When it comes to buying a new hot water system, many Aussies are choosing to make the switch to solar. Despite a higher initial cost to buy and install a solar hot water system, the balance between reliability, efficiency and long-term savings makes a solar system a smarter investment than a traditional water heater in most cases.
In this complete guide, we’ll outline why the case for solar is growing by comparing it to electric and gas options, explaining how each system works and the environmental impacts of different systems. We will give you a full rundown of what each type of system costs to buy and run, and explain how government incentives can help ease the financial burden. Lastly, we’ll look at the key factors to consider before you can decide if solar is the right move for you.
If you’re still not sure which system suits your home, simply call the Same Day Hot Water Service team on 1300 721 996 for personalised advice that’s tailored to your budget and your home’s location.
The most common type of water heater in Australian homes is electric hot water storage tank systems. These use an electric heating element to store heated water in an insulated storage tank and deliver it to taps as required. While they are generally the cheapest type of hot water system to purchase, they are not the most energy-efficient option, as they regularly reheat stored water to maintain a constant temperature, even when not in use. Gas storage tank systems work in the same way, but water is heated using a gas burner.
The other main category of traditional water heater is instant or continuous flow gas systems. These don’t use a storage tank. Instead, they heat water on demand as it passes through a heat exchanger, giving a continuous supply of hot water when taps are turned on.
As the price of electricity and gas rises, many homeowners are making the switch to renewable energy to provide them with hot water. Solar hot water systems use energy from the sun to heat water, significantly reducing energy bills and greenhouse gas emissions.
There are a few different types of solar hot water systems. The first are flat plate collectors, which use a heat-absorbing plate inside an insulated box. Sunlight heats the collector plate and heat transfer fluid, while a small pump circulates this heat through the system to warm the water. Evacuated tube systems are the other type. They consist of multiple glass tubes with a vacuum seal, which acts as insulation to reduce heat loss.
Solar systems can either be integrated, where the entire system is mounted on the roof, or split systems, where the collectors are mounted on the roof, and the storage tank is installed at ground level. They can also be fitted with booster systems to deliver hot water when there is a lack of consistent sunlight.
Traditional water heaters that rely on fossil fuels are cheaper to purchase but have ongoing running costs. They are available in a range of sizes to suit household consumption and the cost of their installation depends on location, access and the presence of existing connections. Here’s how much you can expect to pay for the different types of systems:
Solar hot water systems use the sun’s energy to heat water, so they can significantly cut the cost of a household’s energy bills. Hot water typically accounts for up to a third of the average bill. However, solar systems are more expensive to purchase, with the type of solar collectors, tank size and roof complexity determining their initial cost.
The good news for homeowners who are looking to make the switch to solar is that there are a range of government rebates available to help you save money on the cost of installing solar water heaters. Most systems qualify for Small-scale Technology Certificates (STCs), which are created based on the system’s expected emissions reduction and are typically assigned to your installer to deliver an automatic price discount on their purchase and installation. Some states also offer further rebates that help lower costs even more. These programs mean that homeowners can save up to $1,200 on solar systems, so it’s worth making the switch now to reap the benefits.
To get an accurate quote to switch to solar at your property, call Same Day Hot Water Service on 1300 721 996 for a free assessment.
Electric hot water systems are the most expensive to run, especially on standard (peak) electricity tariffs. For a family of 4, average annual running costs range from $800–$1,200, depending on usage and energy prices. Off-peak tariffs can reduce costs, but hot water availability may be limited during high-demand periods. With electricity prices rising by an average of 8–12% per year, long-term costs add up quickly, resulting in a 10-year running cost of approximately $10,000–$15,000.
Gas hot water systems generally offer lower running costs than electric systems. However, gas prices have increased significantly in recent years. A family of 4 can expect to spend around $500–$700 per year. Over 10 years, typical running costs are estimated at $6,000–$8,500.
Solar hot water systems have the lowest ongoing running costs, with annual costs typically ranging from $150–$350 for booster energy. Depending on the climate, system design and household usage, around 50–80% of hot water demand can be supplied by solar energy, with higher performance in sunnier regions. Over 10 years, total running costs are usually around $2,000–$4,000.
The table below compares typical running costs over time.
| System Type | Year 1 | Year 5 | Year 10 | Break-Even Cost (vs Solar) |
| Electric Storage | $1,000 | $5,500 | $12,500 | Solar saves around $4,000–$6,000 by Year 5 |
| Gas (Natural Gas) | $600 | $3,300 | $7,500 | Solar saves around $1,500–$2,500 by Year 5 |
| Solar Hot Water | $250 | $1,400 | $3,500 | Break-even typically reached within 4–7 years, depending on usage, climate and installation cost |
Wondering how well solar would work for your home? Here’s our breakdown of solar hot water system performance in different parts of Australia.
