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Heat Pump Hot Water Systems

The usual replacement for gas and electric hot water. A heat pump uses up to 75% less energy than an electric tank, can run on your own rooftop solar, and can qualify for up to $2,600 in stacked federal and state rebates.

Less energy
75%
Annual savings
$400+
Maximum rebates
$2,600
Gas needed
0
Get my free quoteSee rebates by state

Prices, specs and rebates as at February 2026.

Integrated heat pump hot water unit on a concrete pad beside a weatherboard house, with native plants around it
An integrated heat pump: the compressor sits on top of the tank.

Hot water system comparison

How heat pumps compare with electric, gas and solar thermal on efficiency, running costs and emissions.

  • Heat pumpMost efficient

    Efficiency
    300 to 400%
    Running cost a year
    $150 to $250
    Upfront cost
    $3,500 to $5,500
    Lifespan
    10 to 15 years
    Emissions
    Lowest (with solar)

  • Electric storage

    Efficiency
    90 to 95%
    Running cost a year
    $500 to $800
    Upfront cost
    $1,500 to $2,500
    Lifespan
    10 to 15 years
    Emissions
    High

  • Gas storage

    Efficiency
    70 to 80%
    Running cost a year
    $400 to $600
    Upfront cost
    $1,800 to $2,800
    Lifespan
    10 to 12 years
    Emissions
    High

  • Solar thermal

    Efficiency
    60 to 80%
    Running cost a year
    $100 to $200
    Upfront cost
    $4,000 to $7,000
    Lifespan
    15 to 20 years
    Emissions
    Very low

How heat pump hot water works

A heat pump works like a reverse air conditioner. It draws heat out of the surrounding air and moves it into the water, which makes it three to five times as efficient as a standard electric system.

  1. Extract

    A fan draws outside air across an evaporator that holds the refrigerant.

  2. Compress

    The compressor raises the refrigerant’s temperature to 60 to 80°C.

  3. Transfer

    The hot refrigerant passes its heat to the water through a heat exchanger.

  4. Store

    The hot water sits in an insulated tank, ready when you need it.

4 kWh

of heat from 1 kWh of electricity, at a COP of 4.0

COP rating explained

COP (coefficient of performance) measures efficiency. A COP of 4.0 means every 1kWh of electricity the system uses produces 4kWh of heat. A traditional electric water heater has a COP of about 0.9. The best heat pumps reach 5.0 and above.

Heat pump vs gas hot water

Switching from gas to a heat pump is one of the biggest steps in taking a home all electric. Here is how the two compare on running costs, emissions and long-term value.

  • Annual running cost

    Heat pump
    $150 to $250
    Gas storage
    $400 to $600
    Gas instantaneous
    $350 to $550

  • Efficiency

    Heat pump
    300 to 400% (COP 3 to 4)
    Gas storage
    60 to 70%
    Gas instantaneous
    80 to 85%

  • Annual CO2 emissions

    Heat pump
    About 0.5t (less with solar)
    Gas storage
    About 2.0t
    Gas instantaneous
    About 1.5t

  • Upfront cost (installed)

    Heat pump
    $3,500 to $5,500
    Gas storage
    $1,800 to $2,800
    Gas instantaneous
    $2,000 to $3,500

  • After rebates

    Heat pump
    $2,000 to $4,000
    Gas storage
    No rebates
    Gas instantaneous
    No rebates

  • Works with solar PV

    Heat pump
    Yes
    Gas storage
    No
    Gas instantaneous
    No

  • Gas connection needed

    Heat pump
    No
    Gas storage
    Yes
    Gas instantaneous
    Yes

  • Lifespan

    Heat pump
    10 to 15 years
    Gas storage
    10 to 12 years
    Gas instantaneous
    15 to 20 years

With gas prices rising 10 to 15% a year in most states and no rebates for gas systems, switching to a heat pump typically pays for itself in 3 to 5 years. Many states are also phasing out new gas connections in new builds.

Heat pump vs solar hot water systems

Heat pumps have largely replaced solar thermal as the efficient hot water choice. Here is why. For the other side, read our solar hot water guide.

