A Hot water SYSTEM is essential for any business or home. However, choosing the right hot water system can be confusing. There is a huge range of different hot water systems on the market. Durability, features, and options vary widely. This affects the price of any given system. With so many options, making the right choice can feel impossible.

But don’t worry! We’re here to help. Let’s demystify this industry.

In this article, we’re going to look at the main factors affecting the price of various hot water heater systems. We’ll examine different models and categories of hot water heaters and explain their pluses and minuses. We’ll explain the basic costs of purchasing and installing a unit, but also cover some factors you may not have considered, such as site access and government rebates.

Hot Water System Costs Explained

There are two driving factors that determine the cost of a hot water heater: the type of unit and the shape of your house. These both play a major role in determining other costs associated with hot water service installation. However, the ‘other’ hot water system installation costs should not be discounted when considering how much your unit will set you back in total.

The 8 Steps Which Determine A Hot Water System’s Cost

There are eight main factors that determine the price of a new hot water system: Household needs, unit type and size, delivery costs, the hot water installation cost, site access, government rebates, disposal cost and running costs.

1. Household Needs

Firstly, you need to consider if your current hot water system is big enough and energy efficient. Otherwise you could be paying too much for your household water heating. This is where our expert team of qualified service technicians can assess what your family really needs with day to day hot water usage.

All families have different lifestyles and schedules, and these should be considered when considering the type or size of water heater that best suits the needs of the household. It is not uncommon in a busy household that the family just puts up with a previously installed product, for no reason other than it existed at the house before they moved in.

What we suggest first is to arrange for a free health check on your current hot water system to find out what works for your family and your budget.

Need more info on prices of hot water systems?

2. Unit Type & Size

Rheem Stella Stainless Steel Hot Water Heaters
Rinnai Infinity Continuous Gas

The types of hot water system and their size are generally the biggest factor in determining price. There are four main types of hot water systems, along with a variety of sub-types in each category. Here’s a summary. This table only includes the equipment itself. Other factors add additional costs.

System TypeAvg. Minimum PriceAvg. Maximum Price
Electric – “Storage” type$450 (25 L)$1900 (400 L)
Electric – “Instant” type$660$1400
Gas – “Storage” type$850 (135 L)$1700 (360 L)
Gas – “Instant” type$750$1800
Solar – Roof Mounted (electric boost)$3600$4800
Solar – Split System (electric boost)$3900$6000+
Solar – Split System (gas boost)$4900$6800+
Heat Pump$3300 (160 L)$4600 (315 L)

Electric Hot Water System Prices

These systems come in two main types: storage, and instant. Electric storage systems use heating elements to heat a tank of water that varies in size from about 25L on the low end to more than 400L. Small sizes start at around $450, and large models—which often use two heating elements for faster warming—rise to about $1900.

Instant water heaters have no tank. Instead, they function by drawing high amounts of power to heat water on-demand. These models are increasing in popularity, as they provide essentially limitless hot water and can save energy in some cases. This is especially true if you use a relatively small amount of hot water. These systems cost in the range of $680 to $1600 (Product only).

 Natural Gas Hot Water System Prices

Like electric systems, gas hot water systems in instant and storage varieties. However, these different approaches have a bit more pricing parity. Gas instant systems typically range from about $750 to $1900, depending on the number of simultaneous taps or water outlets the device must serve. Gas heaters with storage tanks start at about $850 for a 135L system and range to $1800 for high-end 360L systems.

Solar Hot Water System Prices

Increasingly, people are moving to solar-powered hot water, especially in the sunny parts of the country. These systems are more expensive to install, but save energy and money over the life of the system. Most solar systems need an “assist” for days that are particularly overcast or cold.

Solar systems come in a few main varieties. Roof-mounted models are becoming more popular. Base prices for electric-boosted roof-mounted models range from about $3800 to $5400 or more. Electric-boosted systems with a tank on the ground (these are called a “split system”) are preferable when roofs can’t support the weight of a tank. These systems range from roughly $3900 to $6000 or more. Finally, a natural gas boosted split system starts at around $4900 and ranges up to $6500.

Heat Pump Prices

Like a solar system, a heat pump water heater is highly efficient. However, the approach is different. Instead of using solar energy, heat pump water heaters use air-conditioning technology to extract heat from the ambient air and use it to heat water.

These systems save money, but often require a warm or temperate climate and must be installed outdoors. They can also be noisy. Prices for a heat pump water system start at around $3800 for a 160L system, and range to roughly $4500 for a 315L heat pump.

3. Delivery Costs

Technician next to Australian Hot Water Service Van

The third factor that will affect the cost of your hot water system is delivery. This cost depends on size and distance. Some hot water systems weigh only 15 kg and can be easily carried by one person. Others are more than 150 kg and require two or more experienced and strong installers.

4. Installation Costs

Technicians installing Hot Water Systems

The fourth factor determining the price of your hot water system is installation cost. Installation costs can vary widely depending on the complexity of the job.

If you’re replacing an existing hot water system with the same type in the same position, the installation cost is relatively low, in the range of $260 to $690.

