Guide · last reviewed 6 July 2026
Heat pump hot water running costs, honestly
Short version: a heat pump hot water system typically costs $100–$250 a year to run on grid electricity — around 70–75% less than an electric storage tank — and close to nothingif you run it on rooftop solar. Here's how that maths actually works, and where it changes.
Why it's so much cheaper than electric
A conventional electric storage system turns one unit of electricity into one unit of heat. A heat pump moves heat from the air instead of making it, so it delivers roughly three to four units of heat per unit of electricity. That's the whole story: same hot shower, a quarter to a third of the energy. For a typical household that's often the difference between a $400–$700 yearly electric bill and a $100–$250 one.
Heat pump vs electric vs gas — the rough picture
- Electric storage: commonly $400–$700 a year for a family, more on peak tariffs.
- Gas storage or instant: usage plus a daily supply charge you pay even in months you barely use it — often $300–$600+ a year all-in.
- Heat pump (grid): roughly $100–$250 a year for the same household.
- Heat pump (on solar): run it midday and you're heating water with power you'd otherwise export for a few cents — running cost close to zero.
These are indicative ranges for a typical 2–4 person household; your figure depends on usage, tariffs and climate.
What changes your running cost
- Solar PV + a timer: the single biggest lever. Heating water during daylight uses your own generation instead of grid power — the best economics available.
- Your climate: heat pumps are less efficient in the cold, so a Hobart or Canberra winter costs a little more than a Brisbane one. A cold-climate-rated unit keeps the gap small.
- Tariff: a controlled-load or time-of-use tariff can lower the cost of the hours you heat in.
- Tank size and household demand: right-sizing avoids paying to reheat water you never use.
The solar “cheat code”
If you have rooftop solar, put the heat pump on a timer to run in the middle of the day. You're then heating your water with electricity that would otherwise export for a few cents a unit — turning your hot water into one of the cheapest things in the house to run. This is why heat pumps and solar are such a common pairing.
Payback, without the sales spin
A heat pump costs more upfront than a plain electric tank, but the yearly saving is large. After state rebates and federal STCs, the extra upfront cost commonly pays back in around three to five yearsversus electric — sooner with strong rebates or solar. Against gas, the case is usually still positive once you include the daily supply charge, but it's more tariff-dependent, so run your own numbers.
Quick answers
How much does a heat pump hot water system cost to run per year?
For a typical household, roughly $100–$250 a year on grid electricity — about 70–75% less than an electric storage system. Run it on a daytime timer with rooftop solar and the running cost can fall close to zero.
Is a heat pump cheaper to run than gas hot water?
Usually yes, once you count the daily gas supply charge as well as usage. The gap depends on your electricity and gas tariffs, but many households that switch from gas also save by removing the gas connection entirely.
Does cold weather make a heat pump more expensive to run?
Somewhat. Efficiency (COP) drops as the air gets colder, so a Hobart or Canberra winter costs a little more to heat water than a Brisbane one. A unit rated for low ambient temperatures keeps that penalty small.
What's the payback time versus an electric system?
After rebates, the running-cost saving over an electric storage system commonly pays back the extra upfront cost in around 3–5 years — faster in states with strong rebates or if you pair it with solar.
See what it costs you — upfront and after rebates
Running-cost and payback figures are indicative ranges based on published efficiency data and typical Australian tariffs as at July 2026, and vary by household, tariff, climate and system. General information, not financial advice.