Heat pump hot water

  • Works day and night, in any weather
  • No roof panels needed
  • 300 to 400% efficiency (COP 3 to 4)
  • Lower upfront cost ($3,500 to $5,500)
  • Minimal maintenance
  • Eligible for all rebates

Solar thermal hot water

  • Drawback: Only works in sunny periods
  • Drawback: Needs a suitable north-facing roof
  • Drawback: 60 to 80% efficiency
  • Drawback: Higher upfront cost ($4,000 to $7,000)
  • Drawback: Roof panels need periodic cleaning
  • Advantage: Very low running costs when it is sunny

Why the industry has shifted to heat pumps. Solar thermal systems were popular through the 2000s and 2010s, but heat pumps have improved a great deal since. A modern heat pump is more efficient, works in all conditions and costs less to install, and with the rebates it is better value for most Australian homes. If you have rooftop solar panels, a heat pump that runs during the day gives you "solar hot water" without the drawbacks.

Split system vs integrated (all-in-one) heat pumps

Heat pumps come in two main configurations. The right one depends on your budget, the space you have and how much noise matters.

Split system

The compressor sits outdoors and the storage tank is installed separately (often indoors or somewhere else), connected by refrigerant lines.

Good

  • Quieter (the compressor is outside)
  • Generally higher COP ratings
  • The tank can go somewhere sheltered
  • Better cold climate performance

Watch for

  • Higher upfront cost ($4,000 to $5,500)
  • More complex installation

Popular split models: Reclaim Energy, Sanden Eco Plus, Hydrotherm Dynamic X8

Integrated (all-in-one)

The compressor sits on top of, or is built into, the storage tank as a single unit. A simpler design with fewer installation variables.

Good

  • Lower upfront cost ($3,000 to $4,200)
  • Simpler, faster installation
  • One footprint, less space needed
  • Easier to retrofit into an existing setup

Watch for

  • Generally noisier (the whole unit is outdoors)
  • Slightly lower efficiency

Popular integrated models: iStore, Rheem Ambiheat, EvoHeat DHWS

CO2 vs R290 refrigerant: which is better?

The refrigerant affects efficiency, cold weather performance and environmental impact. The two modern options are CO2 (R744) and propane (R290), both far better than the older R134a.

  • GWP (global warming potential)

    CO2 (R744)
    1
    R290 (propane)
    3
    R134a (older)
    1,430

  • Ozone depletion

    CO2 (R744)
    Zero
    R290 (propane)
    Zero
    R134a (older)
    Zero

  • Cold climate performance

    CO2 (R744)
    Excellent (to -10°C and below)
    R290 (propane)
    Good (to -7°C)
    R134a (older)
    Fair (to -5°C)

  • Typical COP range

    CO2 (R744)
    4.0 to 5.2
    R290 (propane)
    3.5 to 4.5
    R134a (older)
    3.0 to 4.0

  • Flammability

    CO2 (R744)
    Non-flammable
    R290 (propane)
    Mildly flammable
    R134a (older)
    Non-flammable

  • Upfront cost

    CO2 (R744)
    Higher ($4,000 to $5,500)
    R290 (propane)
    Moderate ($3,500 to $4,500)
    R134a (older)
    Lower ($3,000 to $4,000)

  • Example brands

    CO2 (R744)
    Reclaim, Sanden
    R290 (propane)
    Hydrotherm, EvoHeat
    R134a (older)
    iStore, Rheem

For cold climates (southern Victoria, Tasmania, the ACT and the highlands), CO2 heat pumps are the clear winner. Where the climate is milder and budget comes first, R290 models are very efficient at a lower price. Both are big upgrades on older R134a systems.

Best heat pump hot water brands in Australia, 2026

We reviewed the main heat pump brands sold in Australia on efficiency, reliability, warranty and real customer reviews on ProductReview.com.au.
  • Reclaim Energy logo

    Reclaim Energy

    Australian

    Top pick: efficiency

    COP rating
    Up to 5.2
    Capacity
    270L, 315L
    Refrigerant
    CO2 (R744)
    Type
    Split
    Noise
    37 dB
    Warranty
    6 years (15yr tank)
    • CO2 refrigerant
    • Works to -10°C
    • Quiet 37 dB operation
    • STC eligible

    Premium Australian-designed system with industry-leading efficiency. Top pick for cold climates.

  • Sanden Eco Plus logo

    Sanden Eco Plus

    Japan

    COP rating
    Up to 5.0
    Capacity
    160L, 250L, 315L
    Refrigerant
    CO2 (R744)
    Type
    Split
    Noise
    38 dB
    Warranty
    6 years (15yr tank)
    • CO2 refrigerant
    • Stainless steel tank
    • Split system design
    • Low 38 dB noise

    Japanese engineering with excellent long-term reliability. 15-year tank warranty is best in class.