Installation Fees Extras

If additional valves are required, or if plumbing or electrical systems require upgrades, costs will be higher. A new law implemented in 2012 means that tempering valves must be fitted on every hot water system. These anti-scald devices regulate water temperature to 50 degrees. In most cases, the manufacturer warranty is void if these valves are not fitted. They cost an additional $190 to $250.

If you need to reposition your hot water system to a different site on the property, installation costs could be another $1100 to $2100 depending on the plumbing and electrical work required.

Changing energy type, for example, switching from an electric hot water system to a natural gas hot water heater, will require additional work and cost in the realm of $1500 to $3000. If you are upgrading the size of your hot water system, additional plumbing and electrical work may be required.

Another factor of the installation process that affects the price is, of course, time. The majority of hot water system installations should be straight forward and would expect to take approximately two hours for a product of a standard size and energy type.

Variables which can affect this length of time include the unknown factor of a product that was made a certain size 10+ years ago and has now changed in either height, width or depth. Manufactured products over time can change for different reasons like efficiency and material improvements, which affect the overall size. So although the model may match in litres or energy efficiency specifications, the new dimensions can alter the way it will be installed when replacing an older model. Therefore this can affect the final cost of installation.

There are many more unseen variants that could extend the average installation to either four, five, or possibly more hours, or even result in a return visit the next day. When a new hot water system has changed energy source or is relocated from its original position, this can propose a more difficult or lengthy process to install plumbing or electric to the new water heater position.

5. Site Access

Crane lifting a hot water system

The fifth factor in the price of a hot water system is ease of access. High roofs, steep and narrow stairs, and other obstacles can require extra labor and equipment. Cranes may even be needed to lift a system into place in some cases. Wall-mounting can also require extra work. All this adds to installation costs.

6. Government Rebates

Rheem Solar Panel

The Australian government provides incentives to purchase efficient hot water systems via a number of rebates and incentives. Solar hot water systems in particular can benefit from government rebates that reduce your costs by $600 to $1200 depending on your selected system.

7. Disposal

Technicians disposing of a old rusty water heater

The next element in determining the cost of your hot water system is disposal. Environmentally responsible disposal of your existing hot water system usually adds about $77 to the cost of a new hot water installation.

So when calculating the cost of a hot water system, you must include:

  • The hot water system itself
  • Delivery
  • Installation and ease of site access
  • Government rebates
  • Disposal of existing system

8. Running Costs

The annual running costs of a hot water system depend on several factors including energy type, tariff type and energy rating. See our guidelines on hot water system running costs below:

Electric :   Storage tank Peak tariff                 =          up to $950.

                 Instant tankless Peak tariff         =         up to $785.

                 Storage tank Off Peak tariff        =          up to $800.


Natural Gas :   Storage tank   –             4 energy star rating   =    up to   $440.

                                                                5.5 energy star rating   =    up to    $350.

                           Instant tankless  –      5.5 energy star rating   =    up to   $345.

                                                                   7 energy star rating    =    up to    $295.

LPG ( Bottle gas ):  Storage tank   –  5.5 energy star rating    =  up to     $565.

                                                                  4 energy star rating   =    up to      $680.

                               Instant tankless –  5.5 energy star rating  =     up to     $540.

                                                                    7 energy star rating   =    up to    $470.


Solar : Electric boosted storage tanksPeak tariff  standard  =    up to     $370.

                                                                                    High efficiency =    up to    $275.

                                                                Off peak tariff standard  =    up to     $260.

                                                                                    High efficiency =    up to    $180.

            Natural Gas Boosted  –                                         standard  =    up to      $95.

                                                                                    High efficiency =    up to       $75.

                   LPG ( Bottle gas )-                                           standard  =    up to     $140.

                                                                                    High efficiency =    up to      $100.


Heat Pump: Electric boosted storage tank – Peak tariff  standard  =    up to   $390.

                                                                                    High efficiency =          up to    $270.

                                                               Off peak tariff standard  =           up to     $240.

                                                                                    High efficiency =          up to    $180.

Trust Our 35+ Years of Experience!

Australian Hot Water is fully certified to supply and install most household and commercial hot water systems. If you are interested in energy efficient water heater installation, make sure you get in touch with us to get expert advice about which of our hot water systems is best suited to your family and your home.

We Offer Hot Water Maintenance!

Australian Hot Water’s certified technicians are also experts in all Australian hot water systems and can continue to maintain your hot water system over its lifetime. You can also have peace of mind knowing that Australian Hot Water has a 24/7 emergency repairs service. So if you ever need your hot water unit to get working quickly in an emergency, Australian Hot Water will deliver same-day service.


Contact Us For All Your Hot Water System Installation Needs

We have been reliably servicing Australian homes for over 35 years with our ideal economic solution to hot water needs across the country. For hassle free hot water system installation or natural gas hot water systems, contact Australian Hot Water. We can supply, install/upgrade and repair your gas hot water systems or electric hot water systems no matter where your house is in Sydney, Newcastle or Canberra.

Call Australian Hot Water Today

Australian Hot Water provide a full service including supply, installation, service, repair and disposal of most household and commercial hot water systems. Contact us today for independent and expert advice on the right hot water system for you and your household, or buy online now.



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