Is heat pump hot water worth it?

A heat pump costs more to buy and less to run. Whether it is worth it comes down to three numbers: how much more it costs than the alternative after rebates, how much it saves each year, and how long it lasts. Here is what the published sources say, and a way to run your own sums.

How long does a heat pump take to pay for itself?

No current federal source gives a payback figure. These estimates use different prices and assumptions, so treat them as a range, not a promise.

How do I work out my own payback?

Payback in years is the extra upfront cost divided by the yearly saving. Using the ACT Government's energy figures (a 300 litre tank heated daily), replacing an element tank saves about $1,018 a year at an example price of 30 cents per kWh (see running costs for other prices). With that saving:

If you are on a cheap controlled load tariff the saving is smaller and payback longer. If you run the heat pump on free midday power or your own solar, the saving can be larger.

When is a heat pump worth it?

• You are replacing an electric storage tank. This is the biggest energy saving. energy.gov.au says a heat pump uses 30% of the energy of a conventional electric system (energy.gov.au).
• Your current system has failed anyway. Then the comparison is heat pump vs a new replacement, not heat pump vs keeping what you have, which shortens the payback a lot.
• You can stack rebates. In Victoria, the VEU discount and Solar Homes rebate together can take up to $1,560 off a gas replacement for eligible owners (VEU).
• You have solar or a free midday window. See solar and off-peak timing.
• You are leaving gas entirely. Victoria's buyers guide says disconnecting from gas saves around $350 to $400 a year in fixed network charges (VEU buyers guide).
• You use LPG. Your Home says LPG costs two to three times as much to run as piped gas (Your Home).

When might it not be worth it?

• Your current system is young and working well. Replacing it early throws away its remaining life.
• You use very little hot water, so the yearly saving is small.
• You live somewhere cold and the only affordable model would rely on its element in winter. A cold-climate model costs more but saves more. See cold climates.
• The install needs expensive switchboard or relocation work.

How long do heat pumps last, and are they reliable?

The Victorian buyers guide talks about the "10-15 year lifespan of a hot water system" when recommending tank sizes. Warranties give another clue: VEU needs at least 5 years, and Your Home says tank warranties are typically 5 to 10 years for glass-lined steel and 10 to 15 years for stainless steel. In the manufacturer data I collected, warranties on the heat pump parts are often shorter than on the tank (see the brand overview).

On reliability, the clearest official warning is about installation, not the product. Building Commission NSW found many heat pump installations under the NSW scheme were "non-compliant to relevant Australian Standards and manufacturer's instructions" (Building Commission NSW). A good installer matters as much as the brand. Use the installer checklist.

What does the ACT ten-year comparison show?

The ACT guide's ten-year cost totals at 2021/22 prices (the guide says the gas figure includes the annual gas connection fee): standard electric $15,855, gas $13,350, heat pump $10,285. The prices are out of date, but on the ACT's numbers the heat pump came out cheapest over ten years.