The Types of Hot Water Systems We Recommend in 2025

When it comes to home comfort, a hot water system has to be up there as one of the most essential items. If you’ve ever been forced to take a cold shower in winter, you’ll know what we’re talking about.

As we step into 2025, hot water systems have come a long way since English painter Benjamin Maughan’s innovation of the first domestic hot water system in 1868. With exciting advancements in energy efficiency and cost savings, new technologies are making it easier than ever to reduce your energy bills while still enjoying that perfect temperature hot shower.

Here’s some insight into our recommendations for different types of hot water systems for 2025. We’ll help you make an informed decision that offers elite performance and durability while being environmentally friendly and budget conscious.

Types of Hot Water Systems in 2025

There are four main types of hot water systems to choose from:

• Electric: Uses electricity to heat water in a tank, offering a simple and reliable solution.
• Gas: Relies on natural gas or LPG to heat water, providing faster heating and typically lower operating costs.
• Solar: Harnesses energy from the sun to heat water, offering a sustainable and cost-effective solution.
• Heat Pump: Extracts heat from the air or ground to heat water, providing an energy-efficient alternative.

What you choose depends on your specific needs and preferences and every type has its pros and cons. Let’s take a look under the hood of each.

Electric Hot Water Systems

Advantages:

• Simple Installation: Electric hot water systems are relatively easy to install and are often a go-to option for homes that don’t have access to gas lines.
• Lower Upfront Cost: Because of the easy installation, electric hot water systems generally have a lower initial purchase and installation cost compared to gas and solar.
• Reliability: If it’s reliability you’re after, these systems require minimal maintenance once installed.

Disadvantages:

• Higher Operating Costs: Due to electricity generally being more expensive than gas in Australia, electric hot water systems can lead to higher ongoing energy costs.
• Energy Inefficiency: Electric systems are typically less energy-efficient than solar, gas and heat pump water heaters.
• Slower Heating: It may take longer to heat up water, especially in larger tanks or colder climates.

Best Applications:

• Smaller homes or apartments where hot water demand is relatively low. Areas without a natural gas supply.
• Those who want a quick and easy installation without the need for a gas connection.
• A smaller space where a compact electric system can be a space-saving solution.

Energy Efficiency Considerations in 2025:

Advancements in technology are improving the energy efficiency of electric hot water systems. In 2025, look for newer models with smart controls that allow you to schedule hot water heating during off-peak hours, reducing costs.

However, even with these improvements, electric systems still tend to be less energy-efficient than solar or gas options, especially if used in larger households.

Gas Hot Water Systems

Types of Gas Systems

• Instantaneous (Tankless) Gas Hot Water Systems: These systems heat water on demand, meaning there’s no storage tank. As water flows through the unit, heated by gas, it provides an endless supply of hot water. Ideal for homes with fluctuating hot water needs or smaller spaces as they are compact and energy efficient. However, they can be more expensive to install and may require upgrades to gas supply lines.
• Storage Gas Hot Water Systems: These systems store hot water in a tank that’s heated continuously by gas. They are perfect for homes where hot water is used in large quantities at specific times, such as in the mornings when everyone is showering. As a result, these are the most common kinds of hot water systems used by Australian families.

Advantages:

• Lower Operating Costs: As previously touched on, gas is typically more affordable to run in Australia, especially for larger households.
• Faster Heating: Gas systems heat water more quickly than electric systems, ensuring you won’t run out of hot water during high-demand periods.
• Reliable and Efficient: Gas systems are generally more energy-efficient than electric, providing more hot water per unit of energy used which may result in lower energy bills over time.

Disadvantages:

• Higher Installation Costs: Gas hot water systems can have a higher upfront installation cost. This is especially so if you need to install or upgrade gas lines.
• Requires Gas Supply: Gas systems require access to a natural gas or LPG supply. As such, it’s not worth it if your home is in an area without a gas connection or in places where gas prices are higher.
• Ongoing Maintenance: Gas systems require more frequent maintenance than electric. To ensure safe and efficient operation, it’s necessary to regularly check the burner, flue, and venting system.

Best Applications:

• Perfect for larger households or homes with high hot water demand, such as families with multiple bathrooms.
• Well-suited for homes located in areas with access to natural gas, meaning you could save on energy costs in the long term.