  • Hydrotherm Dynamic X8 logo

    Hydrotherm Dynamic X8

    Australian

    COP rating
    Up to 4.5
    Capacity
    280L
    Refrigerant
    R290 (Propane)
    Type
    Split
    Noise
    42 dB
    Warranty
    6 years
    • R290 refrigerant
    • 4.8/5 ProductReview
    • Smart Wi-Fi control
    • STC eligible

    4.8/5 on ProductReview. Australian-designed with strong installer feedback and smart features.

  • EvoHeat DHWS logo

    EvoHeat DHWS

    Australian

    COP rating
    Up to 4.2
    Capacity
    270L, 315L
    Refrigerant
    R290 (Propane)
    Type
    Integrated
    Noise
    45 dB
    Warranty
    5 years
    • R290 refrigerant
    • 4.8/5 ProductReview
    • Touch panel controls
    • Budget friendly

    4.8/5 on ProductReview and widely rated as a top overall pick. Great value integrated unit.

  • iStore logo

    iStore

    Australian

    COP rating
    Up to 4.0
    Capacity
    180L, 270L
    Refrigerant
    R134a
    Type
    Integrated
    Noise
    48 dB
    Warranty
    5 years
    • Integrated design
    • Smart timer controls
    • Easy installation
    • Affordable price

    One of Australia's most popular heat pumps. Simple all-in-one design at a competitive price.

  • Rheem Ambiheat logo

    Rheem Ambiheat

    Australia

    COP rating
    Up to 3.8
    Capacity
    270L, 325L
    Refrigerant
    R134a
    Type
    Integrated
    Noise
    52 dB
    Warranty
    5 years
    • Established brand
    • Nationwide service network
    • Boosted heating mode
    • WiFi optional

    Trusted brand with the largest service network in Australia. Easy to get parts and repairs.

Heat pump noise levels compared

Noise is a common worry, especially for units near bedrooms or the neighbours. Here is how popular models compare, all measured at 1 metre.
Noise level of each model in decibels at 1 metre, with an everyday comparison

  1. Reclaim Energy CO2

    Whisper / library

    37 dB

  2. Sanden Eco Plus

    Whisper / library

    38 dB

  3. Hydrotherm Dynamic X8

    Quiet conversation

    42 dB

  4. EvoHeat DHWS

    Refrigerator hum

    45 dB

  5. iStore

    Moderate rainfall

    48 dB

  6. Rheem Ambiheat

    Quiet suburb street

    52 dB

  7. Air conditioner (outdoor)

    For reference

    55 to 60 dB

Most councils require outdoor equipment to stay below 45 dB at the property boundary. For units above that, placing the heat pump away from bedroom windows and neighbouring fences, and fitting anti-vibration mounts, will usually bring the noise within limits.

Heat pumps and solar: hot water at close to zero cost

Heat pumps pair well with solar power. Run yours while the panels are generating and it heats the water with surplus solar you would otherwise export at low feed-in tariff rates.

  1. Smart timing

    Set the heat pump to run in the middle of the solar day (10am to 2pm) so it uses as much of your own power as it can.

  2. Reduce export

    Use excess solar to heat water instead of exporting it at low feed-in rates. More on solar export limits.

  3. Lower bills

    Many households cut another $300 to $500 a year off their electricity bill this way.

Example daily scenario
  1. 11:00am

    Solar peak

    Heat pump starts, drawing 1.5kW

  2. 12:30pm

    Heating complete

    Tank at 60°C, about 2.25kWh of solar used

  3. 6:00pm

    Evening shower

    Hot water ready, no grid power used

Hot water cost for the day$0

ESS, VEU and REPS stack on top of federal STCs

State energy efficiency schemes add their own rebate on top of the federal incentive, and you can claim both.

VEU, Victoria

Victorian Energy Upgrades

Victoria's energy efficiency scheme provides VEECs (certificates) that take a large slice off the cost of a heat pump.

State rebate
$800 to $1,200
Plus federal STCs
$700 to $1,400
Total savings
$1,500 to $2,600
View Victoria rebates

ESS, NSW

Energy Savings Scheme

NSW retailers provide ESCs (certificates) when you upgrade to an efficient heat pump hot water system.

