Best Heat Pump Hot Water Systems in Australia (2026)

If your old electric or gas hot water system is on its last legs, a heat pump is almost certainly what your plumber or installer will recommend. There are a few good reasons for that.

Heat pumps use around one-third to one-quarter of the electricity of a standard resistive electric tank. For a household spending $600 to $900 a year on hot water, that translates to real savings from day one. They qualify for federal STC rebates (typically $600–$1,000 off the installed price), and several states offer additional incentives on top. Unlike rooftop solar hot water panels, a heat pump sits on the ground next to your house. No roof space needed, no plumbing on the roof, and no risk of leaks up high.

They also work in every Australian climate zone. Performance dips in very cold weather, but even in Hobart or Canberra, a well-chosen heat pump will outperform an electric element by a wide margin.

A heat pump hot water system works like a reverse-cycle air conditioner, but instead of heating a room, it heats water. A fan draws in ambient air and passes it over an evaporator coil containing refrigerant. The refrigerant absorbs heat from the air, a compressor concentrates that heat to a much higher temperature, and a heat exchanger transfers it into the water tank.

The key metric is COP (Coefficient of Performance). A COP of 3.5 means the system produces 3.5 kWh of heat energy for every 1 kWh of electricity it consumes. Compare that to a standard electric element, which runs at a COP of 1.0. Higher COP means lower running costs.

There are plenty of heat pumps on the Australian market, but five brands consistently come up in installer recommendations and homeowner reviews. Here is how they stack up.

All prices are approximate and include standard installation. Actual costs vary by location, plumbing complexity, and whether your existing setup needs electrical or plumbing modifications.

Beyond the brand comparison, there are a few things worth considering before you commit.

Tank size: A 270L tank suits most households of 3–4 people. Larger families or homes with multiple bathrooms should look at 315L or above. Undersizing means the backup electric element kicks in more often, which erodes the efficiency gains.

COP rating: Higher is better, but context matters. A COP of 3.5 in mild Sydney weather will deliver different real-world savings than the same COP in a Canberra winter where ambient temperatures regularly drop below 5°C. CO2 refrigerant models hold their COP better in cold conditions.

Noise level: This is the number one complaint from heat pump owners. Check the dB rating in the product specs, and think carefully about where the unit will be installed. Anything under 40 dB is considered quiet. Anything above 50 dB may cause issues if the unit is near bedrooms or a neighbour's property.

Warranty: Most brands offer 5 years on parts and labour. The Reclaim CO2's 15-year tank warranty is an outlier and worth noting. Longer tank warranties generally indicate higher-quality materials (stainless steel vs vitreous enamel).

Refrigerant type: Most heat pumps use R134a or R410A. The Reclaim CO2 uses R744 (carbon dioxide), which is a natural refrigerant with zero ozone depletion potential and very low global warming potential. It also performs better in cold weather. If environmental credentials matter to you, this is worth factoring in.

Heat pump hot water systems are classified as renewable energy products under the federal Small-scale Renewable Energy Scheme. That means you can claim Small-scale Technology Certificates (STCs), which typically reduce the installed price by $600–$1,000 depending on the model and your location. Most installers apply the STC discount at the point of sale, so you do not need to claim it yourself.

On top of the federal rebate, some states offer additional incentives:

• check_circleVictoria: Up to $1,000 through the Solar Homes hot water rebate. Available to eligible owner-occupiers with a combined household income under $210,000.
• check_circleACT: Interest-free loans of up to $15,000 for energy-efficient upgrades including heat pump hot water systems through the Sustainable Household Scheme.
• check_circleNSW, QLD, SA: STCs apply federally. Check for any additional state or local government incentives that may be available in your area.

After all rebates, a mid-range heat pump like the iStore 270L can end up costing $2,200–$3,500 installed, which is competitive with a basic electric storage tank when you factor in the long-term energy savings.

If you are weighing up all your hot water options, here is a quick comparison of the three main technologies.

For most households, a heat pump offers the best balance of upfront cost, running cost, and simplicity. Solar hot water panels can be slightly cheaper to run, but they require roof space and add plumbing complexity. If you want a deeper comparison, see our heat pump vs solar diverter guide.