Heat pump or electric storage hot water: which suits your household?

An electric storage tank heats water with an element, much like a kettle, so every bit of heat in the tank is paid for as electricity. A heat pump water heater uses a fan, compressor and refrigerant circuit to pull warmth out of the outside air and move it into the water, so it uses much less electricity to heat the same tank.

That gap matters most when a household uses a lot of hot water. A family with teenagers running long showers pays for that water every day, so a heat pump's savings add up quickly. A single person who rarely runs a hot wash gets far less back from the extra outlay, especially on a cheap overnight rate.

An electric tank is happy almost anywhere it can be plumbed and drained: a laundry cupboard, an internal alcove or a tight spot beside the fence. A heat pump needs fresh air in, room for its chilled exhaust air to get away, a level base, a drain for condensation and access for servicing. Boxed into a cupboard, it struggles.

A heat pump also hums while it runs, like an air conditioner's outdoor unit. Under your bedroom window, or the neighbour's, it will be heard. On narrow blocks where the side path runs close to the house next door, that can rule out the old tank position and point you towards a split heat pump or another wall.

A heat pump works less efficiently as the air gets colder, and night is the coldest part of the day. July at Laverton averages a minimum of 5.2 °C, so running a heat pump only on an overnight off-peak circuit means slower heating and more time on any backup element, just when the household wants the most hot water.

With solar panels, the usual setup is a timer that runs the heat pump through the middle of the day on your own power. Without solar, we look at your tariff and when the household uses hot water, then set the timer around both. An element tank, by contrast, is perfectly happy heating at 2am on a cheaper overnight rate.

Both systems store hot water, so the tank has to cover your busiest stretch, usually the morning shower rush or the evening run of baths and dishes. Many heat pumps reheat more slowly than an element, especially on cold mornings, so a heat pump is sized on that busiest hour rather than copied from the old tank's label.

As a rough guide, this is where we think each one wins, assuming the tank is sized properly for the household:

Swapping one electric tank for another usually reuses the existing circuit once it has been tested. Moving to a heat pump may mean changing how that circuit is switched, adding a timer or running a new circuit, depending on the model and where it goes. Energy Safe Victoria's guidance on the Wiring Rules says every final sub-circuit, the hot water circuit included, needs safety switch protection.

Some older homes have a hot water circuit with no safety switch at all, and the changeover is a good time to fix that. A licensed plumber connects the water and our team does the electrical side, with a Certificate of Electrical Safety for that work.

If your current system is gas, note that from 1 March 2027 a gas hot water system in an existing home that breaks and can't be repaired must be replaced with an electric alternative. Ask which options qualify for your home before you choose.