Guide · last reviewed 27 September 2026
Replacing an electric hot water system with a heat pump
About half of Australian homes heat their water with a plain electric storage tank, and a heat pump uses around 30% of the energy to do the same job. That makes this the single biggest hot water upgrade in the country. The catch is rarely the technology — it is that most tanks get replaced in a hurry, with a cold shower and a plumber on the phone, and the old habits come across with the new unit.
The numbers, from the government's own page
The Australian Government's energy.gov.au hot water page puts the case in three lines. Electric storage systems are used by around 50% of Australian households; they are the cheapest to buy and install but generally more expensive to run, unless powered by solar. Heat pump water heaters use 30% of the energy of a conventional electric hot water system. Water heating itself is the second largest slice of household energy use, at 15% to 30% of it.
The reason is simple physics. An electric element turns one unit of electricity into one unit of heat. A heat pump uses a refrigeration cycle to move heat out of the outside air and into the water, so the same unit of electricity delivers several units of heat. Our running costs guide turns that into yearly dollar ranges and payback times.
Plan it before the tank dies
Most electric tanks are replaced the day they fail, which is the worst possible time to choose. The path of least resistance is whatever electric tank the plumber has on the van — cheap today, expensive to run for the next decade or more, and it locks in the old setup for the life of the tank.
Two things take the pressure off. First, energy.gov.au notes that some installers will lend you a temporary electric hot water heater while you choose the most suitable system — ask for it when you ring around. Second, if your tank is getting old (leaks at the base, rust-coloured water, the relief valve dribbling constantly), get heat pump quotes now, while you still have hot water and time to compare. In Victoria it is worth knowing that the Solar Victoria rebate requires the system being replaced to be at least three years old — see our Victorian rebate page for the full conditions.
Drop the off-peak habit
Many electric tanks sit on a separate off-peak or controlled-load circuit that only switches on overnight. energy.gov.au describes the trade-off plainly: an off-peak tariff can reduce electricity costs, but water is only heated during the off-peak period. That made sense for a tank that needed cheap power and nothing else.
A heat pump is different on three counts. It is least efficient in the coldest air, which is overnight. Both NSW and Victoria have noise rules that name heat pump water heaters and restrict them being audible next door at night — our noise guide has the hours. And if you have rooftop solar, midday power is usually the cheapest you can get. So do not simply wire the new unit onto the old overnight circuit by default. Ask your installer what timer setting and tariff suit your model, your climate and your bill.
Don't copy the old tank size
Old off-peak tanks were often oversized on purpose: they had one overnight window to heat the whole day's water, so they carried a big reserve. A heat pump can top up during the day, which usually means a smaller tank does the job — and a smaller tank loses less heat standing still. Our sizing guide has the litres-per-person rule and a household table.
There is no star label to compare them on
This one catches people out. energy.gov.au notes that regulations do not require water heaters sold in Australia to display an Energy Rating Label, and that minimum energy performance standards cover electric and gas storage heaters but not heat pumps. So the plain electric tank you are replacing had to meet a legal efficiency floor, while the heat pumps on offer do not have one, and there is no sticker to shop by.
The practical substitute is the model's listing on the Clean Energy Regulator's register of eligible heat pumps, which shows how many certificates it creates in each climate zone. More certificates means more energy deemed displaced versus a conventional electric heater. Our STC guide explains the zones, and if you live somewhere cold our cold-climate guide covers the zone 5 column and the booster — energy.gov.au itself warns that not all models are designed for places that regularly drop below 5°C in winter.
What actually changes on install day
- Position. An indoor or cupboard electric tank cannot simply be swapped in place — the heat pump (or its compressor, on a split system) needs outdoor air. Expect the installer to talk about where it goes.
- Power. The unit needs a suitable electrical supply; your installer will check whether the existing circuit works for the new model.
- Pipework. A new position may mean a longer or re-routed pipe run to the house.
- Rebates. Federal certificates usually come off the quote as a discount, and state programs vary a lot. Check yours with the rebate calculator or the state-by-state rebate guide before you sign.
When staying electric can still make sense
A heat pump is not always the answer. If there is genuinely no workable outdoor position, if you expect to sell or move out very soon, or if you already run a large solar system that covers a simple electric tank during the day, the sums can tip the other way. Our is it worth it guide works through those cases honestly.
Frequently asked
Can I replace an electric hot water system with a heat pump?
Yes, and it is the most common switch there is — energy.gov.au says electric storage systems are used by around 50% of Australian households. The heat pump needs an outdoor position with airflow and a power supply, and your installer will size it and plan the pipe run. It is usually a simpler swap than moving off gas, because there is no gas line to cap and the home is already set up for an electric water heater.
How much less energy does a heat pump use than an electric tank?
The Australian Government's energy.gov.au states that heat pump water heaters use 30% of the energy of a conventional electric hot water system — roughly 70% less for the same hot water. Your real result depends on the model, your climate and when it runs.
Should I keep my heat pump on the off-peak tariff like my old tank?
Not automatically. An old electric tank heats overnight because that is when off-peak power is cheap. A heat pump works hardest in cold night air, NSW and Victoria both restrict when heat pump water heaters may be audible next door overnight, and if you have rooftop solar the middle of the day is usually your cheapest power. Ask your installer which timer setting or tariff suits your model and your bill before copying the old overnight setup.
Is there an energy star rating for heat pump hot water systems?
No. energy.gov.au notes that regulations do not require water heaters sold in Australia to display an Energy Rating Label, and that minimum energy performance standards apply to electric and gas storage heaters but not to heat pumps. To compare heat pumps, use the model's listing on the Clean Energy Regulator's register — the certificate count for your zone reflects the energy it is deemed to save.
My electric tank has just died. Do I have to replace it like for like?
No. energy.gov.au notes that if your existing heater fails, some installers will lend you a temporary electric hot water heater while you choose the most suitable system. Ask for that when you ring around — it removes the pressure to accept whichever electric tank is on the van that day.
Should I get the same size tank as my old electric one?
Often not. Old off-peak electric tanks were sized large because they could only heat once a day, overnight. A heat pump can reheat during the day, so the smallest tank that suits your household is usually the cheapest to run. Our sizing guide walks through the numbers.
Get quotes before the old tank gives out
A local installer can check the position, power and pipe run, size the tank for your household and apply the rebates on the quote.
General information drawing on the Australian Government's energy.gov.au hot water guidance as at 27 September 2026 — not a quote, electrical advice or a design. Energy use and savings vary with model, climate, household and tariff. Confirm electrical and placement requirements with a licensed installer.