4 Different Types of Electric Hot Water Systems

Electric hot water systems are appliances that heat water using electricity. They consist of a heating element that warms the water to a set temperature for household use in showers, baths, washing dishes, and doing laundry. These systems are common in Australian homes due to their reliability and relatively straightforward installation process.

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The 4 different types of electric hot water systems are tank storage systems, tankless (instantaneous) systems, heat pump systems, and solar-assisted electric systems. Each type has its own advantages, operating principles, and costs.

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When choosing the best electric hot water system, consider your household size and water usage patterns, available space, budget constraints, energy efficiency requirements, climate conditions, and electricity tariff options. The right system should balance initial costs with long-term energy savings.

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Regarding installation costs, tank electric hot water systems are the cheapest to install at $750-$1,200 all inclusive, but have higher running costs. Solar-assisted electric systems are the most expensive to install initially at $3,600-$7,000, but offer significant long-term savings through reduced electricity usage.

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1. Tank Electric Hot Water Systems

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Tank Electric Hot Water Systems heat and store water in an insulated tank, keeping it ready for use whenever needed. Also known as storage systems, they maintain a constant supply of hot water in the tank.

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An electric heating element at the bottom of the tank heats the water. When hot water is drawn from the top of the tank, cold water enters at the bottom to be heated. The thermostat regulates the temperature, triggering the element to heat whenever the water temperature drops below the set level. The tank is insulated to minimise heat loss.

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Tank electric hot water systems typically last between 10-15 years before requiring replacement. This lifespan can be extended with regular maintenance including checking the pressure relief valve and replacing the anode rod as needed.

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The cost of a tank electric hot water system varies based on several factors. Purchase prices range from $450 for small basic models to $1,500 for larger premium units. Installation typically costs between $300-$700 for a straightforward replacement. Running costs are relatively high at $600-$950 per year for an average household. Maintenance costs include periodic services at $150-$300 every few years for anode replacement and system checks.

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Pros:

• Lower upfront purchase and installation costs compared to other systems
• Available in various tank sizes to suit different household needs
• Simple, reliable technology that's easy to maintain
• Can be connected to off-peak electricity tariffs to reduce running costs
• Provides good water pressure and flow rate

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Cons:

• Higher operating costs, especially if not connected to off-peak tariffs
• Limited hot water supply that can run out during heavy usage
• Requires significant space for installation
• Continues heating water even when not in use, wasting energy
• Higher greenhouse gas emissions than more efficient alternatives
• May need a larger tank to ensure adequate hot water supply

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2. Tankless Electric Hot Water Systems

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Tankless Electric Hot Water Systems, also known as instantaneous or continuous flow systems, heat water on demand as it flows through the unit, eliminating the need for a storage tank. These systems provide hot water only when needed, making them more energy-efficient than traditional storage systems.

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In a tankless system, cold water flows through a heating chamber containing electric elements that rapidly heat the water as it passes. When a hot water tap is turned on, sensors detect the water flow and activate the heating elements. The temperature can be precisely controlled through digital interfaces on modern units, providing consistent hot water temperature regardless of flow rate.

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Tankless electric hot water systems generally have a longer lifespan than tank models, typically lasting 15-20 years with proper maintenance. Their longer life expectancy is due to fewer parts that can corrode or fail, and the absence of a tank that can deteriorate over time.

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The cost structure for tankless electric systems reflects their technology. Purchase prices range from $680-$1,600 depending on capacity and features. Installation costs are higher than tank systems, typically $400-$900, and may include additional expenses if electrical upgrades are needed to handle the higher power requirements. Running costs are moderate at $450-$800 annually for an average household. Maintenance costs are minimal, typically requiring only periodic descaling to remove mineral buildup, costing $150-$250 every few years.

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Pros:

• More energy-efficient as they heat water only when needed
• Provide unlimited hot water supply without running out
• Compact size saves valuable space in the home
• Longer lifespan than tank systems
• More precise temperature control
• No risk of flooding from a ruptured tank

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Cons:

• Higher initial purchase and installation costs
• May require electrical system upgrades for installation
• Limited flow rate can struggle with multiple simultaneous hot water demands
• Performance may decrease in very cold climates
• Takes a few moments for hot water to reach taps
• Higher power demands when in use

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3. Heat Pump Electric Hot Water Systems

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Heat Pump Electric Hot Water Systems use technology similar to refrigerators but in reverse, extracting heat from the surrounding air to warm water. These systems are among the most energy-efficient electric options available, using up to 75% less electricity than conventional electric water heaters.

