Instant gas vs heat pump hot water: running cost comparison

We’ll answer which hot water system will cost you less to run in Melbourne today and give practical next steps for your home.

We compare continuous‑flow gas and electric heat pump hot water, focusing on real running costs, tariffs and suitability. Using Melbourne mid‑2024 data, we show how electricity tariffs and rooftop solar change annual bills.

We explain how each system makes hot water, the role of storage versus continuous flow, and why electric heat pump and solar hot water often deliver the best ongoing savings despite higher upfront costs.

Where electrical or rooftop constraints make a continuous‑flow gas hot water unit practical, we cover when that option still makes sense for smaller households.

Need fast help? We’re Melbourne based and recommend contacting OnCall Emergency Plumbers for repairs, replacements or upgrades. Call 1800 571 216 for 24/7 service.

Key Takeaways

Heat pump systems generally offer lower running costs for most 1–4 person homes in Melbourne.
Pairing a heat pump with solar hot water cuts bills and emissions further.
Continuous‑flow gas hot water can suit homes with limited electrical capacity.
Compare upfront prices, installation complexity and ongoing maintenance before deciding.
Contact OnCall Emergency Plumbers for rapid, quality service and honest advice.

What we compare today in Australia: running costs, efficiency and real-world usage

Here we set out what matters when choosing a hot water system for a Melbourne home: efficiency, tariffs and how people actually use hot water.

TL;DR

Heat pump systems typically deliver lower annual energy costs and smaller greenhouse gas emissions when paired with rooftop solar or off‑peak electricity.

Continuous‑flow gas hot water can still suit homes with limited electrical capacity, remote outlets or where quick replacement is needed.

What we compare

Energy efficiency and annual running costs for common hot water systems in Australian homes.
How storage tanks and continuous flow designs handle real‑world hot water usage like showers, dishwashers and simultaneous taps.
Tariff effects: electricity can use peak/off‑peak pricing and solar self‑consumption; natural gas is usually not time‑of‑day billed.
Practical constraints: some electric continuous systems need three‑phase power; indoor gas units require compliant ventilation and flueing.
Maintenance and incentives: storage tanks need anode and valve checks; rebates often favour electric heat pump and solar hot water systems.

We keep our advice practical for Melbourne homeowners. If you need help sizing, servicing or replacing a water system, contact OnCall Emergency Plumbers for trusted installs and repairs — call 1800 571 216.

instant gas vs heat pump: how running costs stack up right now

We break down how electricity pricing, rooftop solar and household demand combine to set running costs for different hot water systems in Melbourne.

Energy tariffs and usage patterns: peak, off‑peak and solar self‑consumption

Off‑peak electricity and solar self‑consumption lower running costs for an electric hot water system. Time‑of‑use pricing rewards shifting recovery cycles to daytime or night.

Natural gas tariffs rarely vary by time, so there is less flexibility to cut bills by shifting usage. For small households a compact on‑demand gas hot water unit can still be practical where electrical upgrades are impractical.

Annual bills and emissions signals

Melbourne modelling (mid‑2024) shows heat pump ranges roughly $150–$435 per year depending on household size and solar, while natural gas on‑demand sits from about $235 to $655.

Household size	Heat pump (no solar)	Heat pump (with solar/off‑peak)	Natural gas on‑demand
1 person	$150–$205	$140	$235
2 people	$205–$295	$220	$400
4 people	$300–$435	$325	$655

Outlook and solar synergy

As the grid decarbonises, electric options trend to lower carbon and cost over a decade. Pairing solar hot water with an electric heat pump brings the biggest savings.

We can review your tariff and hot water usage and recommend a system that lowers bills without losing performance. Call OnCall Emergency Plumbers 24/7 on 1800 571 216.

Total cost of ownership: upfronts, installation, maintenance and lifespan

To choose wisely we lay out purchase prices, installation work and ongoing servicing that shape real ownership costs for common hot water systems.

Upfront price ranges and install complexity

Typical purchase ranges (ex‑install) vary: electric heat pump $2,200–$6,800; gas instantaneous $700–$3,000; gas storage $1,000–$7,000; solar $4,000–$8,000; electric storage $650–$2,500.

Installation can add cost: heat pump units need outdoor air access and clearances, while gas hot water requires compliant supply, flueing and ventilation if inside.

Servicing, parts and longevity

Storage tank systems need sacrificial anode checks and valve servicing every few years. Gas units need burner and flue inspections.

