Where you install a heat pump hot water system has a direct impact on its energy efficiency, how long it lasts, and how much it costs to operate.

For most Australian homes, the answer is outdoors. Ideally, in a well-ventilated, north-facing spot, within 5–8 metres of your kitchen and bathrooms, with a nearby drain and enough distance from bedroom windows to keep noise from becoming a problem.

Indoor installation is possible under the right conditions, but in Perth’s climate, especially, outdoor placement wins on efficiency, simplicity, and longevity.

The 5 Key Factors That Determine the Best Location

1. Airflow and Ventilation

The unit draws in air continuously to extract heat from the surrounding air to heat water efficiently. Restrict that airflow, and the system is working against itself from day one.

Proper ventilation and adequate airflow are non-negotiable. Avoid enclosed courtyards, tight side passages, or any spot hemmed in on three or more sides.

As a minimum, aim for 1–2 cubic metres of free air space around the unit to maintain proper airflow.

Never install a heat pump in a sealed space, a small shed, or any fully enclosed area, regardless of how convenient it might seem for aesthetics.

Without sufficient air exchange, the result is reduced efficiency and unnecessary strain on the compressor.

2. Distance From Hot Water Usage Points

Every metre between the unit and your tap is heat lost before the water even reaches you. The further away the hot water system is, the longer it takes for hot water to arrive, and the more water (and more energy) is wasted in the process.

Positioning the unit within 5–8 metres of your primary bathroom and kitchen is the practical sweet spot to minimise heat loss for most homes. It’s also the easiest way to save money on energy costs over time while reducing overall greenhouse gas emissions.

For larger homes with multiple bathrooms spread across the floor plan, a central position often reduces overall pipe run length and keeps delivery times consistent across the house.

3. Noise Considerations

Modern heat pump water heaters run at roughly 42–50 decibels, about the same volume as a quiet conversation.

Eurosun’s HPR range is designed for quiet residential operation, but that low-level hum can still be noticeable in the right conditions.

Noise control is worth thinking through carefully when choosing your spot:

Avoid placing the outdoor heat pump directly below or beside bedroom windows to minimise noise
Keep a reasonable distance from neighbouring bedroom-facing walls, particularly on narrow blocks
If the heat pump needs to be in a noise-sensitive location, split systems are worth considering. The compressor sits outside while the hot water tank lives indoors, which significantly reduces the audible impact near living spaces

4. Condensation Drainage

As a natural byproduct of water heating, heat pumps produce between 5 and 20 litres of condensation daily. The unit must be positioned near an existing drain or have a drainage line run to an appropriate outlet during installation.

A few things to avoid:

Don’t allow cooled air or condensate to pool near doorways or on paths, as it’s a slip hazard
Don’t position the unit where condensate runoff could freeze against walkways in cooler months
Don’t direct drainage onto garden beds that are sensitive to cold water pooling

Your Eurosun installer will sort the drainage solution as part of the installation scope, so it’s not something you need to figure out independently.

5. Safety: Windows, Refrigerants, and Hazardous Materials

Some heat pump units use R290, a propane-based refrigerant. If your system uses R290, it must not be installed directly below openable windows. This is a hard safety requirement, not a recommendation.

Beyond refrigerant safety, keep the following in mind:

Keep the unit well away from stored flammable materials, paints, mineral oils, and solvents
Avoid high salt-air environments where possible. Beachfront properties may need units with specific corrosion protection, as salt-air exposure can significantly affect a system’s efficiency and shorten a system’s lifespan
Steer clear of areas with corrosive chemical exposure for the same reason

Outdoor Installation

Around 95% of Australian heat pump systems are installed outdoors, and for good reason.

Outdoors, the unit has unrestricted access to ambient air, which is exactly what it needs to perform at its best. Drainage is simple. There’s no need for costly ventilation ducting. And any operational noise disperses naturally rather than echoing off interior walls.

For Perth homeowners specifically, outdoor installation is almost always the straightforward choice.

WA’s mild conditions and warm climates keep ambient temperatures well within the efficient operating range for most of the year, making the conditions here close to ideal.

The Ideal Outdoor Spot

When choosing where to position the unit in your outdoor area or on your property, aim for:

A well-ventilated, open area with no tight enclosures or overhanging structures directly above
A north-facing aspect where possible, as this captures ambient warmth throughout the day and supports better year-round energy-efficient operation, particularly if you’re pairing the heat pump with solar hot water systems already generating power on site
Ground-level installation for easier maintenance access and system stability. Roof space installations are possible in some configurations, but ground-level is the preferred option for most homes
Sun exposure helps, but partial shade from a structure won’t prevent the unit from operating efficiently
Proximity to your primary bathroom(s) and kitchen, ideally within 5–8 metres to minimise heat loss through the pipes

Clearance Requirements

Clearances aren’t just about airflow. They’re a compliance requirement and, in many cases, a warranty condition.

Ignoring them risks reduced efficiency, unexpected installation costs, and compromised system performance.

As a general guide:

Sides: minimum 200–300mm clearance from walls, fences, or fixed structures
Front: at least 1 metre for proper airflow and servicing access
Top: minimum 200mm of clear space above the unit

Always refer to your specific model’s installation manual for exact specs. Eurosun’s HPR-200L and HPR-270 units both have detailed clearance requirements that your installer will follow.

Can a Heat Pump Hot Water System Be Installed Indoors?

Yes, but it’s the exception, not the standard approach.

Installing a heat pump indoors requires a large, well-ventilated space. Think garages, utility rooms, or laundries with adequate air exchange.

A cupboard, small storeroom, or sealed space is not suitable and will cause the hot water system to underperform or fail to operate correctly altogether.

When Indoor Installation Makes Sense

There are specific situations where having a heat pump installed indoors is a legitimate option:

Properties in alpine or cold-climate regions where extreme weather conditions cause outdoor temperatures to regularly drop below 5°C, as sheltered indoor placement helps maintain efficiency
Heritage-listed or strata-restricted properties where visible external units aren’t permitted
Homes using split systems, where the compressor unit sits outside, and the storage tank lives in an indoor space. This configuration offers the flexibility of indoor tank placement without sacrificing the airflow the heat pump needs for optimal performance

What to Avoid Indoors

If indoor installation is being considered, steer clear of:

Sealed rooms or spaces under roughly 8–10 square metres, as there won’t be sufficient air volume for the heat pump to operate efficiently
Areas near bedrooms or main living spaces where the unit can generate noticeable noise from a heat pump indoors are far more disruptive than they would be outside
Spaces already prone to moisture or dampness, since the condensation produced daily will compound the problem
Any space that can’t meet the manufacturer’s minimum clearance requirements, as this can increase installation costs, void the warranty, and reduce the system’s efficiency over time

Need More Information about Where to Install your Heat Pump? Contact Eurosun Today!

Getting the location right from the start protects your investment, keeps running costs low, and ensures your system performs the way it should for years to come.

Whether you’re weighing up outdoor placement, working around a tricky block, or considering an indoor option, our team will assess your property and recommend the best solution for your home.

Get in touch today for a free, no-obligation quote.