technology certificates (STCs) under the Australian Government’s renewable energy scheme, reducing the upfront purchase cost. State-based rebates and energy saver incentives may also apply, depending on your location. These are worth checking before committing to a system, as they can meaningfully reduce the cost of lower-emission upgrades.
The lowest-emission system on paper is not always the right one for a particular property. A few questions worth working through before you decide:
| Your situation | Worth considering |
| Have solar PV or planning to install it | Heat pump hot water |
| Good roof access, sunny climate, north-facing | Solar hot water |
| Gas already connected, full electric upgrade not practical | High-efficiency continuous flow gas |
| Limited budget, can pair with solar PV | Electric storage with solar PV |
| Emergency replacement, no solar, no gas | Electric storage |
Choosing the right system comes down to more than just picking the most efficient option on the list. Roof space, gas connections, household size, local climate and whether you already have solar PV all play a role, and getting the sizing and installation right matters just as much as the system itself.
Same Day Hot Water Service can help you work through the options for your home, whether you’re replacing a failed unit or planning an upgrade. Contact our team for practical advice on energy-efficient hot water systems available for your location.
In most Australian homes, heat pump hot water systems and solar hot water systems have the lowest environmental impact, particularly when heat pumps are powered by solar PV or renewable electricity.
Gas hot water systems burn fossil fuel, so they produce emissions during use. High-efficiency gas instantaneous systems produce less waste than older gas storage systems, but they are not emissions-free.
An electric storage water heater running on grid electricity tends to carry a high carbon footprint. Solar panels and a timer can significantly reduce that impact by shifting heating to times when solar generation covers the load.
Yes. Upgrading an older electric or gas storage system to a heat pump or solar hot water system is one of the more effective household steps for reducing energy use and emissions over the system’s lifetime.