What Types of Hot Water Systems Do You Install?

Whether your current system has failed, is nearing the end of its life, or you're switching to a more energy-efficient option, our licensed Melbourne plumbers will help you choose the right system, supply it, install it, and have hot water running again.

5 Types of Hot Water Systems We Install in Melbourne

1. Gas Storage Hot Water Systems

How it works: A gas-fired burner heats water inside an insulated storage tank. The tank maintains the set temperature continuously, ready for use whenever needed. When hot water is drawn off, cold water refills from the bottom and the burner reheats the tank.

Best for: Melbourne households already connected to natural gas who want a reliable, cost-effective storage system. Also suitable as a bottled LPG system in areas without natural gas supply.

Capacity options: 90L, 135L, 160L, 170L, 250L, and 315L — matched to household size. As a general guide: 90–135L suits 1–2 people, 135–170L suits 2–3 people, 250L suits 3–5 people, and 315L+ is appropriate for larger households.

Pros:

• Reliable and widely understood technology
• Lower upfront cost than heat pump or solar
• Fast hot water recovery after peak demand
• Works well in Melbourne's climate year-round
• LPG versions available for off-gas-grid properties

Cons:

• Continuous reheating means some standby heat loss even when not in use
• Tank can run out of hot water during unusually high demand
• Higher running costs than continuous flow or heat pump alternatives

2. Gas Continuous Flow (Instantaneous) Hot Water Systems

How it works: Rather than storing hot water in a tank, a continuous flow system heats water on demand, only when a tap is opened. Cold water passes through a heat exchanger fired by a gas burner and exits at the set temperature. When the tap closes, the burner switches off automatically.

Best for: Melbourne households who want unlimited hot water, lower running costs than storage systems, and a compact unit that frees up space. Particularly popular for families of 3–6 people with simultaneous hot water needs.

Capacity options: Measured in litres per minute (L/min) rather than tank size. Common residential capacities range from 16L/min to 26L/min. Selection depends on the number of simultaneous hot water outlets in your home.

Pros:

• Unlimited hot water, never runs out regardless of demand
• No standby heat loss (only heats water when needed)
• More energy efficient than storage systems, typically 15–20% lower gas consumption
• Compact wall-mounted unit frees up floor and cupboard space
• Longer service life than storage hot water systems

Cons:

• Higher upfront cost than gas storage
• Requires adequate gas supply pressure and metre capacity (our plumbers check this at assessment)
• May need flue upgrade or relocation if replacing an existing storage system
• Some models have a slight delay before hot water reaches the tap in longer pipe runs

Recommendation: For Melbourne families on natural gas who are replacing a system, continuous flow is our most frequently recommended upgrade. The combination of unlimited hot water, lower running costs, and longer lifespan makes the additional upfront investment worth it for most households.

3. Electric Storage Hot Water Systems

How it works: An electric heating element inside a storage tank heats and maintains water at the set temperature. Available in off-peak (controlled load) configurations where the element operates on a cheaper overnight electricity tariff, keeping running costs lower than standard rate electric heating.

Best for: Properties without gas connection, rental properties where simplicity and low upfront cost are priorities, and households eligible for off-peak electricity tariffs.

Capacity options: 25L (under-sink models), 80L, 125L, 160L, 250L, 315L, and 400L. Under-sink models are point-of-use units that provide hot water to a single outlet without waiting for hot water to travel through long pipe runs.

Pros:

• Lower upfront cost than heat pump or solar
• Simple, reliable technology with no gas connection required
• Off-peak tariffs significantly reduce running costs for eligible households
• Widely available and easy to service

Cons:

• Standard rate electric heating is the most expensive hot water energy source up to three times the running cost of gas continuous flow
• Standby heat loss as tank maintains temperature continuously
• Off-peak models can run out of hot water if off-peak heating cycle is insufficient for household demand

A word of honest advice: Standard rate electric storage is the most expensive way to heat water in Melbourne in 2026. If your property doesn't have gas, we strongly recommend considering a heat pump system.

4. Heat Pump Hot Water Systems

How it works: A heat pump hot water system works on the same principle as a reverse cycle air conditioner. It extracts heat energy from the surrounding air and transfers it to the water in the storage tank. Because it moves existing heat rather than generating new heat, it uses less electricity than a standard electric element. For every 1 unit of electricity consumed, a heat pump delivers 3–4 units of heat energy, making it 300 to 400% efficient.

