Heat Pump vs Solar Diverter: The Best Way to Heat Water with Solar

If you're reading this, you've probably already noticed that hot water is quietly one of the biggest energy drains in your home. According to the Australian Government's Your Home guide, heating water accounts for roughly 20–30% of household energy use. For a family of four, that can easily mean $500–$900 a year just to keep the taps warm.

The good news? If you already have solar panels on your roof (or are considering them), there are two proven ways to use that solar energy for hot water. Our guide to how solar works covers the fundamentals if you want a refresher on generation and self-consumption. Each has loyal advocates in the Australian solar community, and each genuinely works, but in very different circumstances.

Let's break down both options, compare them head-to-head, and work out which one makes the most sense for your household. For a broader overview of all the solar hot water options, see our solar hot water solutions page.

A heat pump hot water system works like a reverse-cycle fridge, except instead of cooling the inside and pushing heat out, it pulls heat from the outdoor air and uses it to warm your water. The compressor concentrates that ambient heat and transfers it into an insulated storage tank.

The key metric is COP (Coefficient of Performance). A modern heat pump achieves a COP of 3–4, meaning for every 1 kWh of electricity it consumes, it produces 3–4 kWh of heat energy. That is a dramatic efficiency gain compared to a standard resistive element, which converts electricity to heat at a 1:1 ratio.

On paper, the efficiency story is compelling. In practice, however, many homeowners on Whirlpool and Reddit's r/AusSolar report that the noise is the single biggest issue. A heat pump compressor running at 45–55 dB is comparable to a quiet air conditioner, and if it's near bedrooms or a neighbour's fence line, it can become a genuine source of friction. Newer premium models, like the Sanden Eco Plus at around 37 dB, are quieter, but they also cost more.

A solar diverter is a deceptively simple device. It monitors your solar production and household consumption in real time. When it detects surplus solar energy that would otherwise be exported to the grid for a few cents per kilowatt-hour, it redirects that excess into the resistive element of your existing electric hot water tank.

The clever part is that most diverters use phase-angle control or similar technology to variably adjust the power flowing to the element. So if you have 1.2 kW of surplus solar, the diverter sends exactly 1.2 kW to the hot water, not a fixed on/off. This means virtually no energy is exported while the tank is still heating.

The appeal of a solar diverter is its elegant simplicity. No compressor, no refrigerant, no fan, no noise. Your existing hot water element does what it was always designed to do, powered by energy you are already generating. For households with sizeable solar exports, a diverter effectively turns low-value exported energy (3–8c/kWh) into high-value hot water (worth 30–40c/kWh in avoided grid usage).

The heat pump's greatest strength is independence. It does not care whether the sun is shining. It pulls heat from ambient air at any time, making it the natural choice for homes without solar panels, or in situations where the old hot water system has died and a full replacement is needed anyway. The STC rebate also makes the effective cost considerably more palatable compared to the sticker price.

For a full rundown of what's involved, see our heat pump installation guide.

The solar diverter shines brightest (pun intended) when you are already exporting significant solar energy for next to nothing. Instead of selling that surplus at a declining feed-in tariff rate of 3–7c per kWh, you are converting it into hot water worth 30–40c per kWh in avoided electricity costs. That simple value shift is why diverters pay for themselves so quickly, typically in two to four years.

The other major advantage is longevity. With no compressor, no fan, and no refrigerant, there is almost nothing to fail. Forum users report diverters running for years without a single issue. Compare that to a heat pump, which has a compressor with a finite service life and may need maintenance every few years.

Here's a strategy gaining traction in the Australian solar community that gives you the best of both worlds: pair a heat pump with your solar panels, then use a timer or smart switch to ensure the heat pump runs during peak solar generation hours (typically 10am–2pm).

Why does this work so well? The heat pump's COP of 3–4x means it only draws about 0.5–1.5 kW from the grid while producing 2–5 kW of heating energy. If that 0.5–1.5 kW comes from your solar panels, the running cost is essentially zero and you are barely denting your solar export. You get the efficiency multiplier of the heat pump powered by free solar electricity.

The downsides remain: you still have the noise, the moving parts, and the higher upfront cost. But if your old hot water system has died and you need a full replacement anyway, a solar-timed heat pump is an excellent solution. Many modern heat pumps from brands like Reclaim Energy, Sanden, and iStore already have built-in timers or smart controls that make this easy to set up.

When choosing a brand, community feedback is invaluable. Reddit's r/AusSolar and Whirlpool's solar subforum have extensive threads on real-world experiences with all of these products. We'd strongly recommend reading a few recent threads before making a decision, as firmware updates and model revisions can change the picture over time.

There is no single “best” option. It genuinely depends on your circumstances. But here is how we'd summarise it:

If you already have solar panels with a 5 kW+ system, a working electric tank, and you are looking for the cheapest, simplest way to slash your hot water costs, a solar diverter is hard to beat. It is low-risk, low-cost, silent, and pays for itself faster than almost any other energy upgrade you can make.

If you don't have solar, or your existing hot water system needs full replacement, or you want year-round efficiency that does not depend on sunshine, a heat pump is the smarter pick. Take advantage of the STC rebate, time it to run during solar hours if you do have panels, and install it somewhere that won't cause noise issues.

Either way, both options are dramatically better than running a standard resistive hot water tank on grid electricity at 35–45c per kilowatt-hour. Making any move here is a win. For a broader look at whether solar is the right investment for you, see our guide on whether solar is worth it in Australia. And for a deep dive into system costs, check our solar panel cost guide.