Demystifying the Process: How Hot Water Systems Excel in Heating Water

In the following FAQ, “How Hot Water Systems Work,” we unravel the intricacies of heating water efficiently for your daily needs. Australian Hot Water provides an insightful guide to help you understand the inner workings of hot water systems, demystifying the technology behind heating water for various applications. From traditional tank-based systems to modern tankless solutions, we explore the mechanisms that ensure a constant and reliable supply of hot water. Dive into the details of heat exchangers, thermostats and energy sources, empowering you with the knowledge to make informed decisions about your hot water system. Whether you’re a homeowner or a business owner, this FAQ blog equips you with valuable insights into the science of heating water, making your experience with hot water systems seamless and efficient.

How a hot water system works is not just technical information that the experts need to know. In fact, knowing how these machines work will give you a much greater understanding of what hot water heater is best for you and your family (and how to reduce your energy bill).

Different hot water systems are able to produce different quantities of hot water at different levels of efficiency. So, understanding how the different types of systems work will allow you to ensure that the hot water system you choose will provide enough hot water to meet your family’s needs, while also doing so at a rate of efficiency that is suitable to your budget.

Types of hot water systems

Hot water systems are differentiated by two main factors. The first factor is the power source of the system. The primary power sources of hot water systems are electricity and gas. However, solar hot water systems are becoming more and more popular for their energy efficiency, while heat pump systems are the cutting edge of renewable and efficient hot water production.

The second factor that differentiates hot water system types is whether they are tank-based systems or instantaneous systems. A tank system maintains a large amount of water in a tank that is then refilled as hot water is used. An instantaneous hot water system heats hot water on demand, without keeping any stored supply.

We will go through each of these types in more detail below.

Rinnai internal natural gas
Australian Hot Water Inner West installation of a Commercial Rinnai hot water systems, providing plenty of hot water for the many units and Residents.

Tank systems

A hot water system that uses a tank is the more traditional and still most common type of hot water system. In a tank system, cold water is passed into the tank where it is heated before being sent to hot water outlets in the home. When hot water is used – for example, when someone takes a shower – new water is passed into the tank to be heated. When no hot water is being used, the tank maintains the heat of the water it holds.

By the laws of physics, hot water is lighter than cold water and therefore will rise to the surface of a hot water tank that also contains cold water. Therefore, the water-out pipe in a hot water tank is located close to the top, while cold water enters the tank at the bottom. The heating element or burner is located at the bottom of the tank so that the new cold water is heated immediately as it enters the tank. As long as the tank heats the new cold water faster than hot water leaves the top of the tank, a continuous supply of hot water will be able to flow.

A thermostat for a hot water system is attached to test the temperature of the water. The thermostat in turn regulates the element or gas burner being turned on or off.

Tank systems come in different sizes, ranging from 25L portable tanks up to around 400L for large family tanks. Different tanks also use different materials and insulation systems to improve the energy efficiency of the system.

How do electric hot water systems work?

Electric systems simply work by connecting the tank to your home’s regular electricity supply. For very small tanks, this can sometimes be done by plugging the tank into a normal power outlet in your wall. However, for larger tanks that require higher currents of electricity, they require a fixed integration into your home’s electrics.

An electric hot water system employs an ‘element’, which is either made from copper or ‘Incoloy’ (nickel-chrome alloy) with an inner wire running through it. The system passes an electrical current through the wire to create friction and therefore heat. This makes the element extremely hot and it begins to heat the water in the tank.

How do gas hot water systems work?

A gas hot water system requires that your home be connected to either the natural gas mains supply in your street which is not always available in all areas, or LPG bottle gas independent to your home.
A gas system employs a burner, which ignites the gas as it enters the system. A gas heater also requires a flue to remove combustion gases from the system.
Gas systems are generally more efficient than electric systems and cheaper to run. However, they are also generally more expensive to buy off the shelf.

How do instant hot water systems work?

An instant – also known as instantaneous, tank-less, or continuous flow – hot water system does not require any tank as it does not store any water. An instant system simply heats water as and when it is needed.


It works by passing water through a copper pipe – usually coiled within a heat exchanger – that is heated either by an electric element or a gas burner. The water is immediately heated as it passes through and is sent directly to the water outlet.

Since an instant hot water system does not waste any energy keeping a large amount of water hot when it is not in use, it is generally much more energy efficient than a tank-based system. However, they are generally also more expensive to buy and install.

Instant hot water systems come in different sizes, which dictate how much hot water the system can produce on demand.

How does a solar hot water system work?

A solar hot water system works by capturing heat from the sun and transferring it to water that is then channelled on to water outlets in the home. There are different ways in which this process occurs, however.

The most straightforward method is that solar panels attached to the roof of your home collect heat and transfer it to a water storage tank on the ground. However, solar tanks can also be mounted onto roofs, while some solar systems channel water through tubes near the solar panels so as to give them the added benefit of direct heating from the sun.
Solar Hot Water

In almost all cases, a solar system is integrated with either a gas or electric booster. Since solar power is dependent upon the weather, it is necessary sometimes to use a secondary energy source to quickly heat water to meet demand. A solar system can typically provide around 60% of your hot water needs. However, figures will vary depending upon the location of your home, the type of system, as well as the configuration of your roof.

Solar systems are more expensive to buy and install than regular hot water systems. However, they are far cheaper to run since their energy source is available for free. Also, solar panels are very enduring so that they can be relied upon for significant periods of time.

How a heat pump hot water system works

A heat pump hot water system represents the cutting edge of water heating technology. Like a solar system, the heat pump hot water heater uses renewable energy.

The way that a heat pump works is that it collects air from directly around it and then circulates it through the pump. By circulating it, the heat of the air increases and this heat is then channelled towards the water reserve.

In this way, the heat pump system is attached to a water tank as in a regular hot water system. However heat pump systems are regarded as being two to three times more energy efficient than a standard electric hot water heater.

As with a solar system, the heat pump also comes with either a gas or electric power source. This allows the heat pump to bring in the warm air for circulation and also to boost the heating power of the machine when it is in demand.

The efficiency of a heat pump system is dependent upon the positioning of the pump, the climate in which you live, as well as the specifications of the individual device.

What system works best?

Hot water heaters have been benefiting from the development of technological advances for a long time now. Not only are new technologies like solar and heat pump systems being created, but older types of systems are becoming more and more efficient. So, hot water heaters are working better and better all the time.


There is no simple answer to the question of which hot water heater works the best. The way in which different hot water systems work will be better suited to different needs and situations. For example, not all homes will be compatible with a solar hot water system because the aspect of the roofing does not allow much exposure to sunlight. On the other hand, homes with intermittent hot water usage may be better suited to the way an instant hot water system works – only heating water as and when it is needed.

If you require further guidance on how different types of hot water systems work and which is best for you, you can get in touch with one of Australian Hot Water’s expert advisers. A hot water system represents a significant investment, since you will keep it for a very long time. So, make sure you get the information you need to make the right decision for what is most appropriate for you and your family.


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