Gas vs electric hot water: which is right for you?
Choosing a hot water system is a 10–15 year decision that directly affects your energy bill, comfort, and home value. Here is an honest side-by-side of gas and electric options, based on what we actually install and replace across the Northern Beaches.
- • Connected to mains gas + family of 3+: continuous-flow gas is usually cheapest to run and never runs out.
- • No gas connection + solar/battery: heat-pump electric is the cheapest per litre to run and pairs with solar.
- • Rental, holiday home, or small unit: electric storage is cheapest to install and simplest to service.
- • LPG bottles only (no mains gas): avoid gas — LPG running costs are now higher than electric.
- • Replacement rule of thumb: if your system is 10+ years old and starts leaking or running cold, replacement is almost always cheaper than repair.
- • Typical install cost in Sydney (2026): electric storage $1,400–$2,200 · continuous-flow gas $2,200–$3,500 · heat pump $3,500–$5,500 (after NSW rebate).
The three systems we install most
Across Mosman, Manly, Dee Why, Brookvale, and Frenchs Forest, three options cover 95% of the homes we work on:
- Continuous-flow gas (instantaneous): small wall-mounted unit, heats water on demand. Brands: Rinnai, Bosch, Rheem.
- Electric storage: cylindrical tank (usually 160–315 L) with an internal element. Cheapest to install, most common in older homes.
- Heat-pump electric: uses ambient air to heat water (like a reverse-cycle aircon). 3–4× more efficient than a standard electric element, eligible for NSW energy rebates.
Side-by-side comparison
| Factor | Continuous-flow gas | Electric storage | Heat pump |
|---|---|---|---|
| Install cost | $2,200–$3,500 | $1,400–$2,200 | $3,500–$5,500 (post-rebate) |
| Running cost (yearly, family of 4) | ~$350 mains gas / ~$900 LPG | ~$1,100 off-peak / ~$1,600 peak | ~$280 |
| Lifespan | 12–15 years | 8–12 years | 10–15 years |
| Hot water reliability | Never runs out | Depletes during long showers | Never runs out if sized right |
| Pairs with solar PV | No | Yes (off-peak only) | Yes (best match) |
| Noise | Silent | Silent | Low fan hum (like a fridge) |
Running cost estimates assume 2026 Sydney tariffs. Your actual bill will vary with usage, household size, and retailer.
Which one should you pick?
The right answer depends on three things: what fuels are connected to your home, how many people live there, and whether you have solar panels.
Pick continuous-flow gas if...
- You have a mains gas connection already (check the meter at your front boundary).
- Household of 3+ people with overlapping shower times.
- Wall space is limited — the unit is roughly the size of a carry-on suitcase.
- You want the lowest running cost without changing to electric.
Pick heat-pump electric if...
- You have no mains gas, or you have rooftop solar / battery storage.
- You want the lowest running cost long-term and can wait 5–7 years for payback.
- You have outdoor space on a north- or east-facing wall (the unit needs airflow).
- You qualify for the NSW Energy Savings Scheme rebate — most households do.
Pick electric storage if...
- Tight budget and you need a quick replacement.
- Small household (1–2 people) or low hot-water use.
- You are a landlord or managing a holiday rental — simplest to service.
- You have off-peak electricity tariff available (most Sydney homes do).
Avoid these combinations
- LPG-only gas hot water — the running cost is now higher than electric.
- Heat pump placed in a tight alcove or garage with no airflow — efficiency collapses.
- Oversized electric storage tank for a small household — you are paying to keep water hot that you never use.
Northern Beaches specifics
A few local factors matter more here than in most of Sydney. Coastal properties in Manly, Freshwater, and Collaroy suffer accelerated corrosion on exposed outdoor units — stainless-steel cases and magnesium anodes are worth the extra cost. Older homes in Mosman often have 40+ year copper water supply that can flake and clog the inlet filter on a new continuous-flow gas unit within the first month; we check and flush the supply line before install.
Heat pumps are a strong fit for the Northern Beaches climate — mild winters and good rooftop solar penetration — which is why we now install roughly three heat pumps for every one electric storage replacement, reversed from five years ago.
How to know it is time to replace
Signs your existing system is past its best:
- Rust-coloured water from hot taps (electric storage tank is corroding internally).
- Water pools under or around the unit — tank or joint leak.
- Hot water runs lukewarm or runs out mid-shower even after the element has had time to recover.
- Gas unit error codes (Rinnai 11, 12, 14 are the common ones we see before a fail).
- Gas bill rising with no change in usage — usually a failing burner or heat-exchanger.
- System is 10+ years old. Even if it is working now, failure during winter is a when-not-if.
Key takeaway
If you have mains gas and a family, continuous-flow gas is still the cheapest option overall. If you have no gas or you already have solar panels, a heat pump has the best long-run economics and qualifies for an NSW rebate. Electric storage remains the right answer only for small households, tight budgets, or rental properties. Avoid LPG-powered systems where possible — their running cost has crossed above electric.