QLD / NT — Tropical & Subtropical – Excellent year-round performance
Solar contribution is typically up to 70–90% due to high sun hours.
NSW Coastal – Very good performance
Solar contribution of around 60–75%, with strong solar gain most of the year.
VIC / TAS — Cooler Climates – Good performance, with quality equipment
Solar contribution is 50–65% when using evacuated tube collectors and good north-facing roofs.
SA / WA — Mediterranean & Arid Regions – Excellent performance
Solar contribution is 65–80%, especially inland and in sunny coastal zones.
Before you make the switch to solar, it’s important to assess your home’s unique characteristics. Homes with insufficient roof space, poor orientation, or shading from trees or neighbouring buildings may not be able to generate enough solar energy to justify a solar system. In apartments and unit blocks, electric or gas is generally the only viable option, and the same applies to many heritage homes that are restricted in roof changes that are visible from the street.
If the environmental benefits are the main driver of your decision to make the move to a more efficient hot water system, here’s the data on the difference choosing solar can make.
| System Type | Annual CO₂ Emissions (tonnes) | 10-Year CO₂ Emissions (tonnes) | 10-Year Emissions Saved vs Solar (tonnes) | Equivalent To Trees Planted over 10 Years | Equivalent To Leaving the Car at Home Over 10 years |
| Electric Hot Water | 2.5 – 3.5 | 25 – 35 | 22 – 30 | 1,000 – 1,400 | 110,000 – 150,000km |
| Gas Hot Water | 1.5 – 2.0 | 15 – 20 | 12 – 17 | 550 – 800 | 60,000 – 85,000km |
| Solar Hot Water (gas or electric booster) | 0.3 – 0.8 | 3 – 8 | — | — | — |
By maximising renewable energy use and reducing your reliance on fossil fuels, not only can you lower your electricity and gas bills, but you can also help future-proof your home in line with evolving energy policies and practices.
Solar hot water services are cleaner, smarter systems that work seamlessly with rooftop solar panels, allowing homes to harness the sun’s energy for both electricity and water, further reducing the reliance on electricity or gas to run boosters.
Now you understand that while their initial cost can be a little higher than a traditional system, solar-powered hot water can lead to significant energy savings over time. But how do they stack up when it comes to lifespan and maintenance requirements?
Solar hot water systems are an attractive selling point for homes as more Australians see the value in reducing ongoing energy costs. As well, many more homebuyers are looking for homes that embrace sustainability and cleaner living. It can also make a home more attractive to potential tenants. All of these factors mean that adding a solar hot water system to a new home or replacing an existing system with solar can add a significant amount of value to your property.
When it comes to choosing a new hot water system for your home, solar isn’t the cheapest option. However, lower running costs and a lower carbon footprint are the 2 main draws, so if your budget allows for it, it’s an investment that will generally pay for itself in a few years.
If you already have a solar PV system in place, pairing it with a solar hot water system or an electric booster can further reduce running costs, as excess solar electricity can help power the booster during daylight hours. However, fitting a solar hot water system depends largely on your home. If it has an unsuitable roofline, is heavily shaded or has heritage overlays, a traditional water heater or an energy-efficient alternative such as a heat pump water heater may be a more suitable option for you.
Did you know that in most Australian climates, a solar hot water system will typically pay for itself within 4-7 years? Considering they last nearly twice as long as a traditional electric or gas system, it makes sense to make the switch as soon as possible to start saving on your energy bills.
Ready to upgrade your hot water system? Whether you choose solar or traditional, our licensed experts provide fast, professional installation across New South Wales, Queensland, Victoria and the ACT. Call 1300 721 996 or request a quote online for personalised advice and competitive pricing.
The major disadvantage of solar hot water is that the systems have a higher upfront purchase cost. They can also be less reliable in cold-weather climates, especially if not fitted with an electric or gas booster.
Australia’s intense sunshine, high peak energy demand and government incentives that reduce upfront costs make solar hot water a very worthwhile investment in Australia.
The 5 disadvantages of solar energy are cost, weather dependence, space requirements, planning (not normally suitable for emergency replacements) and maintenance requirements.
Solar hot water heaters are worth the investment because they provide reliable hot water for little to no cost, especially compared to more traditional systems that run on electricity or gas.