Written by BluPlanet Admin8/17/2026
Could Your Hot Water System Be Driving Up Your Energy Bill?
You turn off the lights. You choose energy-efficient appliances. You might even have solar panels on the roof.
But there could still be one appliance quietly adding to your energy bill every single day:
Your hot water system.
Because it sits outside or tucked away from view, it's easy to forget just how much work your hot water system does. Every shower, load of washing and turn of the hot tap requires energy.
In fact, water heating accounts for around one quarter of the energy used in Australian homes, making it one of the biggest opportunities to improve household energy efficiency.
So, could your current hot water system be costing you more than it should? Quite possibly.
The Hidden Cost of Hot Water
Most of us don't think about our hot water system until something goes wrong. As long as the shower is hot in the morning, everything seems fine. The problem is that working doesn't necessarily mean efficient.
An older electric storage system, ageing gas unit or incorrectly sized hot water system may continue doing its job while consuming more energy than a modern, energy-efficient alternative.
In Victoria, traditional electric storage hot water systems can be particularly expensive to operate compared with modern heat pump technology. The Victorian Government notes that electric storage systems can have low upfront costs but can be among the most expensive hot water options to run. That means the hot water system you rarely think about could be having a bigger impact on your household expenses than you realise.
5 Signs Your Hot Water System Could Be Costing You Too Much
1. Your Energy Bills Keep Increasing
If your electricity or gas bills seem unusually high and your household habits haven't changed significantly, your hot water system may be worth investigating. Older systems can lose efficiency over time, while inefficient technology may require considerably more energy to provide the same amount of hot water.
2. You're Still Using an Older Electric Storage System
Traditional electric storage systems use an electric element to heat water and keep it hot inside a storage tank.
Modern heat pump hot water systems work differently. Rather than producing all their heat directly from electricity, they extract heat from the surrounding air and transfer it into the water. It's a much more efficient way to heat water.
3. Your Gas Hot Water System Is Getting Older
Gas hot water has been common in Victorian homes for decades, but more households are now considering efficient electric alternatives as part of the move towards home electrification.
When an older gas system reaches the end of its life, it can be worth comparing the long-term running costs of simply replacing it with another gas unit versus upgrading to an efficient electric heat pump.
4. Your Household Has Changed
Has your family grown? Have children moved out? Are more people working from home?
A hot water system should be appropriately sized for the household using it. A system that is too small may struggle to meet demand, while an unnecessarily large system can mean you're heating more water than you need.
5. Your System Is Simply Getting Old
Waiting until a hot water system completely fails can leave you making a rushed decision.
The Australian Government recommends researching replacement options before your existing system breaks, allowing you to compare efficiency, installation costs, warranties, running costs and available rebates rather than choosing whatever can be installed fastest during an emergency.
So, What's the Smarter Alternative?
For many Victorian households, it's worth considering a heat pump hot water system.
Think of a heat pump as working a little like a reverse-cycle air conditioner, but instead of transferring heat to warm your living room, it transfers heat from the surrounding air into your water. Because the electricity mainly powers the heat-pump process rather than directly creating all the heat, these systems can be significantly more efficient.
Victorian Government guidance states that heat pump hot water systems can use up to 75% less electricity than a conventional electric hot water system. That's a big difference for an appliance your household relies on every day.
And If You Already Have Solar? Even Better.
Heat pump hot water and rooftop solar can work particularly well together.
Instead of sending excess solar electricity back to the grid during the day, an appropriately configured heat pump can use some of that solar generation to heat the water stored in your tank. In effect, your hot water tank can become another way to make better use of the energy you're already producing from your roof.
Solar on the roof + efficient hot water = A smarter way to use your home's energy.
What Could You Actually Save?
Every household is different. Your actual savings will depend on factors such as:
- the hot water system you're replacing
- household size and hot water usage
- electricity and gas tariffs
- the size and efficiency of your new system
- whether you have rooftop solar
- when your heat pump operates
- installation requirements
However, the Victorian Government estimates that many households upgrading to an efficient heat pump hot water system could save around $400 per year on energy bills, depending on usage and the system being replaced.
The important point isn't simply buying a new hot water unit. It's choosing the right system for your household.
Is It Time to Check Your Hot Water System?
Your hot water should make your mornings more comfortable. Not quietly make your energy bills uncomfortable. If your system is ageing, expensive to run or you're simply looking for ways to make your home more energy efficient, it may be worth exploring a heat pump hot water upgrade.
At BluPlanet, we help homeowners understand their energy upgrade options and find solutions suited to their household rather than taking a one-size-fits-all approach. Talk to BluPlanet about upgrading to an energy-efficient hot water system. We'll help you explore suitable options, potential incentives and the right solution for your home.
