Hot water is something we use every day but heating it can be one of the biggest energy costs in a home. The right system can reduce power bills, cut energy waste, and even make your home eco-friendlier.
If you’re looking for an energy-efficient hot water system, there are several great options available. Some use renewable energy, while others are designed to heat water only when needed, reducing unnecessary power use.
The best energy-efficient hot water systems for your home can help you decide which option is right for you. Wondering what the most energy-efficient hot water systems are? Compare heat pumps, solar, and gas options to cut energy bills and save money.
Below, we’ll go through the most efficient hot water systems, how they work, and what to consider before choosing one.
The Best Energy-Efficient Hot Water Systems
Not all hot water systems are the same—some drain energy, while others use smart technology to keep costs low. Here are the most efficient options:
Heat Pump Hot Water Systems – Uses Air to Heat Water
These systems work like a reverse fridge, pulling heat from the air to warm your water. They’re one of the most energy-efficient choices available.
- Uses up to 70% less electricity than a standard electric water heater
- Works best in warmer climates, but advanced models perform well in cooler areas too
- Higher upfront cost, but long-term energy savings make up for it
Best for: Households wanting a highly efficient, eco-friendly option without needing solar panels.
Solar Hot Water Systems – Let the Sun Do the Work
A solar hot water system uses rooftop solar collectors to heat water, making it one of the most sustainable choices. Most systems include a backup gas or electric booster for cloudy days.
- Can reduce hot water energy use by up to 80%
- Low running costs after installation
- Government rebates may be available to offset upfront costs
Things to consider: You’ll need good sunlight exposure and a suitable roof space to get the most out of this system.
Best for: Homes in sunny areas looking for long-term energy savings.
Gas Continuous Flow (Tankless) – Hot Water on Demand
Instead of keeping a tank of water hot all day, this system heats water only when needed, making it far more efficient than traditional gas storage systems.
- Never run out of hot water, as it heats instantly on demand
- More energy-efficient than storage gas systems
- Compact design, saving space in small homes or apartments
Things to consider: You’ll need access to natural gas, and while it’s efficient, it won’t save as much energy as a heat pump or solar system.
Best for: Homes with natural gas access or those wanting an unlimited supply of hot water without a bulky tank.
High-Efficiency Electric Storage Systems – A Smarter Take on Traditional Tanks
While standard electric hot water systems are known for high energy use, newer models have improved insulation, smart controls, and better efficiency.
- Can be programmed to heat water during off-peak electricity times, reducing costs
- Works well with solar panels for lower energy use
- Cheaper to install compared to heat pumps and solar hot water systems
Best for: Homes using solar power or needing a reliable electric option without a high upfront cost.
How to Pick the Right Hot Water System for Your Home
Choosing an energy-efficient hot water system isn’t just about saving power—it also needs to suit your home, budget, and lifestyle. The best option for one household might not work as well for another, so it’s important to consider a few key factors before making a decision.
Climate and Location
The climate in your area plays a big role in how well different systems perform.
- Heat pump systems work best in warm or mild climates but can still operate efficiently in colder areas with the right model.
- Solar hot water systems need plenty of sunlight, making them ideal for homes with good roof exposure.
- Gas and high-efficiency electric systems can be more reliable in colder regions where solar or heat pumps may not work as effectively year-round.
Household Size
The size of your household determines how much hot water you’ll need daily.
- Larger families require a system that can handle high demand without running out.
- Gas continuous flow systems provide endless hot water, making them great for households with multiple people using hot water at the same time.
- Storage tank systems need to be appropriately sized—too small, and you’ll run out of hot water; too big, and you’ll waste energy heating water you don’t use.
Upfront Cost vs Long-Term Savings
Some systems cost more to install but pay off with lower running costs over time.
- Solar and heat pump systems have higher upfront costs but can significantly reduce your energy bills in the long run.
- Gas and electric storage systems are more affordable to install but may result in higher energy expenses over time.
- Rebates and incentives can help offset the cost of energy-efficient systems, making them more budget-friendly.
Government Rebates & Incentives
Many energy-efficient hot water systems qualify for rebates, helping reduce the initial cost of installation.
- Solar and heat pump systems often receive the highest rebates due to their energy-saving potential.
- State and federal programs may offer financial incentives to encourage homeowners to switch to more efficient options.
- Checking local rebate programs before purchasing can help you maximise savings and make an energy-efficient system more affordable.
Which Hot Water System Is Right for You?
If you want the most energy savings, heat pumps and solar hot water systems are the top choices. They cut energy use significantly and, despite higher installation costs, pay for themselves in the long run.
For reliable, space-saving efficiency, gas continuous flow is a strong contender—especially if your home already has a gas connection.
If you need an affordable electric option, a high-efficiency storage system can work well, particularly if you have solar panels to offset electricity use.
Switching to an energy-efficient hot water system means lower power bills and a smaller environmental footprint. With the right choice, you’ll enjoy reliable hot water without the extra energy waste.
Would you like help comparing specific models or checking rebate options in your area? Visit us and we will help you decide.