State rebate
$600 to $1,200
Plus federal STCs
$700 to $1,400
Total savings
$1,300 to $2,600
View NSW rebates

REPS, South Australia

Retailer Energy Productivity Scheme

SA energy retailers offer REPS incentives for installing eligible heat pump hot water systems.

State rebate
$500 to $1,000
Plus federal STCs
$700 to $1,400
Total savings
$1,200 to $2,400
View South Australia rebates

How rebate stacking works

Federal STCs (all states)

Small-scale Technology Certificates are created when you install an eligible heat pump. How many you get depends on your location (zone) and the system's efficiency. Your installer claims them and takes them off your upfront cost.

State schemes (VIC, NSW, SA)

VEU, ESS and REPS are retailer obligation schemes. Energy retailers must surrender certificates, which creates demand. When you upgrade, you can assign your certificates to a provider for an upfront discount, separate from the STCs.

Get my free quote

A licensed local installer prices it with the rebates taken off.

Heat pump rebates by state

Government rebates take a large slice off the upfront cost of a heat pump hot water system.
  • Federal$700 to $1,400STCs based on zone and old system type
  • VIC$1,000+VEU certificates plus the Hot Water RebateStacks with STCs
  • NSW$600 to $1,200ESS certificates from retailersStacks with STCs
  • SA$500 to $1,000REPS certificates from retailersStacks with STCs
  • QLD$700 to $1,400Federal STCs only
View all rebates by state

Heat pump hot water: frequently asked questions

Are heat pumps better than solar hot water?
For most homes, yes. Heat pumps are more efficient (300 to 400%, against 60 to 80% for solar thermal), work in all weather, don't need roof panels and cost less up front. Solar thermal systems need roof space and regular maintenance, and perform poorly on cloudy days.
What is the difference between heat pump and solar hot water?
Solar hot water uses roof-mounted panels to heat water directly with sunlight. Heat pumps extract heat from the surrounding air using refrigeration technology, like a reverse air conditioner. Heat pumps work day and night, rain or shine, while solar thermal only works in sunny periods.
Should I replace my solar hot water with a heat pump?
If your solar hot water system is more than 10 years old or needs repairs, a heat pump is usually the better replacement. Heat pumps are more reliable, cost less to maintain and qualify for generous rebates. Many households save $200 to $400 a year after switching.
How noisy are heat pump hot water systems?
Modern heat pumps typically run at 37 to 52 dB, about the level of a quiet conversation or a refrigerator. Premium CO2 models like Reclaim Energy and Sanden are among the quietest at 37 to 44 dB. Put the unit away from bedroom windows and on anti-vibration mounts for the best result.
Do heat pumps work in cold weather?
Yes. Quality heat pumps work down to -10°C or lower. CO2 refrigerant models (Reclaim, Sanden) do particularly well in cold climates because CO2 holds its efficiency at lower temperatures. In very cold conditions, some units use a backup electric element.
What size heat pump do I need?
For most households: 1 to 2 people need 160 to 180L, 3 to 4 people need 250 to 270L, and 5 or more need 315L or larger. Size for peak demand (several showers in the morning, for example) rather than the daily average.
Can I replace my gas hot water with a heat pump?
Yes. Heat pumps are the most common replacement for gas hot water when a home goes all electric. The installer handles the electrical work and can often reuse the existing plumbing connections. You may also be eligible for extra rebates for switching from gas.
What is VEU/ESS/REPS rebate stacking?
State energy efficiency schemes (VEU in Victoria, ESS in NSW, REPS in SA) provide certificates that reduce the cost of a heat pump. These stack with federal STCs, so you can claim both, often $1,500 to $2,600 or more in total.
What is the difference between a split system and integrated heat pump?
A split system has a separate outdoor compressor connected to an indoor tank (like Sanden). An integrated (all-in-one) unit has the compressor mounted on top of the tank (like iStore). Split systems are generally quieter and more efficient but cost more. Integrated units are simpler to install and more affordable.
Is a CO2 or R290 refrigerant heat pump better?
CO2 (R744) heat pumps excel in cold climates and have zero ozone depletion potential with a GWP of 1. R290 (propane) units are also very efficient and slightly cheaper, with a GWP of 3. Both are far better than older R134a refrigerants. CO2 models tend to have higher COP ratings but cost more up front.
How long does heat pump installation take?
Typically 4 to 6 hours for a straightforward replacement. If significant plumbing or electrical work is needed (relocating the unit or upgrading the switchboard, for example), it may take a full day.

Related resources

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