Heat pump hot water systems are the most efficient type of hot water heater available, using up to 75% less electricity than a conventional electric storage water heater. They run at efficiency ratings of 2.2 to 3.3, which means they deliver two to three units of heat for every unit of electricity they consume.
That is the short answer, but it is not the whole one. Solar hot water systems and condensing gas continuous flow units sit close behind on different measures, and the best hot water system for your home comes down to your roof, your gas connection and your hot water demand.
How Hot Water Efficiency Is Actually Measured
A conventional system can never exceed 100% efficiency, because it converts energy into heat. Burn a unit of gas or run a unit of grid electricity through an element, and the most you get back is a unit of heat.
A heat pump does not generate heat. It moves it, which is why it can beat 100%. A rating of 2.2 to 3.3 means multiple units of heat for every unit of electricity drawn.
Gas is measured differently, on thermal efficiency, where a condensing gas water heater tops out near 97%. Solar sits outside both scales because most of its input is free.
The Four Types of Hot Water System Ranked by Efficiency
Ranked on energy used per litre of hot water delivered, the order is consistent. What changes between households is which one is practical.
Heat Pump Hot Water, the Most Efficient Type
A heat pump uses the same heat pump technology as a fridge, running in reverse. A heat exchanger pulls warmth from the ambient air outside and moves it into an insulated storage tank, so the electricity is spent shifting heat rather than making it.
That is where the up to 75% saving over electric storage comes from, and it holds across a full year in Perth because a heat pump does not depend on the sun on the day.
If you already have a solar PV system, running the unit through the middle of the day turns it into something close to a battery, storing free energy as hot water.
Our page on hot water heat pumps covers how modern heat pumps handle a typical household.
Solar Hot Water Systems
Solar hot water systems use roof-mounted collectors to absorb sunlight and heat water directly, with no conversion step in between. They use at least 60% less energy than conventional systems, and with good sun exposure they deliver the lowest running costs of anything on this list.
The trade-offs are honest ones. Weather conditions affect output, so a backup element or gas booster covers cloudy runs. The collectors also take up roof space that could otherwise hold solar panels for a solar PV system, which matters if you are planning to expand your solar power later.
Expect $3,000 to $6,000 installed for solar hot water systems.
Condensing Gas Continuous Flow
A continuous flow system heats water on demand. Cold water flows through a heat exchanger past a gas burner and comes out hot, so there is no stored water sitting in a tank losing heat overnight. Condensing continuous flow units go further and recover heat from the flue, reaching up to 97% thermal efficiency, the highest of any combustion system.
They need an existing natural gas connection, and output is finite, so running multiple outlets simultaneously can stretch them.
Modern units have no pilot light burning constantly, but running costs still move with gas prices, and carbon emissions are higher than an electric system running on solar.
Electric Storage Water Heaters
The least efficient option is also still the most common. An electric storage water heater uses an element to heat water inside an insulated tank and then holds it at temperature, which means paying a standing heat loss every hour of the day whether you use the hot water tap or not.
Electric hot water systems are the cheapest to buy, at $500 to $1,200, and the most expensive to run. Off-peak electricity narrows the gap without closing it. These traditional systems are the benchmark every other option here is measured against.
Efficiency and Cost Compared
The ranking looks different depending on whether you are comparing purchase price or lifetime cost, which is exactly why so many households end up with the wrong system.
| System Type | Efficiency | Upfront Cost | Running Costs |
| Heat pump hot water | 2.2 to 3.3, up to 75% less electricity | $3,000 to $5,000 before rebates | Lowest year-round |
| Solar hot water | At least 60% less energy | $3,000 to $6,000 | Lowest with good sun, backup needed |
| Condensing gas continuous flow | Up to 97% thermal | $900 to $2,000 | $400 to $500 a year, moves with gas prices |
| Electric storage | Under 100% with standing heat loss | $500 to $1,200 | Highest of the four |
The cheapest system to buy is the most expensive to own, and the gap compounds every year you keep it.
Ready to Install a Heat Pump? Get in Touch with Eurosun!
Heat pumps win on efficiency because they move heat rather than make it, and that advantage holds through a full Perth year regardless of the weather on the day.
Pair one with existing solar panels, and you are effectively storing free daytime energy as hot water.
The right choice still depends on your household. Your roof space, whether you have a gas connection, how much hot water you use, and what rebates you qualify for all shift the numbers.
Eurosun can size the right system for your home, walk you through the rebates available, and handle the installation from start to finish.
Get in touch with us today to talk through your options.