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Introduction to Hot Water System Installation Costs

Installing a new hot water system is a significant investment for your residential or commercial property. Selecting the appropriate size hot water system for your needs is crucial to maximising efficiency and securing long-term savings. This article provides an informative overview of the main factors impacting hot water system installation costs.

We’ll consider the installation costs linked to various water heaters, including gas, electric, solar, and heat pumps. Costs can vary significantly depending on the required system capacity, features, energy rating, and whether you opt for a storage or instantaneous hot water model. Brand, regional variables and professional installation fees also contribute to your hot water system’s overall expense.

To pinpoint the most economical option, we’ll analyse factors such as household size and climate to determine which hot water system is right for your home and budget. We’ll also discuss estimated price ranges for different systems to help you budget effectively.

This guide will provide you with a clear understanding of the realistic costs associated with installing different hot water systems. Equipped with this knowledge, you’re set to choose a new system for hot water to meet your household’s specific needs and budget.

Types of Hot Water Systems

Four primary types of hot water systems are prevalent in Australian households and businesses:

Gas Storage Hot Water Systems

A gas storage water heater heats water in an insulated tank, using natural gas or LPG as fuel. The heater maintains a reserve of hot water until it’s required. A system gas setup may be appropriate for your home if you have access to mains gas.

Electric Storage Hot Water Systems

Electric storage systems use heating elements whose energy consumption influences the long-term cost of hot water. While electric hot water systems are most efficient with off-peak tariffs and generally less efficient than gas, they serve as an alternative where gas connections are unavailable.

Heat pump water heaters use a heat exchange cycle to actively pump and heat water, drawing heat from the air into an existing hot water system’s storage tank. They are energy-efficient with a favourable price for hot water system operation, especially suitable in warmer climates.

Solar hot water systems utilise roof-mounted panels to heat your water, offering a sustainable solution for your home. Energy efficient, but rely on sufficient sunlight. Solar electric boosters may be added to cater to both home and business needs on cloudy days.

Gas Hot Water Systems

Continuous flow gas hot water system can provide instantaneous hot water with superior efficiency, making it a popular choice among Australians. Natural gas ignites to heat water stored in an insulated tank. When you turn on the hot tap, your system efficiently transitions from cold water to flowing heated water continuously to meet demand.

Gas hot water system installation costs average between $1,000 and $1,500, impacting your budget. Costs depend on the tank capacity, gas connection complexity, and if you need additional safety features. A licensed gasfitter must install your water heater to ensure safety and compliance.

Gas hot water is an effective choice to supply hot water for households with 2+ bathrooms. While maintenance costs remain low for this type of system, gas prices can affect operating expenses over time. Therefore when selecting a system, check the energy rating as higher efficiency translates to savings.

Electric Hot Water Systems

Electric storage units warm water in a tank using electric elements, an important consideration for energy efficiency. Pricing is quite affordable in the range of $450-$1,400 installed. Upfront purchase price depends on the tank size, power rating, and model features.

Electric hot water systems suit households with 1-2 bathrooms. They can work well when gas lines do not run to the property.

Just be mindful that using electric elements to heat water consumes more energy, making it less efficient than gas or solar options. The operating costs of an electric hot water system will affect the cost to your finances, influenced by electricity rates and the storage tank’s insulation quality.

One benefit of type hot water systems like electric storage tanks is the availability of off-peak controlled load tariffs. Should your hot water system qualify, more affordable overnight power rates could apply, assisting in the reduction of your ongoing bills. Considering electric units with an energy star rating between 3.5-4 stars is recommended for maximum efficiency.

Electric hot water systems present a straightforward, low-maintenance method to heat water. For optimal performance, ensure your storage tank is sized correctly and utilise off-peak power pricing.

Heat Pump Hot Water Systems

Heat pump water systems, frequently configured as split systems, offer energy efficiency leading to lower electricity bills. Split system heat pumps absorb heat from the surrounding air to heat water in a storage tank. An integrated system with inline plumbing can drive the process with a heat pump and fan.

Installation costs for a heat pump hot water system are around $3,000. Extra expenses may range between affordable to substantial, depending on the tank capacity required and the complexity of installation. As a specialised job, a licenced plumber is recommended.

Heat pump systems can run on electricity but provide instant hot energy output far exceeding the electrical energy they consume. This makes them much more efficient than conventional electric water heating methods. They can lower greenhouse emissions by up to 70% compared to traditional gas and electric systems, making them a green choice for your house.

One downside, which can affect performance, is that heat pumps are generally more effective in warmer climates. Their efficiency diminishes in temperatures below 5°C. Luckily most suburban areas even in cold Australian states see higher ambient temperatures regularly throughout the year.

Solar Hot Water Systems

Solar hot water systems represent a renewable energy option, and while the cost solar hot water units may be higher initially, they harness power from the sun to heat water. While the cost of installing a solar hot water system with its water tank ranges between $4,000 - $8,000 initially, the benefits to the environment and long-term savings are significant.

Solar heat is harnessed by roof-mounted solar collector panels that warm a transfer fluid within the solar hot water units. This solar heated liquid passes through a heat exchanger to warm water held in an insulated storage tank or pipes in the ground. When you turn on your hot water tap, the stored solar heated water is ready for use.

An advantage of solar hot water systems is the cost savings from free solar energy input once installed. Government rebates up to $1,000 are also available reducing payback periods. Using solar hot water systems can reduce greenhouse emissions by around 3 tonnes each year, enhancing sustainability.

Solar types hot water systems work well as pre-heaters to existing gas or electric systems.

