If your gas hot water system is nearing the end of its life, you're probably asking the same question thousands of Australian homeowners are asking: should I replace it with another gas system, or is now the time to switch to a heat pump?
Heat pump hot water systems have become one of the fastest-growing choices for Australian homes because they can significantly reduce hot water energy use, work well with solar PV systems, and can qualify for government incentives. Whether you’re replacing an old gas system or planning an all-electric home, understanding your options is the first step towards making the right choice.
This article explains how heat pump hot water systems work, compares them with gas on running costs, outlines what installation typically involves, explores available rebates, and examines whether factors - such as climate, space, and household size make a heat pump the right choice for your home.
A gas hot water system heats water by burning gas - either continuously, or to keep a storage tank topped up. A heat pump hot water system works differently. Instead of creating heat through combustion, it uses a refrigeration cycle to extract heat energy from the surrounding air and transfer it into water stored in a tank.
Because a heat pump transfers existing heat energy rather than generating heat by burning fuel, it requires electricity only to power components such as the compressor and fan. This ability to move more heat energy than the electricity it consumes is what makes heat pumps significantly more efficient than traditional hot water systems.
Stiebel Eltron’s SHP-O Plus range is a good illustration of just how efficient this process is. It carries a published Coefficient of Performance (COP) of up to 4.27, meaning it can produce more than four units of heat for every unit of electricity it consumes. This high efficiency contributes to the range’s A+ energy rating.
From the outside, a heat pump hot water system looks much like a conventional storage water heater. The key difference is the integrated heat pump module, which extracts warmth from the surrounding air instead of burning gas. This allows the system to heat water using far less energy than traditional electric resistance systems while also avoiding the direct combustion of natural gas.
|
Feature |
Gas Hot Water |
Heat Pump Hot Water |
|
Energy source |
Natural gas or LPG |
Electricity + ambient air |
|
Heating method |
Burns gas to generate heat |
Transfers heat energy from the air |
|
Solar compatible |
Limited |
Yes |
|
Running costs |
Typically higher |
Typically lower |
|
Government incentives |
Limited |
Available on eligible systems |
|
Greenhouse emissions |
Higher |
Lower (especially when powered by renewable electricity) |
The biggest difference for homeowners isn’t the tank, it’s what powers the system. Gas hot water systems depend on gas supply and pricing, while heat pumps use electricity to capture and transfer heat from the air. If you have rooftop solar, a heat pump can use your excess solar energy to heat water, helping to further reduce running costs.
Lower running costs. Hot water typically accounts for around 15–30% of household energy use in Australia, according to the Australian Government's Your Home guidance. Heat pump water heaters are highly efficient because they use electricity to move heat from the air rather than generating heat directly. With some models achieving a COP of over 4, they can deliver more than four units of heat for every unit of electricity used, helping reduce running costs compared with conventional electric systems and, in many cases, gas systems.
Moving to an all-electric home. Many homeowners are transitioning to all-electric homes, with hot water often being the final gas appliance to replace after cooking and heating have already switched. Removing the gas connection may allow homeowners to avoid ongoing gas supply charges, which can add up depending on the retailer and location. This can improve the overall energy efficiency and running costs of the household, not just the hot water system.
Rebates and incentive schemes. Federal and state government programs can help reduce the upfront cost of switching from gas to a heat pump water heater. For example, eligible installations may qualify for Small-scale Technology Certificates (STCs) under the Australian Government's Renewable Energy Target, while additional incentives may be available through state-based programs such as Victoria's Victorian Energy Upgrades (VEU) or New South Wales' Energy Savings Scheme (ESS). Available incentives vary by location, eligible products, and installation circumstances, so rebate values and eligibility should always be confirmed before making a purchasing decision.
Replacing an ageing gas system. Not every change is proactive. Many happen because an existing gas system has reached the end of its service life or has failed unexpectedly. Instead of replacing it with another gas system, this can be an opportunity to upgrade to a more efficient heat pump solution. Available incentives may also help reduce the upfront cost of making the switch.
The honest starting point here: running costs depend on household size, usage patterns, your electricity and gas tariffs, climate, and whether you have solar. Anyone promising an exact dollar figure without this information is only an estimate.
What we can say with confidence is how the technology works, because it's backed by Stiebel Eltron's own tested figures. The SHP-O Plus range achieves a COP of up to 4.27, meaning it delivers more than four units of heat for every unit of electricity consumed under standard test conditions. This makes it significantly more efficient than a conventional electric resistance water heater and is a key reason why heat pumps generally have much lower running costs.
