Heat Pump Hot Water Systems
The modern replacement for gas and electric hot water. Heat pump hot water systems use up to 75% less energy, pair perfectly with rooftop solar, and qualify for up to $2,600 in stacked government rebates.
Hot Water System Comparison
How heat pump hot water systems compare to electric, gas, and solar thermal in efficiency, running costs, and environmental impact.
| Type | Efficiency | Running Cost | Upfront Cost | Lifespan | Emissions |
|---|---|---|---|---|---|
water_heaterHeat Pump✓ | 300-400% | $150-250/yr | $3,500-5,500 | 10-15 years | Lowest (with solar) |
electric_boltElectric Storage | 90-95% | $500-800/yr | $1,500-2,500 | 10-15 years | High |
local_fire_departmentGas Storage | 70-80% | $400-600/yr | $1,800-2,800 | 10-12 years | High |
solar_powerSolar Thermal | 60-80% | $100-200/yr | $4,000-7,000 | 15-20 years | Very Low |
How Heat Pump Hot Water Works
A heat pump works like a reverse air conditioner. It extracts heat from the surrounding air and uses it to heat water, achieving 3-5x the efficiency of traditional electric systems.
Extract
Fan draws ambient air across an evaporator containing refrigerant
Compress
Compressor increases refrigerant temperature to 60-80°C
Transfer
Hot refrigerant transfers heat to water via heat exchanger
Store
Hot water is stored in insulated tank for use on demand
COP Rating Explained
COP (Coefficient of Performance) measures efficiency. A COP of 4.0 means for every 1kWh of electricity used, the system produces 4kWh of heat energy. Traditional electric water heaters have a COP of ~0.9. The best heat pumps achieve COP 5.0+.
Heat Pump vs Gas Hot Water
Switching from gas to a heat pump is one of the most impactful steps in home electrification. Here is how the two compare across running costs, emissions, and long-term value.
| Factor | Heat Pump | Gas Storage | Gas Instantaneous |
|---|---|---|---|
| Annual running cost | $150-250 | $400-600 | $350-550 |
| Efficiency | 300-400% (COP 3-4) | 60-70% | 80-85% |
| Annual CO2 emissions | ~0.5t (less with solar) | ~2.0t | ~1.5t |
| Upfront cost (installed) | $3,500-5,500 | $1,800-2,800 | $2,000-3,500 |
| After rebates | $2,000-4,000 | No rebates | No rebates |
| Works with solar PV | Yes, perfectly | No | No |
| Gas connection needed | No | Yes | Yes |
| Lifespan | 10-15 years | 10-12 years | 15-20 years |
With gas prices rising 10-15% annually in most states and no rebates available for gas systems, the payback period for switching to a heat pump is typically 3-5 years. Many states are also phasing out new gas connections in new builds, making heat pumps the future-proof choice.
Heat Pump vs Solar Hot Water Systems
Searching for solar hot water? Heat pumps have largely replaced traditional solar thermal systems as the preferred efficient hot water solution. Here's why.
Heat Pump Hot Water
- check_circleWorks day and night, any weather
- check_circleNo roof panels required
- check_circle300-400% efficiency (COP 3-4)
- check_circleLower upfront cost ($3,500-5,500)
- check_circleMinimal maintenance required
- check_circleEligible for all rebates
Solar Thermal Hot Water
- cancelOnly works during sunny periods
- cancelRequires suitable north-facing roof
- cancel60-80% efficiency
- cancelHigher upfront cost ($4,000-7,000)
- cancelRoof panels need periodic cleaning
- check_circleVery low running costs when sunny
Why the Industry Has Shifted to Heat Pumps
While solar thermal systems were popular in the 2000s and 2010s, heat pump technology has improved dramatically. Modern heat pumps achieve higher efficiency, work in all conditions, and cost less to install. Combined with generous government rebates, heat pumps now offer better value for most Australian homes. If you have rooftop solar panels, a heat pump running during the day effectively gives you "solar hot water" with none of the drawbacks.
Split System vs Integrated (All-in-One) Heat Pumps
Heat pumps come in two main configurations. The right choice depends on your budget, available space, and noise sensitivity.
Split System
The compressor unit sits outdoors while the storage tank is installed separately (often indoors or in a different location). Connected by refrigerant lines.
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. Simpler design with fewer installation variables.
