The main system types
Hot water systems differ in two ways: how they heat water, and whether they keep a tank of it ready. The table sets the common types side by side in general terms. Details vary by brand and model, so treat it as a map and not a recommendation.
| Type | How it works | Worth weighing |
|---|---|---|
| Electric storage | An element heats water held in an insulated tank. | Simple and widely available. Running costs depend on tariff and household use. The tank takes space and can run out. |
| Gas storage | A gas burner heats a tank, and a flue carries exhaust away. | Recovers quickly. Needs a gas connection and a compliant flue location. |
| Gas instantaneous | Heats water as it flows, with no tank. | Compact and continuous. Needs adequate gas supply and flue clearance, and can struggle when several outlets run at once. |
| Heat pump | Uses a refrigerant cycle to move heat from the air into a tank. | Typically uses far less energy than a plain element. Costs more up front, needs outdoor space, and makes some fan noise. |
| Solar with booster | Roof collectors preheat water, with an electric or gas booster for dull days. | Needs good sun exposure and roof space. Installation is more involved. |
Electric or gas
The better choice depends on what your home already has. A house connected to gas can swap like for like with minimal change, but gas connection and supply costs are a long-term consideration, and many households are moving toward electric options. A home without gas should think carefully before adding it. In apartments, the building's layout, rules and shared services often decide the options before preference does.
Getting the size right
Bigger is not automatically better. An oversized storage tank wastes energy keeping extra water hot, and an undersized system leaves the last person in the queue with a cold shower. Think about how many people live in the home, how many bathrooms, and how many outlets tend to run at once on a busy morning. For a storage tank, the question is capacity and how fast it recovers. For an instantaneous unit, the question is whether its flow can cover simultaneous use. A competent installer should ask you these questions, and explain the answer in plain terms.
The safety parts you should know about
- Temperature and pressure relief valve. A safety device on storage systems that opens if pressure or temperature climbs too high. A small amount of dripping as water expands during heating can occur, but a steady flow is not normal and needs attention. Never block or cap it.
- Tempering valve. Mixes cold water into the hot supply so that taps in bathrooms do not deliver scalding water. Storage tanks keep water hot enough to limit bacterial growth, which is exactly why this valve matters.
- Isolation valves. A cold water valve lets you shut the unit off. Know where it is.
In NSW, installing or replacing a hot water system is regulated work. A licensed plumber handles the water connections, a licensed gas fitter handles gas, and a licensed electrician handles hardwired power. Do not attempt this yourself, and do not accept an unlicensed installer. Check licences with the NSW Fair Trading licence check.
Paperwork and permissions
After regulated work, ask what compliance paperwork applies and keep a copy with the unit's manuals. Owners in strata buildings usually need approval before changing a system or its position, and flue or outdoor-unit locations can be restricted. Ask about these before you choose a model.
Rebates and incentives
Governments have offered incentives for efficient hot water systems, especially heat pumps and solar, but schemes change, close and reopen. Do not assume an incentive applies. Check current information at Energy NSW and ask any installer how a scheme would apply to your property, and to put it in writing.
Signs it may be time to replace
- The unit is old, and the compliance plate on it will show when it was made.
- Rusty hot water, repeated faults, or a leak from the tank body, not from a fitting.
- Rumbling or banging noises, or water that never gets properly hot.
Replacing one before it fails gives you time to compare options. A unit that fails on a cold morning leaves little choice, so plan ahead if you can. If it is leaking now, go to the emergency guide.
Questions worth asking
- Which type suits my household, and why not the alternatives?
- What will be needed for gas, power, flue, drainage of the relief valve and access?
- What is included in the price, and what could change it?
- What paperwork will I receive, and what happens to the old unit?
For cost context, read plumbing costs in Sydney, and for the bigger picture see plumbing in Sydney.