We believe that most of the 9.3 millions households in Australia will switch to heat pump hot water over the next 25 years.
People are turning to electric hot water options as gas is phased out of Australian homes. Heat pump hot water is the clear favourite of the electric options as it's the most efficient and cheapest to run.
So the question is, when is the best time to switch to heat pump hot water?
Pleasingly, the options are straightforward: either now or later.
The key message from this article is: you need a plan. You need a plan when switching to heat pump hot water, especially when switching from gas. No one likes cold showers, so you need to either plan to switch now, or have a plan in place if you decide to 'run the gauntlet' and wait for your current hot water service to fail. Unfortunately it's all too common to have a hot water unit fail, the owner needs a solution quickly and the easiest option is to replace it with another gas hot water unit. You're then effectively signed up to rising gas prices for another ten years.
The First Question
The first question to ask is whether you are prepared to 'run the gauntlet' and wait for your current unit to fail. There's nothing wrong with this approach, but as I mention above, you need to have a plan.
If your current unit fails, you'll be out of hot water. No hot water for showers, baths, washing dishes.
If you call an installer saying "my hot water unit has failed, when can you install a new one", you will receive varied responses. Some might say they can install a new one the next day, some might say a week or longer. The good installers understand this and will move their schedules to accommodate 'emergency replacements.'
It's wise to have the following ready:
- Which unit will you install?
- Which installer will you use?
- Where will the new unit go and what is access like? i.e. can the installer easily bring in the new unit and take out the old
If you're looking at another week of research and time to make a decision, you will likely find yourself rushing your decision.
Switching Based on Financials
Let's assume you are open to switching before your unit fails. Many clients do this as their units age.
The key variables are:
- The type and efficiency of your current hot water service - gas storage, instant gas, solar hot water, electric resistance hot water all have different efficiencies. The less efficient, the more it makes sense to switch sooner.
- Your current usage - a family of 6 will use a lot more hot water and therefore save more from switching to heat pump hot water
- The age of your current hot water tank - the older your unit, the more likely it is to fail in the short term
- Eligibility for rebates - if you are eligible for rebates, it will bring the cost down and make switching more appealing
- Last gas appliance - if your gas hot water unit is your last gas appliance, removing it will also allow you to remove the gas connection to your property, saving you the daily gas service fee (around $350 per year) charged by gas retailers
- Solar - heat pump hot water units are cheaper to run even when using electricity from the grid. If your house has solar, the running costs are lower still thanks to free electricity
Pro tip: it's a good idea to keep in mind the eligibility criteria for rebates. For example, the Solar Victoria $1,000 rebate is means tested at $210,000 of household income. If your income drops or increases, it can be smart to time the installation by either delaying it or bringing it forward to meet the eligibility criteria.
If you tick a number of these boxes, it might make sense to switch to heat pump hot water sooner rather than later. For example, if you are eligible for rebates, you have solar, you currently have inefficient gas storage hot water and it's your last gas appliance, it probably makes sense to switch to heat pump hot water now.
On the other hand, if your usage is low (say 1 or 2 people in the home), you have instant gas hot water and you are not eligible for rebates, it probably doesn't make financial sense to switch now. As keen as we are for people to switch, perhaps it makes sense to get some more mileage out of your current unit. (It still of course makes sense to switch on environmental grounds).
Below I discuss each of the common hot water services (gas storage, gas instant and electric resistance) and considerations around switching now or later.
Gas Storage Units
Gas is burnt to heat water stored in a tank. As hot water is used in the home, the tank is refilled with cold water and continually heated. Gas storage units are inefficient and the cost of operating them will increase as gas prices continue to increase.
Sustainability Victoria estimates savings of around $345 ($290 vs $635) for a four person home when switching from gas storage to heat pump hot water.
Recommendation: depending on the factors above, we recommend you consider replacing gas storage units as they approach 10 to 15 years of age. While it's possible the unit might last another 5 years, we think it's best to be prepared.
Gas Instant Units
"Instant" gas or "continuous flow" hot water units heat water on demand. The units heat water quickly as hot water is required inside the home. Instant units are more efficient than storage units as they only heat water as it is used, as opposed to continual heating. For example, if you go away for a week, the gas storage unit will keep heating water, whereas the instant unit will not. Instant gas units typically last longer than gas storage units.
Sustainability Victoria estimates savings of around $200 per year ($290 vs $490) for a four person home when switching from instant gas hot water to heat pump hot water.
Recommendation: depending on the factors above, we recommend you consider replacing instant gas units as they approach 15 years of age.
Electric Resistance Hot Water Units
Electric hot water units look very similar to gas storage hot water units. The easiest way to think of them is a big kettle. They contain a resistive element which is submerged in water, heats up and heats the water in the tank.
While electric hot water units are powered by electricity and are therefore capable of being green, they are horribly inefficient. Sustainability Victoria estimates that electric hot water units are the second most costly hot water service to run, only behind gas hot water units powered by LPG (gas delivered in a bottle, like your barbecue). Sustainability Victoria estimates savings of around $815 per year ($290 vs $1,105) for a four person home when switching from electric hot water to heat pump hot water.
Recommendation: given the significantly higher running costs, we recommend changing from electric hot water units to heat pump hot water immediately. There are two exceptions. The first is if the electric hot water unit is less than three years old and you are otherwise eligible for the Victorian government rebate (units to be greater than three years old to be eligible). The second is if you have solar, are exporting excess solar and can otherwise redirect it to the hot water tank. In this case the difference is not as great, you'll just receive less credit on exported solar, which is quickly diminishing anyway.
Summary
Unfortunately there is no one clear answer on when you should switch to heat pump hot water - it really does depend on your circumstances. Hopefully this article makes the factors affecting the timing of your decision clearer and easier to understand. As keen as we are to encourage people to switch to heat pump hot water, it pays to be practical.
