4 Different Types of Electric Hot Water Systems

Electric hot water systems use electricity to supply household hot water. Conventional resistance models heat water directly with an element, while heat pumps use electricity to transfer heat from the air. Some solar thermal systems use an electric booster.

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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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Installation costs vary by system type. Tank electric systems have a simpler installation, while solar-assisted electric systems also involve solar equipment. Running costs are another consideration when comparing the options.

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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 vary between small basic models and larger premium units. Installation costs depend on whether the work is a straightforward replacement. Running costs depend on electricity consumption, your current tariff and any use of rooftop solar. Maintenance costs include periodic services 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
• Suitable models and tank sizes may use controlled-load tariffs or timers; confirm supply hours and rates
• Provides good water pressure and flow rate

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Cons:

• Operating costs depend on demand, heat losses, heating times and the electricity tariff
• Limited hot water supply that can run out during heavy usage
• Requires significant space for installation
• Storage heat losses can require reheating even when no hot water is drawn
• 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 depend on capacity and features. Installation costs are higher than tank systems and may include additional expenses if electrical upgrades are needed to handle the higher power requirements. Running costs depend on demand and the electricity tariff; instantaneous operation may prevent shifting water heating to cheaper times. Maintenance costs are minimal, typically requiring only periodic descaling every few years to remove mineral buildup.

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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. They can use substantially less electricity than conventional resistance water heaters; performance depends on the model, local conditions, demand and booster use.

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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 depend on size and features. Installation costs are higher than standard electric systems due to more complex setup requirements. Heat pumps can reduce electricity consumption compared with resistance heating, but annual savings depend on the model, local conditions, hot water demand, booster use and tariff. Maintenance costs include regular system checks and occasional compressor servicing every 3-5 years.

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Pros:

• Can use less electricity than conventional resistance heating; compare model performance for the local conditions
• Potential running-cost savings depend on model performance, household demand and current tariffs
• Environmentally friendly with reduced greenhouse gas emissions
• May receive federal STC support if the model and installation are eligible
• Suitable controls can help use available solar PV electricity; compare grid use and tariff effects
• 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. Installation costs are significant due to the complexity of installing rooftop collectors and connecting them to the storage system. Running costs depend on solar contribution, household demand, booster and pump energy, and current tariffs. Maintenance costs include periodic system checks, pump servicing, and occasional collector cleaning every 3-5 years.

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Pros:

• Uses free and renewable solar energy as the primary heating source
• Running costs depend on solar contribution, boosting, pump use and current tariffs
• Environmentally friendly with minimal greenhouse gas emissions
• May receive federal STC support if the model and installation are eligible
• Any financial benefit should be assessed using the installed quote and household-specific running-cost estimate
• Solar heating can reduce purchased energy, while electrical boosting remains exposed to 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. Compare the installed quote and expected running costs for the selected model and household.
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. Their electricity use depends on the model, local conditions, demand and booster use; check the manufacturer’s airflow and siting requirements.
4. Solar-Assisted Electric Systems: Systems that use solar collectors to capture the sun's energy, with an electric element as backup. Compare sunlight, collector orientation, demand and booster use for the property. Installation cost, purchased energy and emissions depend on the selected system and how it is operated.

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What affects tank electric hot water system costs?

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Tank Electric Hot Water Systems use simple technology with a heating element and thermostat. The installation process is often quicker and less complex than other systems, affecting labour costs. Installation requirements also depend on whether the work is a direct replacement.

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What affects solar-assisted electric system costs?

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Solar-Assisted Electric System costs reflect the advanced technology, additional components (solar collectors, pumps, controllers), and more complex installation requirements. These systems may qualify for federal STC support, subject to the registered model and installation requirements.

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

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Compare energy performance using the selected model’s declared data and relevant test conditions; there is no universal government star-rating scale across these electric water-heater types.

• Solar-Assisted Electric Systems: Solar contribution varies with system design, sunlight and demand. Include booster and pump energy when comparing performance.
• Heat Pump Electric Hot Water Systems: Compare COP and annual performance data under equivalent test conditions. Actual electricity use depends on climate, hot water demand and booster operation; there is no universal government star rating for this category.
• Tankless Electric Hot Water Systems: These systems avoid storage-tank heat losses but heat water when it is used. Check electrical requirements, expected demand and the applicable tariff.
• Tank Electric Hot Water Systems: Check the model’s declared energy performance and storage heat losses. These systems must meet Australian minimum energy-performance requirements but are not required to display an Energy Rating Label.

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What alternatives are there to electric resistance hot water systems?

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Alternatives to conventional electric resistance heating include the following options; compare them using the same household demand and current energy tariffs:

• Gas-based systems: Gas hot water systems include storage and instantaneous models using natural gas or LPG. Compare model energy use, fuel prices and any supply charges with electric resistance, heat pump and solar options; an existing gas connection does not establish the lowest running cost.
• Electric heat pump systems: Heat pumps use electricity to operate a compressor and transfer heat from the air into water. They can use less electricity than resistance heating, but actual performance depends on the model, ambient conditions, demand and any booster use.
• Solar thermal systems: Collectors provide solar heat, with gas or electric boosting when needed. Some designs also use electrically powered pumps or controls. Compare the complete system’s purchased energy and tariffs rather than assuming it is entirely non-electric or has the lowest running cost.

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