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Even more energy savings

Save up to 80% on energy costs when compared with conventional electric hot water systems

Solar HW or heat pump?

Pumped to know the difference between a solar and a heat pump system? Here are the basics. 

Solar hot water system


  • Consists of solar collector panels and a storage tank. A four-person household typically needs about four square metres of solar collector area (two panels) and a 300–360L tank. You need a large tank to allow for days with less sunlight (or more hot showers than usual).

  • Thermosiphon systems have both the collector panels and the storage tank mounted on the roof. The liquid in the panels circulates into the tank via the thermosiphon effect (as water heats up, it becomes lighter and rises into the tank). 

  • Pumped or split systems have collector panels on the roof but the tank is located at ground level (or elsewhere in the building). Hot water is pumped from the panels to the tank.

  • If panels can't be installed in an ideal location – usually a north-facing part of the roof with no shading – their efficiency may drop and you'll need a larger collector area.

  • Collectors may be flat panel or evacuated tubes. Evacuated tubes are generally more efficient – so require less panel area – but they're also more expensive.

  • The storage tank usually has an electric or gas booster element to keep the water hot on days with less sunshine. 

  • In frost-prone areas, the water can freeze and damage the panels, so you need frost-tolerant panels which use a special heat-exchange fluid to heat the tank rather than heating the water directly.

  • Solar hot water systems can be comparatively expensive and time-consuming to install compared to conventional gas and electric hot water systems, but a well-chosen system will pay for itself in the long run due to very low running costs.

Heat pump hot water system


  • A very efficient electric storage tank system that works on the same principle as a fridge or air conditioner, by extracting heat from the air and using it to heat the water tank.

  • Units are usually integrated (tank and compressor together) but can also be split(separate tank and compressor).

  • Need to be installed in a well-ventilated area, usually outdoors.

  • The compressor on the unit can be noisy, like the outdoor unit of an air conditioner, so don't install too close to a neighbouring home. 

  • Tend to work best in warm and temperate regions, but some models are designed to work well in cold climates too, and most systems have a booster element for days of cold weather or high demand.

  • You'll typically need a 270–315L tank for a four-person household. Tank sizes generally range from 125L to 400L.

Government rebates 

Some state governments still operate energy-efficiency incentive schemes. To find incentives and rebates for hot water systems, see the Australian government site Your Energy Savings (YES) or contact your state government. Some manufacturers and suppliers also have rebate calculators on their websites.

The main upfront financial incentive for buying a new solar or heat pump hot water system (HWS) comes from government-regulated Small-Scale Technology Certificates (STCs). Solar and heat pump systems qualify for a certain number of STCs depending on the efficiency of the system and where you live. 

In most cases, the easiest way to use STCs is to sell them to the company supplying your new hot water system – they usually 'pay' you by discounting the system you're buying. You can also opt to trade the STCs yourself, but this is a bit trickier and you might not do any better out of it.

Solar and heat pump hot water systems typically qualify for 20 to 40 STCs. The market price for STCs varies but is usually about $30. So for a system eligible for 30 STCs, at a price of $30 per STC, you would get $900. Different suppliers may quote different amounts for STCs.


Installation of a solar HWS can be more complex than for a conventional electric or gas system. It won't happen the next day, so unless you can live without hot showers for a while, it's probably not a good option for when your old HWS dies. A heat pump HWS is easier, as it's often situated and plumbed in just like other outdoor electric tank systems.

Solar hot water panels need a section of roof with good access to sunlight, preferably facing north for maximum exposure. With a thermosiphon system, the roof might need reinforcing as it has to bear the load of the water tank. And if the roof is difficult to access, the supplier might charge more for installation. 

Check with your local council about building regulations. Councils probably won't object to you installing a solar hot water system, but there may be restrictions. For example, noise regulations cover the noise from a heat pump hot water system. The installer should know the relevant regulations but it's still worth checking with them; you don't want to end up in a dispute with your neighbour over a noisy heat pump.

For strata buildings, it might be impossible to install solar hot water for individual units, and most units won't have suitable outdoor space for a heat pump. However, the owners' corporation could consider a commercial installation for the entire building. Villas and townhouses have more options, but owners' corporation approval will still be needed.

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