Your hot water system is probably the last thing you think about until it stops working. Then suddenly it’s the only thing that matters, and you’re standing in a cold shower, trying to decide whether to stick with the same type again or switch to something completely different.
Should you stick with a storage hot water system or make the move to continuous flow? It’s the most common question Same Day Hot Water Service gets asked, and we can tell you the answer is never one-size-fits-all.
Your household size, budget, energy source, and even your local climate all play a part, so it’s worth understanding what each system actually does before you commit either way.
The main difference is how each system heats your water. Storage hot water systems heat water in advance and keep it in an insulated tank, ready for when you need it. Continuous-flow systems (also called instantaneous or tankless hot water systems) only start when you turn on a hot tap. Cold water passes through a heat exchanger, is heated on the spot, and reaches your shower or sink at the set temperature.
| Feature | Storage Hot Water Systems | Continuous Flow (Instant) |
| How it heats | Stores and maintains heated water in a tank | Heats water on demand via a heat exchanger |
| Energy sources | Electric, gas, solar, heat pump | Gas (most common), electric |
| Installed cost | $1,000 – $2,500 | $1,200 – $3,000+ |
| Annual running cost | $400 – $900+ (varies by type/tariff) | $250 – $500 (gas continuous flow) |
| Lifespan | 8 – 12 years | 15 – 20 years |
| Space required | Significant (floor or wall-mounted tank) | Compact wall-mounted small unit |
| Hot water supply | Limited to storage tank capacity | Unlimited (within flow rate) |
A storage tank, anywhere from 25 litres to over 400 litres, holds water that’s kept heated and ready for use. When you turn on a hot tap, heated water flows from the top of the tank while cold water enters at the bottom to be heated next. The system cycles through this process continuously, maintaining stored water at around 60 to 70 degrees Celsius to prevent bacterial growth.
There are four main types of storage hot water systems in Australia, and the energy source is what separates them:
| Storage Type | How It Heats Water | What Stands Out |
| Electric storage | Electric element inside the tank, similar to a kettle | Cheapest to buy and install, found in roughly half of Australian homes |
| Gas storage | Gas burner beneath the storage tank | Faster recovery between uses, lower running costs than electric |
| Solar storage | Rooftop solar collectors with an electric or gas booster | Highest upfront cost, lowest ongoing running costs in sunny areas |
| Heat pump | Draws warmth from surrounding air to heat water in the tank | Uses 60-75% less electricity than conventional electric storage |
Storage hot water systems work well for larger families where everyone needs hot water at the same time. They’re also a solid option if you’re on an off-peak electricity tariff, you’ve already got a storage tank installed and want a simple replacement, or you’re interested in going solar or upgrading to a heat pump.
With these systems, there is no storage tank at all. When you turn on a hot tap, a flow sensor inside the unit detects the water movement and activates the gas burner or electric element.
Cold water flows through a heat exchanger, gets heated instantly, and reaches your tap at the right temperature. The moment you turn the tap off, the system shuts down, so no energy is wasted keeping stored water hot while you’re asleep, at work, or on holiday.
| Continuous Flow Type | How It Works | Worth Knowing |
| Gas continuous flow | Wall-mounted outdoors, connected to natural gas. Brands like Rinnai, Rheem, Bosch, and Dux all make them | Most popular choice in Australia, suits the majority of households |
| Electric instantaneous | Heats water electrically at the point of use | Less common for whole homes. Most properties need electrical upgrades ($1,000 – $3,000 extra), so they’re usually installed as a small unit for a single tap or basin |
Instantaneous systems suit households that prioritise long-term energy and cost savings, as well as homes with limited space for installation, apartments, new builds, and renovations. They’re a strong fit for small to medium-sized households with an adequate natural gas supply and homes with one to three hot water outlets at a time.
| System Type | Installed Cost | Rebates Available? |
| Electric storage | $1,000 – $2,000 | No |
| Gas storage | $1,500 – $2,500 | No |
| Gas continuous flow | $1,200 – $2,100 | No |
| Heat pump | $2,500 – $5,500 | Yes, STC rebates of $400 – $1,300, depending on state |
| Solar hot water | $3,000 – $7,000+ | Yes, government rebates vary by state |
These prices are based on a like-for-like installation, meaning you’re replacing the same type of system with the same type. If you’re switching from one type to another (like going from electric storage to gas continuous flow), there’ll be extra costs for things like new gas lines and plumbing work.
Storage systems lose heat through the tank walls throughout the day. That means the system is using energy to keep the water hot whether you’re home or not. If you’re on an off-peak tariff, the damage is much lower because you’re heating water overnight when rates are lower.
Gas storage costs slightly less to run than electricity, and heat pumps cost the least of all.
No tank means no heat loss sitting around waiting. Gas continuous-flow systems use gas only when you turn on a hot tap, which is why their running costs are consistently among the lowest of any system type.
