Choosing the Right Hot Water System: What Most Homeowners Get Wrong
Choosing the right hot water system is a decision that homeowners often underestimate. While it may seem like a straightforward purchase, the wrong choice can lead to higher utility bills, poor performance, environmental waste, and long-term regret. This article explores the common mistakes homeowners make when selecting a hot water system, provides guidance on how to avoid these pitfalls, and helps you make an informed choice that balances efficiency, cost, and household needs.
The Importance of Getting It Right
Water heating accounts for around 21% of the energy used in an average Australian home, making it the second-largest segment of residential energy use after heating and cooling (source). This significant energy draw means your hot water system isn’t just a utility—it’s a major factor in your household’s environmental footprint and energy expenses.
Many homeowners don’t realize that choosing the wrong type or size of hot water system can lock them into higher costs and lower comfort for a decade or more. Replacing an old or faulty system is also typically a reactive decision, made under the stress of a breakdown—often without research or consideration of modern alternatives.
Mistake #1: Assuming Bigger Is Always Better
A common myth is that a larger tank ensures better performance. While it might feel comforting to know there’s a large reservoir of hot water, oversizing leads to increased energy use. Tanks keep water hot constantly, even when not in use. This “standing heat loss” becomes more significant with bigger tanks, resulting in unnecessary power consumption.
Instead, size your system according to actual household needs:
- 1–2 people: 90–160 litres
- 3–4 people: 160–300 litres
- 5+ people: 300+ litres
Tankless or continuous flow systems are another option for households concerned about space or heating efficiency, as they heat water on demand rather than storing it.
Mistake #2: Ignoring System Type Differences
There are four main types of hot water systems:
1. Electric Storage Systems
These are the most common in older homes but also the least efficient. They heat water using an electric element and store it in an insulated tank. They are cheaper upfront but have higher running costs and are increasingly being phased out in some regions due to poor energy performance.
2. Gas Storage or Instantaneous Systems
Natural gas systems are efficient and affordable where gas is available. Instantaneous gas systems (also known as continuous flow) only heat water when needed, which reduces standby losses.
3. Solar Water Heaters
Solar systems use rooftop panels to harness energy and often come with an electric or gas booster for cloudy days. They have high installation costs but extremely low running costs. Over time, the savings can be substantial. According to the Australian Government, households switching to solar water heating can reduce their water heating bills by 50% to 80% (source).
4. Heat Pump Systems
Heat pumps extract heat from the air and use it to warm water. They are extremely efficient, especially in warmer climates, but may not perform well in very cold areas unless supported by a booster system.
Mistake #3: Not Considering Water Usage Patterns
Even the best hot water system can underperform if it doesn’t align with your household’s usage patterns. For example, solar systems work best when most water usage occurs during daylight hours. If everyone showers late at night, the booster may have to work overtime, negating efficiency gains.
Similarly, continuous flow systems are ideal for households with staggered shower times but might struggle with simultaneous usage (e.g., showering while the dishwasher and washing machine are running).
Mistake #4: Choosing Based on Upfront Cost Alone
A low sticker price is appealing—but it’s only part of the story. Operating costs over the life of the system often exceed the purchase price. Electric systems, while cheap to buy, can be twice as expensive to run compared to solar or heat pump systems.
When evaluating costs, look at:
- Installation costs
- Operating costs (per year)
- Expected lifespan
- Maintenance and repair costs
- Government rebates and incentives
While solar and heat pump systems may require a larger initial investment, rebates and long-term energy savings often make them more cost-effective over time.
Mistake #5: Failing to Check Energy Ratings
Many homeowners overlook energy ratings when purchasing a hot water system. In Australia, the Energy Rating Label provides an efficiency score (measured in stars) that helps you compare systems.
Higher star ratings generally mean lower running costs. Over 10 years, choosing a system with an extra star could save hundreds—if not thousands—of dollars in energy bills.
Mistake #6: Not Factoring in Climate
Climate plays a big role in how efficient a hot water system will be. Solar systems work best in sunny areas, while heat pumps are most efficient in mild to warm climates. In colder regions, gas or high-efficiency electric systems may be more reliable.
Always factor in your geographic location when comparing system types and brands. For instance, frost protection is essential for solar systems in colder climates to prevent pipe damage.
Mistake #7: Overlooking Installation Complexity
Different systems have different installation requirements:
- Solar systems require adequate roof space, proper orientation, and plumbing access.
- Gas systems require gas line connections and proper ventilation.
- Heat pumps need sufficient outdoor space for airflow and minimal noise disruption.
Choosing a system without considering installation logistics can lead to unexpected costs or installation delays. Always get a professional assessment of your home before purchasing a new system.
Mistake #8: Ignoring Maintenance Requirements
Every system type has its own maintenance needs:
- Electric systems may require periodic element replacement.
- Gas systems need regular inspection for safety.
- Solar systems require annual checks for panel cleanliness and pump operation.
- Heat pumps need airflow clearance and filter maintenance.
Choosing a system that suits your willingness to perform or schedule maintenance is crucial. Neglecting maintenance shortens lifespan and reduces efficiency.
Mistake #9: Not Planning for the Future
Your hot water needs may change—due to family growth, renovations, or a switch to electric appliances. Consider scalability when choosing a system.
Some homeowners invest in systems that just meet their current needs, only to discover later they’re inadequate. Others fail to consider off-grid potential or compatibility with solar PV panels. It’s worth asking:
- Will this system still serve me in 10 years?
- Is it compatible with energy-saving upgrades?
- Can it integrate with my smart home or solar power system?
Mistake #10: Skipping Professional Advice
Too many homeowners make decisions based on price tags or marketing alone. Consulting a licensed plumber or hot water specialist can prevent costly errors. A professional can:
- Recommend the right size and type
- Assess your home’s setup
- Advise on local rebates
- Provide a total cost-of-ownership analysis
Getting an expert’s input upfront ensures you’re not left with a system that’s either inefficient or incompatible with your household’s needs.
Final Thoughts: Smart Decisions Lead to Long-Term Savings
Choosing the right hot water system isn’t just a matter of ticking boxes—it’s a careful decision involving lifestyle, efficiency, cost, and climate considerations. The most common mistake homeowners make is focusing on the short term: the lowest price, the biggest tank, or the most familiar option. In reality, the best system for your home is the one that meets your specific needs while minimizing environmental and financial impact over time.
By avoiding the common errors outlined above, you’ll not only enjoy reliable hot water but also save money and reduce your household’s carbon footprint. Take the time to research, compare, and ask the right questions—your future self will thank you.
Sources:
- Australian Government Department of Climate Change, Energy, the Environment and Water. Hot Water Systems Guide
- Australian Government Energy.gov.au. Solar Water Heaters