For many Australian households, this efficiency can make a meaningful difference, as hot water typically accounts for around 20–30% of total household energy use. Improving the efficiency of your hot water system can therefore help reduce overall energy consumption and support lower ongoing energy costs.
|
Comparison |
Gas |
Heat Pump |
|
Fuel |
Natural Gas |
Electricity |
|
Solar compatible |
✕ |
✓ |
|
Daily supply charge |
Yes (if connected to mains gas) |
No (if gas disconnected) |
|
Efficiency |
Combustion |
Uses ambient air to transfer heat |
|
Running cost |
Higher due to gas usage and supply charges |
Lower for most households, particularly with solar |
Two things can tip the comparison further in the heat pump's favour:
The daily gas supply charge. If hot water is your only remaining gas appliance, you may still be paying a fixed daily charge to stay connected to the gas network, even when your actual gas usage is low. Depending on your retailer, location and tariff, this can add up to hundreds of dollars per year before any gas is used. Switching to a heat pump and disconnecting from gas (where practical) can remove this ongoing connection cost.
Solar. If you have rooftop solar, a heat pump can draw much of its already-low electricity use from your own daytime solar generation. Australian Government guidance also notes that combining a heat pump with rooftop solar can further reduce household energy bills and greenhouse gas emissions. By using a timer to heat water during peak solar production hours, many households can further reduce their hot water running costs by consuming more self-generated electricity and purchasing less power from the grid.
For many households, switching from gas to a heat pump can be a smart upgrade, but not every home is the same. Factors such as your existing system, energy setup, installation requirements and hot water needs all play a role.
A heat pump is typically the best option if:
You may need additional advice if:
The cost of switching from a gas hot water system to a heat pump depends on the system you choose and how straightforward the installation is. As a general guide, quality residential heat pump hot water systems in Australia typically cost $3,000–$6,500 installed before rebates, depending on tank size, installation complexity, and location. Federal STCs commonly reduce this by roughly $500–$800 upfront, with some state programs offering further support. For an exact price for your home, a site assessment and personalised quote will give you the most accurate figure.
For many homes, replacing an existing gas storage system with a heat pump hot water system is a relatively straightforward job. If the new unit can be installed in the same location and the home's electrical capacity is already suitable, installation is usually simpler and more cost-effective.
However, installation costs may increase if your property requires:
The best way to understand your likely installation cost is to arrange a site assessment. An installer can confirm whether your replacement is a straightforward swap or whether additional work will be required.
Yes. Many Australian households may be eligible for financial incentives when installing an eligible heat pump hot water system.
Depending on your location and the product you choose, support may include:
These programs change regularly, and eligibility can depend on factors such as the system installed, your location and the installation date. It’s important to check the latest requirements before making a purchasing decision.
In many Australian homes, yes.
Replacing a gas hot water system with a heat pump is typically a straightforward replacement rather than a major renovation. In many cases, the new unit can be installed in the same general location as the existing system, provided there is adequate airflow, suitable electrical capacity and access for installation.
During the site inspection, the installer will check four key things:
Heat pumps extract warmth from the surrounding air, so they need sufficient ventilation to operate efficiently. Outdoor locations, suitable garages, and covered external areas may be appropriate when installed in accordance with the manufacturer's clearance requirements.
Unlike gas systems, heat pumps require an electrical connection to operate. Most homes have suitable electrical infrastructure, but an electrician will confirm whether any additional circuits or switchboard upgrades are required.
Existing hot and cold water pipework can often be reused, although minor plumbing modifications may be required depending on the replacement system and installation layout.
If you're moving to an all-electric home, the existing gas hot water connection can be safely capped and, where appropriate, the gas meter disconnected to avoid ongoing gas supply charges. If you plan to keep gas for cooking or heating, only the hot water connection needs to be decommissioned.
For many homeowners, replacing a gas hot water system with a heat pump can be completed as a straightforward installation by licensed plumbing and electrical professionals.
You are likely to be a good candidate if:
You may need additional planning if:
One of the most common questions homeowners ask is whether a heat pump hot water system will be noisy.
Modern heat pump hot water systems are designed for residential environments and are generally quieter than many people expect. The Stiebel Eltron SHP-O Plus range has a published average sound pressure level of approximately 47 dB(A), measured at two metres under specified test conditions.
Like any appliance with a fan and compressor, you may hear the system operating while it is heating water. However, when installed in a suitable location and in accordance with the manufacturer’s installation guidelines, the sound is generally unobtrusive.
If noise is a concern, your installer can recommend the most suitable installation location to help minimise sound near bedrooms, neighbouring properties or outdoor entertaining areas.