Best for: Melbourne households currently on electric storage systems who want significantly lower running costs, and households seeking to take advantage of Victorian government energy efficiency rebates. Also ideal for properties without gas who want the most energy-efficient option available.

Pros:

• Up to 65–75% lower running costs than standard electric storage
• Victorian Energy Upgrades (VEU) rebates available for eligible households replacing an electric system
• No gas connection required
• Compatible with solar PV systems (can be programmed to heat water when solar power is being generated, further reducing running costs)
• Environmentally, the lowest emissions hot water option available for non-solar households

Cons:

• Higher upfront cost than standard electric storage (before rebates)
• Performance is reduced in very cold temperatures; Melbourne's winter temperatures are generally manageable for most models
• Requires adequate outdoor space for the heat pump unit and adequate airflow
• Some models produce a low-level fan noise during operation

Recommendation: For Melbourne households currently on electric storage hot water, upgrading to a heat pump is the single most impactful change you can make to reduce your energy bills. The running cost savings typically pay back the upfront cost difference within two to four years, and the system continues delivering savings for a decade or more.

5. Solar Hot Water Systems

How it works: Solar hot water systems use roof-mounted solar collectors to capture heat from the sun and transfer it to a storage tank, either directly (open loop) or through a heat transfer fluid (closed loop). A gas or electric booster heats the water when solar input is insufficient during cloudy days, winter periods, or periods of high demand.

Best for: Melbourne households committed to maximising renewable energy use, reducing long-term running costs, and who have suitable north-facing roof space for collector installation.

Pros:

• Lowest long-term running cost of any hot water system type
• Federal Small-scale Technology Certificate (STC) rebates available, reducing upfront cost
• Environmentally the most sustainable option
• Gas or electric boosted to ensure hot water is always available regardless of solar conditions

Cons:

• Highest upfront cost before rebates
• Performance depends on available solar radiation
• Roof space, orientation, and structural loading requirements need assessment before installation
• Flat plate collectors may be visible from street level; consideration for heritage or aesthetically sensitive properties

How to Choose the Right Hot Water System for Your Melbourne Home

Here's the straightforward decision framework our licensed plumbers use when assessing Melbourne homes.

Step 1: What Energy Sources Are Available?

You have natural gas: Gas continuous flow is almost always the best option for households of 2 or more people. The combination of energy efficiency, unlimited hot water, and long service life makes it the clear recommendation in most cases.

You don't have gas: Heat pump is the recommended first choice in 2026, particularly given the VEU rebates currently available. Solar is the best long-term investment if your roof has suitable solar exposure. Standard electric storage should only be chosen when upfront budget constraints make the alternatives genuinely unaffordable.

Step 2: How Many People Are in the Household?

Hot water demand scales directly with household size, and undersising is the most common mistake in hot water system selection.

• 1–2 people: 90–135L storage, or 16L/min continuous flow
• 2–3 people: 135–170L storage, or 20L/min continuous flow
• 3–5 people: 250L storage, or 20–24L/min continuous flow
• 5+ people: 315L+ storage, or 24–26L/min continuous flow

Step 3: What's Your Budget?

Lowest upfront cost: Electric storage or gas storage
Best value over 5–10 years: Gas continuous flow or heat pump (after rebates)
Best value over 15+ years: Solar hot water

Step 4: Are There Any Victorian Government Rebates Available?

Currently available in Victoria:

Victorian Energy Upgrades (VEU) program: Rebates for households replacing electric storage with heat pump or solar hot water systems. Rebate amounts vary and are updated regularly.

Federal Small-Scale Technology Certificates (STCs): Available for solar hot water and heat pump installations. The value of STCs is applied directly to reduce the supply cost of the new system.

Our licensed plumbers will identify and apply all applicable rebates to your installation. You don't need to navigate the rebate system yourself.

Need to Replace or Install Your Hot Water System? Contact My Plumbing Services

Whether your current system has failed, is approaching the end of its life, or you simply want to upgrade to a more efficient option, My Plumbing Services is ready to help!

Call 03 9071 4424 or request a quote online.