Refrigerant circuits in heat pump systems are sealed but benefit from coil cleaning and periodic checks to maintain efficiency.

Rebates and incentives

We note rebates in Victoria and NSW often offset higher upfronts for heat pump and solar hot water installations.
Include potential electrical upgrades, gas line changes and ongoing servicing in the total ownership calculation.

We specify reputable brands and quality materials to maximise lifespan. For end‑to‑end installation and maintenance call OnCall Emergency Plumbers on 1800 571 216.

Performance and suitability: household size, climate, space and noise

We match a hot water system to your home by looking at who lives there, how you use hot water and what space you have available.

Small vs large households and storage sizing

Smaller homes often suit compact continuous flow gas hot water units for space savings and on‑demand delivery.

Larger families usually benefit from a correctly sized storage tank or an electric heat pump system to handle peak morning and evening showers.

Melbourne climate and unit performance

Heat pump units extract warmth from the air and work best when temperatures are milder. Modern models still perform well in cooler months with smart controls and defrost cycles.

Location, ventilation and installation

Indoor gas installations must have proper flueing and combustion air. Outdoor electric systems need clear airflow and safe condensate drainage.

Acoustics and placement

We select quieter models for built‑up areas, place units away from bedrooms and use compliant mounts to reduce vibration and neighbour impact.

Factor	Small home	Large household	Best practice
Typical option	Compact continuous flow	Storage tank systems / electric heat pump	Match capacity to daily litres and peaks
Space need	Low	Moderate to high	Check outdoor area and roof for PV
Installation notes	Minimal pipe runs	May need larger electrical feed	Plan ventilation, condensate and recirc loops
Noise & neighbours	Low impact if inside	Place unit away from sleeping areas	Use quiet models and compliant mounts

We design each installation around your usage patterns and area constraints. For a site check or personalised advice call OnCall Emergency Plumbers 24/7 on 1800 571 216.

Choosing the best hot water system for Melbourne homes

Choosing the right hot water setup for a Melbourne home depends on space, bills and how you use hot water daily.

When a continuous-flow gas option makes sense and when a heat pump wins

We recommend a small continuous-flow gas hot water system when space is tight, an extra tank is impractical, or electrical upgrades would be costly. It suits remote bathrooms and quick replacements.

We favour an electric heat pump where low long-term running costs matter, especially if you have solar hot water or can use off‑peak electricity. Rebates often reduce upfront cost and the system cuts greenhouse gas emissions over time.

Call OnCall Emergency Plumbers for 24/7 repairs, upgrades and quality installs — 1800 571 216

We are Melbourne‑based and available 24/7 for emergency repairs, blocked drains, burst pipes and leak fixes. Call us for rapid restores and honest advice.

Quality materials and trusted brands: why we specify reputable systems

We specify known brands and durable components to lower future maintenance and noise. Our team manages siting, clearances, flueing or condensate work and coordinates meter or electrical changes for a compliant installation.

Best for small homes: compact continuous flow where electrical work is limited.
Best for savings: electric heat pump with solar PV or off‑peak tariffs.
We balance total cost of ownership, emissions and household hot water needs.

Call OnCall Emergency Plumbers on 1800 571 216 for a site check, rebate guidance and a quality installation that suits your Melbourne home.

Conclusion

In short, we show the best pathway to lower running costs and lower emissions without sacrificing hot water reliability.

Our Melbourne modelling finds electric heat pump choices typically cost less to run than on‑demand gas options, especially when paired with off‑peak electricity or rooftop solar.

We also explain when a compact on‑demand gas unit still makes sense: tight space, limited electrical capacity or fast replacement needs. Those cases remain valid but carry exposure to future gas price rises.

We recommend sizing storage correctly, checking site ventilation and choosing reputable brands and quality materials for long life and low servicing costs.

For a seamless upgrade or repair, reach OnCall Emergency Plumbers 24/7 at 1800 571 216.

FAQ

What running cost differences should we expect between instant gas and a heat pump hot water system?

Costs depend on fuel prices, system efficiency and household usage. Electric heat pump systems typically use far less electricity per litre of hot water than electric resistance or continuous-flow gas units use gas or power, so they often show lower annual bills where electricity tariffs and solar export arrangements are favourable. However, instant gas can be cheaper in homes with low, intermittent hot water demand or where natural gas prices remain low. We evaluate meter tariffs, hot water usage patterns and any available solar generation to estimate actual running costs.

How do peak and off‑peak electricity tariffs affect heat pump running costs?