Yes. Modern heat pump water heaters are designed to operate efficiently across a wide range of Australian climates.
The Stiebel Eltron SHP-O Plus range operates in ambient temperatures from –6°C to +43°C. When outdoor temperatures fall to around 5°C or below, the integrated electric booster element automatically assists the heat pump when required to maintain reliable hot water performance.
For homes in Australia's coldest regions, including alpine areas and parts of Tasmania, Stiebel Eltron also offers the SHP-O Premium range, which is designed to operate in temperatures as low as –10°C.
For most Australian households, winter performance is not a reason to avoid installing a heat pump.
Compared with many household appliances, heat pump hot water systems require relatively little routine maintenance. However, like any water heating system, regular checks help maintain efficiency, reliability, and warranty coverage.
Typical maintenance may include:
Most homeowners won't need to perform these tasks themselves. During routine servicing, a qualified technician can inspect the system and replace any worn components if required.
Following the manufacturer's maintenance recommendations helps maximise system performance and prolong its service life.
The lifespan of any hot water system depends on factors such as water quality, installation quality, local climate and ongoing maintenance.
Rather than focusing on a fixed number of years, it is more useful to consider the factors that support long-term performance. Correct installation, regular maintenance and timely replacement of wear components can help maximise the service life of a heat pump hot water system.
Stiebel Eltron supports the durability of its heat pump range with a comprehensive domestic warranty, providing homeowners with confidence in the system’s long-term residential performance.
Following the manufacturer’s maintenance recommendations helps maintain efficiency, reliability and extend the system’s service life.
Selecting the right system size is just as important as choosing the right technology.
A system that's too small may struggle during periods of high demand, while a larger system than required may increase upfront costs unnecessarily.
As a general guide:
|
Household Size |
Typical Capacity |
|
1–2 people |
200 L |
|
3–5 people |
300 L |
|
5+ people |
Large-capacity or multiple systems (subject to assessment) |
Your installer will also consider hot water usage patterns, the number of bathrooms, and peak demand before recommending the most suitable model.
Most residential heat pump installations can be completed within a day by licensed plumbing and electrical professionals, depending on the site conditions and complexity of the installation.
A typical installation includes:
Before leaving, the installer should confirm that the system is operating correctly and provide warranty documentation, product information, and any relevant maintenance guidance.
Myth: They don't work in winter.
Reality: Modern systems operate in sub-zero temperatures and include booster heating when required.
Myth: They're too noisy.
Reality: Modern residential heat pumps are designed to operate quietly and are comparable to many everyday household sounds.
Myth: They only work if you have solar.
Reality: Rooftop solar can help reduce running costs further, but it is not required. Heat pumps are highly efficient and can deliver energy savings even when powered from the grid.
For a homeowner who’s decided switching makes sense, the process tends to follow a consistent shape:
With decades of experience developing heating and hot water technology, Stiebel Eltron designs reliable heat pump systems engineered for efficiency, performance, and Australian conditions.
Key benefits include:
For many Australian households, yes — especially if the existing gas system is nearing the end of its life. Heat pumps can help reduce hot water running costs, work well with rooftop solar, and may help eliminate ongoing gas supply charges if hot water is your last remaining gas appliance. The right choice depends on your household size, energy tariffs, installation requirements, and future plans for your home.
Yes. In most cases, an instantaneous or storage gas water heater can be replaced with a heat pump. Because a heat pump stores hot water in an insulated tank, your installer will assess available space, plumbing connections, ventilation, and electrical capacity before recommending the most suitable system.
Yes. Modern heat pump hot water systems are designed for Australian conditions. The Stiebel Eltron SHP-O Plus range operates from −6°C to +43°C, while the SHP-O Premium range is designed for temperatures as low as −10°C, making it suitable for colder climates.
Absolutely. A heat pump remains highly efficient even without rooftop solar because it transfers heat from the surrounding air instead of generating heat through electrical resistance. Solar simply provides an additional opportunity to reduce running costs.
Most residential replacements are completed within a single day by licensed plumbing and electrical professionals. More complex installations involving switchboard upgrades or relocating the system can take longer.
Routine maintenance is generally minimal. Periodic servicing by a qualified technician helps maintain efficiency and warranty coverage and may include inspecting the sacrificial anode, pressure relief valve, condensate drain, and electrical components.
Choosing the right heat pump isn't just about tank size—it's about selecting a system that suits your household, climate, and long-term energy goals.
Whether you're replacing a failed gas water heater or planning an all-electric home, our team can help you:
Speak with a Stiebel Eltron specialist today and take the next step towards efficient, reliable hot water for your home.