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These systems operate by drawing in ambient air through an evaporator containing refrigerant. As the refrigerant absorbs heat from the air, it changes from a liquid to a gas. This gas is then compressed, which significantly increases its temperature. The hot gas passes through a condenser coil wrapped around or inside the water tank, transferring heat to the water before cooling and returning to a liquid state to repeat the cycle.

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Heat pump systems have a moderate lifespan of 10-15 years for the overall system, though the tank component may last longer. The compressor, which is the heart of the heat pump, typically needs replacement after 10-12 years, while other components may require earlier maintenance or replacement.

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The cost profile of heat pump systems reflects their advanced technology. Initial purchase prices range from $2,500-$5,500 depending on size and features. Installation costs are higher than standard electric systems at $800-$1,500 due to more complex setup requirements. The significant advantage comes in running costs, which are substantially lower at $200-$400 annually for an average household. Maintenance costs include regular system checks and occasional compressor servicing, averaging $200-$400 every 3-5 years.

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Pros:

• Extremely energy-efficient, using up to 75% less electricity than standard electric systems
• Lower running costs provide significant long-term savings
• Environmentally friendly with reduced greenhouse gas emissions
• Eligible for government rebates and incentives in many areas
• Works well with solar PV systems for even greater efficiency
• Can operate effectively in a wide range of climates with proper selection

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Cons:

• High upfront purchase and installation costs
• Requires adequate air circulation and space for installation
• Produces noise similar to an air conditioner when operating
• Performance may decrease in extremely cold conditions
• Longer recovery time to heat water compared to direct electric heating
• May require a backup electric element for periods of high demand

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4. Solar-Assisted Electric Systems

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Solar-Assisted Electric Hot Water Systems use solar panels (collectors) to capture energy from the sun to heat water, with an electric element serving as a backup when solar energy is insufficient. These systems are highly environmentally friendly, using renewable energy as their primary source.

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These systems work by circulating a heat transfer fluid through solar collectors typically mounted on the roof. As sunlight hits the collectors, the fluid heats up and transfers this heat to water in a storage tank through a heat exchanger. On cloudy days or when hot water demand exceeds what solar energy can provide, an electric element in the tank activates automatically to ensure a continuous supply of hot water.

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Solar-assisted electric systems have a good lifespan, with the storage tank typically lasting 10-15 years and the solar collectors lasting 15-25 years. The electronic controllers and pumps may need replacement after 10-15 years, while the backup electric element has a similar lifespan to conventional electric systems.

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The cost structure reflects the advanced technology and dual heating methods. Purchase prices range from $3,600-$7,000 for a complete system. Installation costs are significant at $1,000-$2,000 due to the complexity of installing rooftop collectors and connecting them to the storage system. The major advantage is in running costs, which are very low at $150-$300 annually, depending on climate and solar conditions. Maintenance costs include periodic system checks, pump servicing, and occasional collector cleaning, averaging $200-$400 every 3-5 years.

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Pros:

• Uses free and renewable solar energy as the primary heating source
• Very low running costs after initial investment
• Environmentally friendly with minimal greenhouse gas emissions
• Eligible for substantial government rebates and incentives
• Increases property value and appeal
• Provides energy independence and protection from rising electricity prices

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Cons:

• Highest upfront purchase and installation costs of all electric systems
• Performance depends on climate and available sunlight
• Requires suitable roof space with correct orientation to the sun
• May not be sufficient during extended periods of cloudy weather
• More complex installation and maintenance requirements
• Backup electric element still needed for reliable hot water supply

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How to choose the best electric hot water system type

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When selecting an electric hot water system, several key factors should influence your decision to ensure you get the most suitable system for your specific needs and circumstances.

Key choosing criteria:

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• Household size: The number of people in your household directly impacts the size and type of system you need. Larger households with higher hot water demand will need systems with greater capacity or faster recovery rates.
• Available space: The physical space you have available will determine what type of system is practical. Tank systems require significant floor space, while tankless systems are compact and can be wall-mounted.
• Climate: Your local climate affects the efficiency of certain systems. Heat pump systems work best in moderate to warm climates, while solar systems need adequate sunlight to operate efficiently.
• Energy efficiency: Different systems have varying levels of energy efficiency, which directly impacts running costs and environmental footprint. Heat pumps and solar-assisted systems are the most energy-efficient but have higher upfront costs.
• Budget considerations: Balance the initial purchase and installation costs against potential long-term savings from more efficient systems. Sometimes paying more upfront can save significantly over the system's lifespan.
• Hot water usage patterns: Consider when and how your household uses hot water. If you need hot water at specific times or have high simultaneous usage, this will influence your choice.
• Electricity tariffs: Check if off-peak electricity rates are available in your area, as this can make storage systems more economical to run.