Popular integrated models: iStore, Rheem Ambiheat, EvoHeat DHWS
CO2 vs R290 Refrigerant: Which Is Better?
The refrigerant type affects efficiency, cold weather performance, and environmental impact. The two modern options are CO2 (R744) and propane (R290), both far superior to older R134a.
| Factor | CO2 (R744) | R290 (Propane) | R134a (Older) |
|---|---|---|---|
| GWP (Global Warming Potential) | 1 | 3 | 1,430 |
| Ozone depletion | Zero | Zero | Zero |
| Cold climate performance | Excellent (to -10°C+) | Good (to -7°C) | Fair (to -5°C) |
| Typical COP range | 4.0-5.2 | 3.5-4.5 | 3.0-4.0 |
| Flammability | Non-flammable | Mildly flammable | Non-flammable |
| Upfront cost | Higher ($4,000-5,500) | Moderate ($3,500-4,500) | Lower ($3,000-4,000) |
| Example brands | Reclaim, Sanden | Hydrotherm, EvoHeat | iStore, Rheem |
For cold climates (southern Victoria, Tasmania, ACT, highlands), CO2 heat pumps are the clear winner. For milder climates where budget is the priority, R290 models offer excellent efficiency at a lower price. Both are significant upgrades over older R134a systems.
Best Heat Pump Hot Water Brands Australia 2026
We have reviewed the top heat pump brands available in Australia based on efficiency, reliability, warranty, and real customer reviews on ProductReview.com.au.
| Brand | Type | Refrigerant | COP | Capacity | Noise | Warranty |
|---|---|---|---|---|---|---|
| Reclaim Energy✓ Australian | Split | CO2 (R744) | Up to 5.2 | 270L, 315L | 37 dB | 6 years (15yr tank) |
| Sanden Eco Plus Japan | Split | CO2 (R744) | Up to 5.0 | 160L, 250L, 315L | 38 dB | 6 years (15yr tank) |
| Hydrotherm Dynamic X8 Australian | Split | R290 (Propane) | Up to 4.5 | 280L | 42 dB | 6 years |
| EvoHeat DHWS Australian | Integrated | R290 (Propane) | Up to 4.2 | 270L, 315L | 45 dB | 5 years |
| iStore Australian | Integrated | R134a | Up to 4.0 | 180L, 270L | 48 dB | 5 years |
| Rheem Ambiheat Australia | Integrated | R134a | Up to 3.8 | 270L, 325L | 52 dB | 5 years |
Reclaim Energy
✓ Top Pick: EfficiencyPremium Australian-designed system with industry-leading efficiency. Top pick for cold climates.
Sanden Eco Plus
Japanese engineering with excellent long-term reliability. 15-year tank warranty is best in class.
Hydrotherm Dynamic X8
4.8/5 on ProductReview. Australian-designed with strong installer feedback and smart features.
EvoHeat DHWS
4.8/5 on ProductReview and widely rated as a top overall pick. Great value integrated unit.
iStore
One of Australia's most popular heat pumps. Simple all-in-one design at a competitive price.
Rheem Ambiheat
Trusted brand with the largest service network in Australia. Easy to get parts and repairs.
Heat Pump Noise Levels Compared
Noise is a common concern, especially for units installed near bedrooms or neighbouring properties. Here is how popular models compare. All measurements are at 1 metre distance.
| Model | Noise Level | Similar To |
|---|---|---|
| Reclaim Energy CO2 | 37 dB | Whisper / library |
| Sanden Eco Plus | 38 dB | Whisper / library |
| Hydrotherm Dynamic X8 | 42 dB | Quiet conversation |
| EvoHeat DHWS | 45 dB | Refrigerator hum |
| iStore | 48 dB | Moderate rainfall |
| Rheem Ambiheat | 52 dB | Quiet suburb street |
| Air conditioner (outdoor) | 55-60 dB | For reference |
Most councils require outdoor equipment to be below 45 dB at the property boundary. For units above this threshold, positioning the heat pump away from bedroom windows and neighbouring fences, plus installing anti-vibration mounts, will usually bring noise within acceptable levels.
Heat Pumps + Solar = Zero Hot Water Costs
Heat pumps pair perfectly with solar power. By running your heat pump during solar generation hours, you can heat water for free using excess solar energy instead of exporting it at low feed-in tariff rates.
Smart Timing
Set your heat pump to run during peak solar hours (10am-2pm) to maximise free energy use.
