Gas vs electric hot water: which is right for you?
I get asked this every week. Here's what I tell people after installing hundreds of systems across Frenchs Forest, Manly, and Mosman.
A family in Frenchs Forest called me last year. They'd been running an old electric storage tank and were fed up with $200 quarterly bills. I installed a heat pump — took about four hours. First quarter after that, their bill dropped to $80. "I wish we did this five years ago," the wife said. That's the kind of call that makes my job rewarding.
Across the Northern Beaches, from Mosman to Manly to Forestville, three hot water system options cover 95% of the homes I work on. Here's the honest breakdown.
Continuous-flow gas
- Small wall-mounted unit, heats water on demand
- Never runs out of hot water
- Best for families of 3+ with mains gas connected
- Running cost ~$350/year on mains gas
- Install: $2,200–$3,500
- Lasts 12-15 years — longest of any option
Heat pump electric
- Uses ambient air to heat water — 3-4x more efficient than standard electric
- Running cost ~$280/year, cheapest of all options
- Eligible for NSW rebates ($600-1,200 off)
- Install: $3,500–$5,500 (post-rebate)
- Lasts 10-15 years
- Pairs perfectly with rooftop solar
Electric storage
- Cheapest to install — $1,400–$2,200
- Running cost ~$1,100–$1,600/year depending on tariff
- Best for 1-2 people, rentals, or tight budgets
- Lasts 8-12 years — shortest lifespan
- Runs out during back-to-back showers
What to avoid
- LPG gas (bottled gas) — running cost is now higher than electric. Avoid if you have the choice.
- Heat pump in a tight alcove with no airflow — efficiency collapses.
- Oversized electric tank for a small household — you're paying to heat water you never use.
How to decide
- Got mains gas and a family of 3+? Continuous-flow gas. Lowest running cost, never runs out.
- No gas connection but have solar panels? Heat pump. Best long-term economics, pairs with solar.
- Tight budget, rental, or small household? Electric storage. Simple, cheap to install, easy to service.
Northern Beaches reality check
Coastal properties in Manly, Freshwater, and Collaroy need stainless-steel casings and magnesium anodes on outdoor units. Salt spray eats standard units in 3-4 years. Older homes in Mosman often have 40-year-old copper supply lines that flake and clog the inlet filter on a new continuous-flow gas unit. I check and flush the supply line before every install.
Heat pumps are perfect for our mild Northern Beaches climate. I now install three heat pumps for every one electric storage replacement — completely flipped from five years ago.
Frequently asked questions
Which hot water system is cheapest to run?
For homes with mains gas, continuous-flow gas is the cheapest to run at about $350/year for a family of four. For homes without gas, a heat pump is the cheapest at about $280/year. Standard electric storage costs $1,100-1,600/year depending on your tariff. LPG gas is the most expensive option at about $900/year.
Can I switch from electric to gas hot water?
Yes, if you have a mains gas connection at your property. Switching requires running a gas line to the unit location and installing a flue for the exhaust. Our gas plumbers handle the full conversion. If you do not have mains gas, a heat pump is usually a better option than installing LPG bottles.
Do NSW rebates apply to hot water systems?
Yes. Heat pump hot water systems are eligible for NSW Energy Savings Scheme rebates, typically $600-1,200 depending on the model and installer. Some solar hot water systems also qualify for Small-scale Technology Certificates (STCs). Electric storage and gas systems do not currently qualify for rebates.
Which hot water system lasts the longest?
Continuous-flow gas units last the longest at 12-15 years because there is no storage tank to corrode. Heat pumps and solar tanks last 10-15 years. Electric storage lasts 8-12 years. Gas storage has the shortest lifespan at 8-10 years due to thermal stress from the burner.
Not sure which system to choose?
I'll give you an honest recommendation based on your home, not what I've got in the van. Free quote, same-day install available.
Related reading
- Why Is My Hot Water System Leaking?Diagnose leaks before deciding to replace.
- How Long Should a Hot Water System Last?Know when your existing system is due for replacement.
- No Hot Water? 7 Common Causes and How to Fix ThemTroubleshoot issues before deciding to replace.
- Hot Water System Maintenance ChecklistKeep your system running efficiently.
- What Size Hot Water System Do You Need?Choose the right capacity for your household.
- Hot Water System ReplacementProfessional installation and same-day replacement across the Northern Beaches.
The short version
If you've got mains gas and a family, continuous-flow gas is the cheapest overall. If you've got no gas or have solar panels, a heat pump has the best long-term economics and qualifies for an NSW rebate. Electric storage only makes sense for small households, rentals, or tight budgets. Avoid LPG — the running cost has crossed above electric.