How Much Does It Cost to Run Your Hot Water System in NSW?

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?

The comparison below uses dated reference tariffs checked on 10 September 2026. It is an illustration with explicit energy assumptions, not a prediction of a household bill.

The Annual Running Cost Comparison

Illustration for exactly three people using standard calculator energy assumptions, no PV and AGL Ausgrid/Jemena reference rates checked 10 September 2026. Gas supply is included once when hot water is the only gas appliance.

• Heat pump: about $437/year in the reference scenario
• Solar with electric boost: about $537/year in the reference scenario
• Gas continuous flow: about $1,094/year including gas supply
• Gas storage: about $1,285/year including gas supply
• Electric storage: about $1,392/year in the reference scenario

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.

Heat pumps can work in Sydney winters, but efficiency and recovery vary with the model and conditions. Tank size and operating schedule need to match demand.

The Hidden Cost of Gas: Your Connection Fee

A gas account has a daily supply charge even when little gas is used. Our September 2026 AGL Jemena reference tariff adds about $356 a year. We count it once in the hot-water-only gas comparison.

If cooking or space heating keeps your gas account open, changing the water heater does not remove the supply charge. If it is the last gas appliance, ask your retailer about closing the account, disconnection work and fees; capping the appliance alone does not cancel charges.

Getting Off Gas? You’re Not Alone

A heat pump can reduce running costs, but the difference depends on the old system, tariff, usage and gas-account arrangements. Compare those assumptions before making a decision, and do not add a gas supply saving a second time to a comparison that already includes it.

Eligible installations may receive incentives that reduce upfront cost. Payback depends on the actual installation quote, running-cost difference and future maintenance; there is no fixed three-to-five-year payback for every home.

Off-Peak Electricity: A Bonus for Electric Systems

Controlled-load tariffs depend on the meter, supply hours and plan. The calculator reference uses 19.30929c/kWh plus a 4.57853c/day CL1 service charge, compared with 33.13717c/kWh general usage. These are AGL Ausgrid standing-offer rates from 1 July 2026, not every household’s tariff.

Controlled load may suit some electric storage and heat-pump installations. Check the model’s requirements, tank capacity, network supply hours and eligibility before assuming it can replace a general connection.

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 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.