Reduce Export
Instead of exporting excess solar at low feed-in rates, use it to heat your water. Learn more about solar export limits.
Lower Bills
Many households reduce their electricity bill by an additional $300-500/year with this strategy.
Example Daily Scenario
ESS + VEU + REPS + Federal STCs
State energy efficiency schemes provide additional rebates that stack on top of federal incentives. Claim both for maximum savings.
Victorian Energy Upgrades
Victoria's energy efficiency scheme provides VEECs (certificates) that reduce heat pump costs significantly.
Energy Savings Scheme
NSW retailers provide ESCs (certificates) when you upgrade to an efficient heat pump hot water system.
Retailer Energy Productivity Scheme
SA energy retailers offer REPS incentives for installing eligible heat pump hot water systems.
infoHow Rebate Stacking Works
Federal STCs (All States)
Small-scale Technology Certificates are created when you install an eligible heat pump. The number of STCs depends on your location (zone) and the system efficiency. These are claimed by your installer and deducted from your upfront cost.
State Schemes (VIC/NSW/SA)
VEU, ESS, and REPS are retailer obligation schemes. Energy retailers must surrender certificates, creating demand. When you upgrade, you can assign your certificates to a provider in exchange for an upfront discount, separate from STCs.
Heat Pump Rebates by State
Government rebates can significantly reduce the upfront cost of a heat pump hot water system.
Heat Pump Hot Water: Frequently Asked Questions
helpAre heat pumps better than solar hot water?
For most homes, yes. Heat pumps are more efficient (300-400% vs 60-80%), work in all weather conditions, don't need roof panels, and have lower upfront costs. Solar thermal systems require roof space, regular maintenance, and perform poorly on cloudy days.
helpWhat is the difference between heat pump and solar hot water?
Solar hot water uses roof-mounted panels to directly heat water using sunlight. Heat pumps extract heat from ambient air using refrigeration technology, like a reverse air conditioner. Heat pumps work day and night, rain or shine, while solar thermal only works during sunny periods.
helpShould I replace my solar hot water with a heat pump?
If your solar hot water system is 10+ years old or needs repairs, a heat pump is usually the better replacement. Heat pumps are more reliable, have lower maintenance costs, and qualify for generous rebates. Many households save $200-400/year after switching.
helpHow noisy are heat pump hot water systems?
Modern heat pumps typically produce 37-52 dB, which is similar to a quiet conversation or refrigerator. Premium CO2 models like Reclaim Energy and Sanden are among the quietest at 37-44 dB. Position the unit away from bedroom windows and on anti-vibration mounts for best results.
helpDo heat pumps work in cold weather?
Yes. Quality heat pumps work down to -10°C or lower. CO2 refrigerant models (Reclaim, Sanden) perform particularly well in cold climates as CO2 maintains efficiency at lower temperatures. In very cold conditions, some units use a backup electric element.
helpWhat size heat pump do I need?
For most households: 1-2 people = 160-180L, 3-4 people = 250-270L, 5+ people = 315L+. Consider peak demand (e.g. multiple showers in the morning) rather than just daily average.
helpCan I replace my gas hot water with a heat pump?
Absolutely. Heat pumps are the most common gas hot water replacement as part of home electrification. The installer handles all electrical work and can often reuse existing plumbing connections. You may also be eligible for additional rebates for switching from gas.
helpWhat is VEU/ESS/REPS rebate stacking?
State energy efficiency schemes (VEU in Victoria, ESS in NSW, REPS in SA) provide certificates that reduce heat pump costs. These stack with federal STCs, meaning you can claim both for maximum savings, often $1,500-$2,600+ total.
helpWhat is the difference between a split system and integrated heat pump?
A split system has a separate outdoor compressor unit 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.
helpIs 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 upfront.
helpHow long does heat pump installation take?
Typically 4-6 hours for a straightforward replacement. If significant plumbing or electrical work is needed (e.g. relocating the unit or upgrading the switchboard), it may take a full day.
Related Resources
Heat Pump Costs
2026 pricing guide by brand, capacity, and installation type.
Learn more →Installation Guide
What to expect during heat pump installation.
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Pair a battery with your heat pump for maximum savings.
Read guide →Solar Calculator
Calculate your solar + heat pump savings.
Calculate →Upgrade to Heat Pump Hot Water
Cut your hot water costs by up to 75% and eliminate gas dependency. Get a free quote including all available rebates.