Choosing the Right Hot Water System in 2025

Why getting the right system matters more than ever

A few months ago, my neighbour Sarah knocked on my door, frantic because her old electric water heater had failed overnight. With a family of four and a busy week ahead, she needed hot water fast. Like most people, her first question was, “What’s it going to cost me?”

It’s a fair question —installing a new hot water system is one of the first things people want to understand. But cost is only part of the story.

In 2025, picking the right system involves more than price. Factors like energy efficiency, government rebates, running costs, and environmental impact all matter — not just for your wallet, but for the planet too.

Key things to consider before buying

Over the years, I’ve helped many clients upgrade their hot water systems. One thing I always stress: don’t rush the decision.

It’s a long-term investment — the wrong choice can lock you into higher bills or performance issues for years.

Here’s what to think about:

• Household size & usage — Bigger families need more capacity.
• Energy source — Gas, electric, solar, or heat pump?
• Available space — Indoors, outdoors, wall-mounted?
• Budget — Upfront and running costs.
• Sustainability — Keen to lower your carbon footprint?

A good installer will guide you through these questions, but it pays to start thinking about them ahead of time.

How government rebates can lower your costs

I’m always surprised how many people don’t realise rebates are available. If you’re looking to upgrade, check for government rebates on hot water systems — they can make a big difference.

In 2025, common rebates include:

• Federal STCs (Small-scale Technology Certificates) — for eligible systems.
• State-based rebates vary depending on where you live.
• Programs for replacing old electric systems — often with bonus incentives.

When I upgraded to a heat pump last year, rebates covered almost a third of the cost, turning a more expensive choice into the most cost-effective long-term.

Tip: A good installer will help you navigate the rebate process — make sure to ask.

Why energy efficiency pays off long-term

I get it — when the old system fails, people want the cheapest quick fix. But I always encourage clients to think beyond the upfront cost.

Energy-efficient hot water systems can dramatically lower your running costs. Over five to ten years, the savings add up.

Here’s a comparison based on typical Aussie households:

Even though my heat pump costs more upfront, I’m saving over $600 a year on my bills, meaning I’ll break even in about 3–4 years, then enjoy the savings every year after that.

A simple guide to system types

When people first start researching, they often get confused by all the options. Here’s how I explain it (and I always recommend clients also check types of hot water systems for more details):

Electric Storage

• Lowest upfront cost.
• Highest running costs.
• Best for very small households or as a temporary option.

Gas Storage

• Mid-level upfront and running costs.
• Good for large families with consistent hot water needs.
• Needs a gas connection.

Gas Continuous Flow

• Compact and wall-mounted.
• Heats water as needed — so no running out!
• More efficient than gas storage.

Heat Pump

• Very energy efficient.
• Works well in most climates.
• Requires good airflow and outdoor space.

Solar + Booster

• Most efficient overall.
• Great rebates.
• Works best for sunny homes with roof space.

Real-life installation tips

I’ve seen dozens of installs — here are a few things I always tell clients:

✅ Plan ahead — Don’t wait for a breakdown if your system is 10+ years old.
✅ Site inspection is key — The installer should check space, plumbing, and electrical.
✅ Expect possible extras — Things like tempering valves, pipe upgrades, or electrical work.
✅ Understand the warranties — For both the system and the installation work.
✅ Know maintenance needs — Some systems (especially solar) require regular servicing.

Sarah (my neighbour) learned this the hard way — she’d left it too late and ended up without hot water for a few days because the right parts weren’t in stock. Planning makes all the difference.

How to choose the right installer

Just as important as choosing the system is choosing the right person to install it.

Here’s what I tell clients to look for:

• Fully licensed and insured plumber.
• Experience with the system you want.
• Willing to give a detailed quote — no surprises!
• Knows the current rebates and can help you claim them.
• Good reviews and reputation.

I also suggest getting 2–3 quotes, but be wary of the cheapest option. Quality install = better performance, efficiency, and compliance.

Your 2025 hot water system checklist

If you’re planning a hot water system install, here’s a checklist I share with my clients:

✅ Understand your hot water needs (family size, daily usage).
✅ Research different system types.
✅ Check available rebates.
✅ Compare running costs — not just purchase price.
✅ Choose a licensed, experienced installer.
✅ Plan the install (before the old system fails!).
✅ Review warranty and servicing needs.
✅ Make sure all work complies with local standards.

Final thoughts

Replacing your hot water system is one of those jobs that feels daunting, but it doesn’t have to be. A little preparation goes a long way.

In 2025, the smartest homeowners are asking more than just “What’s my hot water system installation cost?” — they’re asking, “How much will this save me long-term?”, “What rebates can I claim?” and “Which system is best for my family and the environment?”

By taking time to explore your options and working with a trusted installer, you’ll set your home up for years of efficient, reliable hot water — and lower energy bills to boot.

If your current system is over 10 years old or your energy bills are creeping up, now’s a great time to start planning your upgrade. Your future self (and wallet) will thank you!