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How much less energy does a heat pump hot water system use?

Australian Government guidance says heat pump water heaters use about 30% of the energy of a conventional electric hot water system. Actual running-cost savings depend on the model, climate, household hot-water use, tariff and whether you can run it from rooftop solar.

Do builders include heat pumps as standard?

Some do, particularly as energy rating requirements increase. Many still include a standard electric or gas system — heat pump is often an upgrade.

What is the running cost difference?

Heat pumps generally use much less electricity than conventional electric storage systems, but annual dollar savings vary with household use, tariff, climate, system efficiency and solar self-consumption. Compare the registered product energy use and your electricity tariff rather than relying on one national dollar figure.

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Home›Build Knowledge Hub›Building Process›Energy Efficiency›Heat Pump vs Electric Hot Water System

Energy Efficiency

Heat Pump vs Electric Hot Water System

Heat pump hot water vs traditional electric systems — energy use, running-cost factors and what builders include in new homes.

5 min·Compare My Build — Independent Resource· Updated September 2026

Introduction

Hot water accounts for 20–30% of a typical household's energy use. The type of hot water system included in your new build significantly affects your ongoing running costs. Heat pump hot water systems are far more energy-efficient than conventional electric systems — but they're not always included in a builder's base price.

Feature	Electric (Resistance)	Heat Pump
Efficiency (COP)	1.0 (100% conversion)	3.0–4.0 (300–400% efficiency)
Energy use	Higher — resistive element heats water directly	Much lower — Australian Government guidance says about 30% of conventional electric use
Dollar saving	—	Household- and tariff-specific
Upfront cost	$800 – $1,500	$2,500 – $4,500
Noise level	Quiet	Moderate (like aircon fan)
Standard inclusion	Many builders	Growing inclusion — some builders

Cost Comparison

Standard electric hot water (included)$800 – $1,500

Heat pump upgrade+$1,500 – $3,000

Running-cost savingVaries by tariff, use, climate and solar

Payback periodProject-specific; incentives and energy prices matter

Heat pump payback periods have shortened as energy prices increase. Government rebates may apply — check current state incentives.

Common Builder Inclusions

›Standard electric hot water systems are included in most base prices
›Heat pump hot water is increasingly offered by energy-focused builders
›NCC 2022 Whole of Home requirements consider hot-water energy use, but they do not create one Australia-wide rule requiring a heat pump in every particular climate zone
›Ask your builder: 'Is a heat pump hot water system available as a standard or upgrade option?'
›Government rebates may reduce the upfront cost — check current availability