How Much Does It Cost to Run Your Hot Water System in NSW?
— Northern Beaches Hot Water
Compare the real annual running costs of heat pumps, gas, electric, and solar hot water systems using current NSW energy prices. The results might surprise you.
If you’re a homeowner on the Northern Beaches, your hot water system is probably one of the biggest energy costs in your home — second only to heating and cooling. But how much is it actually costing you each year? And could you be saving hundreds by switching to a different system?
We’ve crunched the numbers using current NSW energy prices (2025–26 tariffs) so you can see exactly how the main hot water system types compare.
The Annual Running Cost Comparison
Here’s what each system type costs to run per year for an average 3–4 person household on the Northern Beaches, based on current Ausgrid electricity rates and AGL/Jemena gas rates:
- Heat pump: ~$480/year — the clear winner
- Solar + electric boost: ~$590/year
- Gas continuous flow (6-star): ~$820/year
- Gas storage: ~$1,000/year
- Electric storage: ~$1,530/year — the most expensive by far
Want to see the numbers for your household size? Try our free Running Cost Calculator — it lets you compare all system types with your specific situation.
Why Heat Pumps Are So Cheap to Run
A heat pump works like a reverse refrigerator. Instead of pushing heat out (like your fridge does), it pulls heat from the surrounding air and uses it to heat your water. For every 1 kWh of electricity it uses, it produces 3–4 kWh of heat energy. That’s 3–4 times more efficient than a traditional electric element.
On the Northern Beaches, our mild Sydney climate means heat pumps perform at their best year-round. There’s almost always enough warmth in the air for the heat pump to work efficiently, even in winter.
The Hidden Cost of Gas: Your Connection Fee
Here’s something most people don’t think about: if your hot water system is the only gas appliance in your home, you’re paying a gas connection fee of around $281 per year just to stay connected — before you even use any gas.
That connection fee is part of your hot water running cost. If you also have a gas cooktop or gas heater, the fee is shared across those appliances. But if hot water is your only reason for having gas connected, that’s $281 every year you could eliminate by switching to an electric heat pump.
Getting Off Gas? You’re Not Alone
More and more Northern Beaches homeowners are making the switch from gas to electric heat pumps. The economics are compelling: save $500–$800 per year on running costs (based on current rates), plus eliminate the gas connection fee entirely. Those savings compound every year — and with energy prices rising, the gap only grows.
NSW government rebates can help reduce the upfront cost of a heat pump installation. Between the rebates and the running cost savings, many households find the heat pump pays for itself within 3–5 years.
Off-Peak Electricity: A Bonus for Electric Systems
Most electric hot water systems on the Northern Beaches run on a controlled load tariff — a separate meter that only charges for electricity during off-peak hours (overnight). At around 19.5c/kWh, this is roughly half the cost of general tariff electricity (36.5c/kWh).
Both heat pumps and traditional electric storage systems can run on off-peak. If your system is already on a controlled load meter, your running costs are even lower than the general tariff figures above.
What Should You Do?
If you’re thinking about replacing your hot water system — or if your current system is getting old and you want to plan ahead — the running costs should be a major part of your decision. A cheaper system upfront can cost you thousands more over its lifetime.
We offer free on-site quotes and can walk you through the options for your specific home. We’ll look at your current system, your household size, your energy setup, and recommend the most cost-effective solution.
Ready to find out how much you could save? Give us a call on 0448 581 325 or request a free quote online.
Need hot water help? Call Northern Beaches Hot Water on 0448 581 325.