Solar Hot Water Systems

Advantages:

• Energy Efficiency: Solar hot water systems are one of the most energy-efficient ways to heat water. They harness free energy from the sun, reducing reliance on electricity or gas and making them the eco-friendly choice.
• Low Running Costs: Once installed, solar systems have very low operating costs, as sunlight is free! This can lead to significant savings over time.
• Sustainability: As a renewable energy solution, solar systems reduce your carbon footprint. This makes it an ideal choice for environmentally conscious homeowners.

Disadvantages:

• High Initial Costs: The upfront cost of purchasing and installing a solar hot water system can be significantly higher than electric or gas systems. The more high-quality panels and equipment you choose (which is advisable), the more the cost.
• Weather Dependence: Solar systems rely on sunlight to heat water, so their efficiency can decrease on cloudy days. This makes them somewhat dependent on the weather and climate in which you live.
• Space Requirements: Solar panels need space on your roof, and larger systems may require more area, which could be a problem if your home has a small roof-surface area.

Suitable Climates and Installations:

As previously mentioned, solar hot water systems perform best in sunny climates, where there is a high amount of sunlight throughout the year. Solar systems can still be used in regions with less sunlight, but their efficiency will be lower.

For installation, it’s important to ensure your roof is structurally sound and oriented correctly for optimal sun exposure, ideally facing north in Australia, which will utilise more of the winter sun. The roof angle also plays a role—your professional installer can help determine the best setup for your home.

Cost Savings and Government Incentives in 2025:

In 2025, the long-term cost savings of solar hot water systems are substantial. Think of solar as a marathon, not a sprint—despite the higher initial investment, these systems can save you hundreds of dollars annually on your energy bills. Over time, the savings can offset the installation costs, especially in areas with high electricity or gas prices. Most modern systems come with an accompanying app on your phone to help you monitor energy usage and savings.

The Australian government continues to support households making the switch to solar hot water systems with generous incentives, such as rebates. However, these programs vary by state, so it’s worth checking your local options to maximise your savings.

Heat Pump Hot Water Systems

Heat pumps use electricity to extract heat from the air or geothermal energy in the ground and transfer it to heat water. This process makes them highly energy-efficient, especially by leveraging ambient air rather than generating heat directly. They can use up to 70% less energy compared to traditional electric systems.

Advantages:

• Low operating costs
• Reduced carbon footprint
• Eligibility for government rebates

Disadvantages:

• Higher upfront cost
• May perform less efficiently in colder climates without proper insulation.

Best Applications:

Heat pumps are ideal for environmentally conscious households looking to reduce energy consumption and long-term costs. They’re particularly suited to homes powered by renewable energy sources like solar panels.

Hot Water System Recommendations at a Glance

Same Day Hot Water’s Recommendations for 2025

Choosing the right hot water system for your home can be overwhelming. But with our expert guidance, you can find the perfect match for your household needs.

Recommendations Based on Home Size, Energy Preferences, and Budget

Small Homes or Apartments:

• Electric hot water system
• Instantaneous gas systems.

They are cost-effective and space-saving options, ideal for tight budgets and compact spaces.

Medium to Large Homes:

• Gas storage systems for reliability and quick heating.
• Heat pump systems for long-term energy savings.

Eco-Conscious Homes:

• Solar hot water systems.
• Heat pumps.

While their upfront costs may be higher, the long-term energy savings and sustainability benefits make them worthwhile investments.

Budget-Conscious Households:

• Electric systems.
• Pairing a heat pump or solar system with government incentives.

Both options can offer significant savings in the long run.

Why Is It Important to Choose the Right Hot Water System?

Ensuring you choose the most suitable hot water system for your home is essential for many reasons:

• Lower Operating Costs: Investing in an energy-efficient system reduces ongoing expenses.
• Enhanced Comfort and Convenience: The right system ensures you never run out of hot water, even during peak usage times.
• Environmental Impact: Sustainable options like solar and heat pump systems help reduce greenhouse gas emissions.
• Long-Term Value: While the upfront cost may vary, selecting a suitable system adds value to your home and saves money in the long run.

Consult a Professional for Tailored Advice

If you need advice on what hot water system is best suited for you, we recommend consulting a professional. At Same Day Hot Water, our team of experts is here to help you assess your needs, explore your options, and handle the installation process seamlessly.