Heat pumps benefit from off‑peak rates and time‑of‑use pricing because they can schedule heating when power is cheaper. If a home has controlled load or night‑store tariffs, the effective cost per kWh falls substantially. We also factor in solar self‑consumption: daytime solar can cover a heat pump’s electricity demand and reduce grid purchases further, lowering bills compared with continuous gas use.

Will switching to a heat pump reduce our household greenhouse gas emissions?

Yes — moving from a combustion-based gas unit to an electric heat pump typically cuts emissions, especially where the electricity grid is increasingly renewable or the house has rooftop solar. Emissions savings depend on local grid intensity and system COP (coefficient of performance). We model expected annual energy use and local grid factors to give a realistic emissions outlook.

What upfront costs and installation differences exist between pump hot water systems and gas hot water systems?

Heat pump units usually cost more to buy and may need space for an outdoor unit and electrical upgrades. Instant gas systems tend to be cheaper to purchase but can require flueing and gas line work. Installation complexity affects labour charges: convert‑overs, ventilation, and electrical panel capacity all influence final quotes. We provide itemised estimates including permits and any necessary trades.

How do maintenance and lifespan compare for storage tank systems with heat pumps versus gas continuous‑flow systems?

Storage tanks with heat pump sources need regular checks of refrigerant circuits and outdoor fans; anode rod replacement and tank flushing remain important. Gas continuous‑flow units require burner servicing and occasional component replacement. With proper maintenance, heat pump tanks often last 10–15 years and well‑maintained gas systems similar spans, though individual outcomes vary by brand and water quality.

Are there rebates or incentives that make heat pumps more affordable in Australia?

Federal and state programs, plus local council incentives, sometimes offer rebates or interest‑free loans for efficient electric hot water systems and for homes pairing systems with rooftop solar. These schemes change frequently. We check current Victorian and federal incentives during quoting and help customers claim eligible rebates to reduce net purchase cost.

Which system suits small households or apartments better — instant gas or a storage heat pump?

For small households with low, intermittent demand, an instant continuous‑flow gas unit provides on‑demand hot water without a large tank footprint. For flats with access to reliable electricity and space for an outdoor unit or compact storage tank, electric heat pump systems can deliver lower running costs and reduced emissions. We assess demand profiles and space constraints to recommend the right capacity and configuration.

How does Melbourne’s cooler climate affect heat pump efficiency in winter?

Heat pumps lose some efficiency in colder conditions because they extract heat from ambient air, but modern units remain effective in Melbourne’s climate. Sizing for seasonality and considering indoor or sheltered outdoor placement helps preserve performance. We size and site systems so they maintain reliable hot water through cooler months while keeping energy use low.

What installation location and ventilation issues should we consider for both system types?

Gas units need proper flueing and combustion air supply; flues must meet clearance and termination rules. Heat pump outdoor units require airflow clearance and consideration of frost or extreme exposure. Indoor placement of tanks needs condensate management. We assess site constraints, compliance and best‑practice clearances during a pre‑install inspection to avoid retroactive works.

Are heat pumps noisy and how can we keep them compliant and quiet?

Outdoor heat pump units produce fan and compressor noise; modern models run quietly but location choices influence perceived noise. Placing units away from bedrooms, using anti‑vibration mounts and following manufacturer clearances keeps noise within local regulations. We advise on compliant siting and can arrange quieter models where needed.

When is instant continuous‑flow gas a practical option compared with a heat pump for Melbourne homes?

Instant continuous‑flow is practical when space is limited, demand is low and there’s an existing gas supply with competitive pricing. It also suits sites where outdoor unit placement for a heat pump is impossible. Conversely, if reducing energy bills and emissions is a priority, or if the home has good solar capacity, a heat pump often wins. We discuss household priorities and run financial and carbon comparisons to guide choice.

Which brands and materials do we trust for reliable hot water systems?

We specify reputable manufacturers with strong local support networks and tested reliability — for example Rinnai and Bosch for gas continuous‑flow, and brands like Rheem and Dux for electric and heat pump storage options. We choose corrosion‑resistant tanks, reliable anodes, quality valves and certified installation materials to ensure long service life and warranty protection.

How quickly can we get 24/7 repair, upgrade or installation support if our hot water fails?

We offer 24/7 emergency plumbing and hot water repair services, with prioritised call‑outs and trained technicians for both gas and electric systems. Our team can diagnose faults, carry out urgent repairs, and arrange replacement installations when required. Contact our service line for immediate assistance and an ETA for a technician visit.