The warmer your climate, the less your system has to work. In Brisbane or Perth, the water coming into your house is already fairly warm. In Melbourne or Canberra during winter, it’s freezing. That means higher bills, no matter what system you have, but especially for continuous flow, since it starts from scratch every time someone turns on a tap.
| Cost Factor | Electric Storage (off-peak) | Gas Storage | Gas Continuous Flow | Heat Pump |
| Installed cost | ~$1,500 | ~$2,000 | ~$1,600 | ~$4,000 (after rebates) |
| Annual running cost | ~$450 | ~$600 | ~$350 | ~$350 |
| 5-year running total | ~$2,250 | ~$3,000 | ~$1,750 | ~$1,750 |
| 5-year total | ~$3,750 | ~$5,000 | ~$3,350 | ~$5,750 |
| 10-year total | ~$6,000 | ~$8,000 | ~$5,100 | ~$7,500 |
Note: Continuous-flow 10-year figures indicate no replacement is needed, as these units typically last 15 to 20 years. Storage systems may need replacing around the 10 to 12 year mark, which adds another purchase cycle.
A 250-litre storage tank can handle three or four showers in a row. Throw the dishwasher and a hot laundry load in at the same time, and you might run out of hot water. Then you’re waiting 30 minutes to over an hour for it to reheat.
Continuous flow won’t run out because it heats as you go. But there’s a limit to how many hot water outlets it can supply at once. A 26-litre-per-minute unit handles two comfortably, but when you push it to three, the water temperature starts dropping.
If you turn a hot tap off for a moment and then back on, you can get a quick blast of cold water before the unit fires up again. Not a big deal, but it surprises people who are used to storage.
Storage works fine with any water pressure. Continuous flow needs decent mains pressure to activate, so homes with lower pressure might have trouble getting hot water to taps further from the unit. Temperature is generally steady with continuous flow, but if someone flushes a toilet while you’re in the shower, you might notice a brief change.
Continuous flow wins here easily. The unit sits on an exterior wall and takes up very little space. A storage tank needs floor space, a concrete slab, or a solid rooftop spot. If space is tight, continuous flow is the obvious choice.
| Storage Hot Water Systems | Continuous Flow (Instant) Hot Water Systems | |
| Advantages | Lower upfront cost, especially electric models | Unlimited hot water, no running out mid-shower |
| Works with any water pressure, including lower pressure | No standby heat loss, lower energy bills | |
| Simple technology, cheaper repairs | Compact wall-mounted unit, takes up less space | |
| Off-peak electricity makes running costs competitive | Lasts 15 to 20 years | |
| Handles heavy simultaneous demand well | Precise water temperature control | |
| Compatible with solar panels and heat pumps | Lower long-term running costs | |
| Disadvantages | Standby heat loss costs you money even when nobody uses hot water | Higher upfront cost than basic electric storage |
| Shorter lifespan of 8 to 12 years | Flow rate limits how many hot water outlets can run at once | |
| Takes up significant space | Cold water sandwich when taps turn on and off quickly | |
| High running costs on standard electricity tariffs | Homes without gas need extra infrastructure work | |
| Larger tanks may need structural support | Repairs cost more when they’re needed |
For a deeper look at how to match the right system to your home, check out our guide to choosing a hot water system.
They use a storage tank but run on a fraction of the electricity. Government rebates reduce the upfront cost, and when paired with rooftop solar panels, they make for one of the most environmentally friendly hot water systems available in Australia.
Both storage and continuous flow hot water systems have genuine strengths, and the right choice depends on your specific household situation. If you’re weighing up your options or want a recommendation tailored to your home, the team at Same Day Hot Water Service can help.
With experience installing every type of hot water system across Sydney, Melbourne, Brisbane, Perth, Newcastle, Central Coast, Wollongong, Sunshine Coast, and Canberra, we’ll match you with the right system at the right price.
Call us for a quote or browse our full range of continuous-flow and storage hot water systems online.
Neither is universally better. Continuous flow suits households that want unlimited hot water and lower running costs over the long term. Storage suits homes on off-peak tariffs, with high simultaneous demand, or tighter upfront budgets.
Most experienced plumbers regularly recommend gas continuous-flow systems. The hesitation usually involves electric instantaneous systems, which require significant and costly electrical upgrades that add complexity to the installation.
In most cases, yes. Continuous gas flow eliminates standby heat loss, saving households $100 to $300 per year on gas bills compared with gas storage hot water systems.
Continuous flow systems generally last 15 to 20 years. Storage tank water heaters typically last 8 to 12 years, depending on water quality and maintenance.
Yes. Switching from gas storage to continuous gas flow is relatively straightforward. Switching from electric storage to gas continuous-flow requires more work, including new gas piping, which increases installation costs. Same Day Hot Water Service can assess your property and provide an accurate quote.
Heat pump systems powered by renewable electricity are the most environmentally friendly option. Gas continuous flow produces fewer emissions than electric storage on standard tariffs due to lower overall energy use. Solar hot water systems are also excellent for reducing your carbon footprint.
Most modern continuous-flow gas units use electronic ignition and require a small amount of power to operate so that they won’t function during a blackout. Older models with a standing pilot light can still work without electricity.
A 26-litre-per-minute continuous-flow gas unit (such as a Rinnai B26, Rheem Metro 26, or Dux Condensing 26) is the standard recommendation. That capacity comfortably handles two simultaneous hot water outlets, which covers typical demand in a four-person household.