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What are the hot water system types?

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There are four main categories of electric hot water systems:

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1. Tank Electric Hot Water Systems: Traditional storage systems that heat and maintain water in an insulated tank. These are best for households with moderate hot water needs and limited budget for upfront costs. They're simple, reliable, and have the lowest initial cost, though ongoing running costs are higher.
2. Tankless Electric Hot Water Systems: On-demand systems that heat water as it flows through the unit without storing it. These are ideal for smaller households or where space is limited. They provide endless hot water and save energy by not maintaining a tank of hot water, but may struggle with multiple simultaneous hot water demands.
3. Heat Pump Electric Hot Water Systems: Energy-efficient systems that extract heat from the surrounding air to heat water. These are perfect for environmentally conscious households looking for lower running costs. They use up to 75% less electricity than conventional systems but require good airflow around the unit and work best in moderate climates.
4. Solar-Assisted Electric Systems: Systems that use solar collectors to capture the sun's energy, with an electric element as backup. These are ideal for sunny locations and those wanting maximum environmental benefits and lowest running costs. They have the highest upfront costs but the lowest operating costs and environmental impact.

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What is the cheapest electric hot water system type?

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Tank Electric Hot Water Systems are the cheapest type to purchase and install, with all-inclusive costs starting from around $750-$1,200. These systems use simple technology with just a heating element and thermostat, making them reliable and straightforward to install. The installation process is often quicker and less complex than other systems, keeping labour costs down. No additional equipment or upgrades are typically needed, making them ideal for direct replacements and budget-conscious homeowners.

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What is the most expensive electric hot water system type?

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Solar-Assisted Electric Systems are the most expensive type to purchase and install, with costs typically ranging from $4,600-$9,000 all inclusive. This higher price reflects the advanced technology, additional components (solar collectors, pumps, controllers), and more complex installation requirements. Despite the higher upfront investment, these systems offer the lowest running costs and may qualify for government rebates that help offset the initial expense.

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What Are the Energy Efficiency Ratings for different electric Hot Water System types?

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Electric hot water systems in Australia are rated using energy star ratings, which help consumers compare energy efficiency across different models and types:

• Solar-Assisted Electric Systems: Highest efficiency with ratings of 4-5 stars. These systems use renewable energy as their primary source, resulting in minimal electricity consumption from the grid.
• Heat Pump Electric Hot Water Systems: Very efficient with ratings of 3.5-4.5 stars. They use approximately 70-75% less electricity than standard electric systems by extracting heat from the surrounding air.
• Tankless Electric Hot Water Systems: Moderate efficiency with ratings of 2.5-3.5 stars. They eliminate standby losses associated with storage tanks but still use significant electricity when actively heating water.
• Tank Electric Hot Water Systems: Lowest efficiency with ratings of 1-2.5 stars. These systems continuously use electricity to maintain water temperature in the storage tank, resulting in higher energy consumption.

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What is the best alternative to electric hot water systems?

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Several non-electric alternatives offer different advantages depending on your specific needs and circumstances:

• Gas-based systems: Gas hot water systems heat water using natural gas or LPG instead of electricity. These systems come in both storage and instantaneous varieties. They typically heat water faster than electric systems and have lower running costs than standard electric systems. Gas instantaneous systems are particularly efficient as they only heat water when needed, eliminating standby energy losses. Gas systems are ideal for households with existing gas connections and areas where electricity prices are high.
• Heat pump systems using refrigeration: While some heat pumps use electricity to operate their compressors, they primarily use refrigeration technology to transfer heat rather than generate it. These systems operate like a refrigerator in reverse, extracting heat from the surrounding air and transferring it to the water. They can produce up to 3-4 units of heat energy for every unit of electricity consumed, making them up to 75% more efficient than conventional electric systems.
• Solar non-electric systems: Solar thermal systems capture heat directly from the sun using roof-mounted collectors, without relying on electricity as their primary energy source. These systems circulate water or heat transfer fluid through the collectors where it's warmed by solar radiation. The heated water is then stored in an insulated tank for use. While they may include a gas booster (instead of electric) for cloudy days, their primary energy source is completely renewable and free. These systems offer the lowest running costs and environmental impact of all hot water systems.

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