Solar power could essentially eliminate energy bills, supplying abundant, renewable heat for your water needs independent of the grid.

Factors That Influence Installation Costs

When budgeting for a hot water system installation, there are several influential cost factors to consider beyond the unit purchase price. Its important to get the sizing right for your household to avoid unnecessary increases in the total expense.


Selecting the proper hot water system capacity for your property is essential. An undersized unit can lead to you run out hot water prematurely, ending up with uncomfortable lukewarm showers, whereas an oversized system leads to wastage of resources and funds. Consider:

  • Number of bathrooms and residents
  • Peak usage times
  • Average hot water usage per day (litres)

Location and Access

The hot water system’s size and location, together with the ease of install, influence labour time and material requirements. More complex venting, drainage, gas or electrical connections add expenses. Outdoor units typically cost $200-$500 more in materials to weatherproof.

Safety Devices and Add-Ons

Ensuring your hot water system should include installing tempering valves, pressure limiting valves, and other safety features, all contributing to the final quoted price.

Professional Installation

Licenced plumbers and technicians typically charge by the hour, forming a considerable part of the overall expense. Their hourly rates plus materials and transport eats into budgets. But their expertise ensures correct setup and safety.

Determining the Right Size and Capacity

Choosing the appropriate type hot water system size and capacity is crucial to seamlessly integrate into your household’s requirements without overspending. As a general rule, allow for 30-50 litres of hot water per person per day. For a family of 4, a 200 litre storage capacity would be suitable.

Consider peak demand times, such as morning showers and evening cleaning, when choosing the best hot water system for uninterrupted supply. Speaking with a reputable plumber can help assess your property’s needs based on:

  • Number of bathrooms and residents
  • Average and peak water usage in litres
  • Allowance for future demand increases e.g. a growing family

Installing a system that’s too small can lead to lukewarm showers when demand spikes. Oversize systems are more expensive both upfront and ongoing as you heat more water than required. Getting the size right keeps costs in check while delivering sufficient hot water flow when you need it.

Professional Installation Services

Installing a hot water system demands comprehensive knowledge to configure and activate the system—your safety depends on professional standards. Due to the involvement of gas, electrical, and plumbing work, it’s crucial to employ a fully-qualified technician.

While DIY is tempting to save on cost installing, the absence of licences, expertise, and proper tools to safely manage hazardous services poses significant risks. Incorrect installation can invalidate warranties and breach compliance standards.

Our team of licenced plumbers and gasfitters specialise in installing hot water units, handling all aspects of the process. Years of training and experience in installing hot water systems empowers us to accurately size, position and connect systems, overcoming any challenges that may arise. We handle all permitting and certification too.

Installation fees for existing hot water systems are generally charged by the hour, whether it’s a gas electric system or solar installation. Rest assured our rates provide expertise and peace of mind, ensuring your new hot water system operates safely for years to come. Contact us today to learn more about our professional installation services.

Regional Cost Variations

Water system your location influences can vary significantly in price. Even within the same city, Installation costs can significantly vary from one suburb to another.

Factoring in the average installation cost, regional areas often incur higher labour and transport fees due to their remoteness. Availability of technicians and distance travelled impact the cost to install a hot water system. For example, the cost of hot water system installations in central and western NSW towns exceeds the metro average by over $500.

Hot water unit and installation costs in Sydney suburbs generally match the NSW average. However regional cities like Wollongong and Newcastle often see prices 5-10% below Sydney.

Heading further south into Victoria, costs decrease. The Sunraysia region bordering SA reports install rates around $300 cheaper.

South Australia shows some of the largest water system installation cost differences across the state. Adelaide offers the lowest rates while heading north adds around $800+ once regional premiums get factored in. Always request a detailed site-specific quote from local plumbers to understand precise costs in your area.

Energy Efficiency and Long-Term Savings

When selecting a hot water system, energy efficiency directly impacts long-term running costs and savings. More efficient systems often have higher upfront purchase prices but save money over time through lower energy bills.

Heat pump and solar water heating systems can involve greater initial investments ranging from $3,000 to $8,000 when installed. So despite steep initial outlays, your expense is recouped through a decade of utility savings.

However their advanced designs extract free heating from ambient air and sunlight. This maximises energy efficiency, cutting electricity or gas usage by 50-70%.

Seeking out higher star rated systems also translates to real savings. With rising energy prices, an extra star could save over $100 annually.

A 5-star gas water storage unit operates around 30% more efficiently than a unit with a 3-star rating. Carefully weigh lifecycle costs during your purchase decision to pick the optimal system for efficiency and savings.

Government Rebates and Incentives

Installing certain energy efficient hot water systems may qualify you for considerable government rebates and incentives. This can help alleviate high initial purchase costs, making more sustainable systems affordable.

Topping upfront system installation cost reductions include federal government solar hot water rebates and state-level programmes. Rebates up to $1,200 are currently available for installing solar water heaters specifically. Eligible households can also access up to $1,000 off solar heat pump or gas/electric hybrid system purchases until June 2024.

Additional incentives apply for pensioners, low income earners and new home builds. We assist customers with all paperwork and processes to access rebates seamlessly. Receiving these discounts leads to reduced system cost payback periods, thanks to ongoing savings from lower utility bills.

A new efficient hot water unit represents a wise investment for your home or business, especially with rising electricity and gas prices. Call our team today to check available rebates so you can best optimise savings potential. We’ll assess your property, provide quotes outlining eligible incentives and help put money back in your pocket through discounts.

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