How heat pump hot water works

Your Home, the federal government's guide to sustainable homes, puts it simply: heat pumps "use electricity to move ('pump') heat from one place to another instead of generating heat directly" (Your Home). An ordinary electric storage tank turns electricity straight into heat with an element, like a kettle. A heat pump spends its electricity running a compressor and a fan, and gets most of the heat for free from the air.

What happens inside a heat pump?

The federal government's 2026 regulation review describes four stages (Decision RIS, April 2026):

1. Evaporator. A fan draws outside air across a heat exchanger. The cold, low-pressure liquid refrigerant inside absorbs heat from the air and boils into a gas. This works even when the air feels cold, because the refrigerant is colder still.
2. Compressor. The compressor squeezes the gas, which raises its temperature. This is where most of the electricity goes.
3. Condenser. The hot gas passes through a heat exchanger in contact with the water, gives up its heat, and turns back into a liquid.
4. Expansion valve. The pressure drops, the refrigerant cools right down, and it heads back to the evaporator to start again.

What is COP, and why does it matter?

COP stands for coefficient of performance: units of heat delivered for each unit of electricity used. A COP of 3 means 3 kWh of heat in the water for 1 kWh of electricity. Your Home gives these typical figures (Your Home):

Treat a brochure COP with care. Your Home warns that COP doesn't count the energy used by a booster element and that manufacturers quote COP under different test conditions. The federal review adds that across the operating range, capacity and COP can vary "by factors of 3 to 6" with air and water temperature. That is why a heat pump is most efficient on a warm afternoon and least efficient on a frosty morning. See cold climates.

How much less power does a heat pump use?

The official figures vary with the comparison each source makes:

• energy.gov.au: a heat pump uses "30% of the energy of a conventional electric hot water system" (energy.gov.au).
• The Victorian Government: "around 60 to 75% less electricity than a conventional electric hot water system" (VEU buyers guide).
• Renew: at least 50% and as much as 78% less, "depending on the climate, brand and model" (Renew).

These all point the same way: roughly a quarter to a half of the power of an element tank, depending on the unit and where you live.

Why does hot water matter so much on the power bill?

Your Home says water heating is about 25% of average household energy use in Australia. energy.gov.au puts it at 15% to 30%, the second-largest use in the home, and the largest source of household greenhouse gas emissions at up to 25%. In Victoria the government puts hot water at about 18% of household energy. Around half of Australian households use an electric storage system (energy.gov.au).

Does a heat pump have a backup element?

Many do. Your Home says many units "include a boost element that heats water directly during very cold weather or during periods of high hot water use", and that running costs rise if the element is used often. The federal review found installers sometimes leave units set up to use the booster, which "can dramatically reduce the energy efficiency". After installation, ask the installer to show you which mode the unit is in.

Does a heat pump need a timer?

Not to work, but it helps. Your Home notes that "most heat pumps" have built-in timers that can be set to run when excess solar power or cheap electricity is available, and that heating in warmer afternoon air also improves efficiency. Victoria's Solar Homes rebate requires a user-set timer or solar PV link on eligible heat pumps. See solar and off-peak timing.

What about Legionella and scalding?

Your Home says residential hot water storage must be heated to at least 60°C at least once every 7 days, and new systems need a tempering valve so water at the tap does not exceed 50°C. A properly set up heat pump handles both. This is one of the reasons installation should be done by a licensed plumber.

More on how heat pumps work

• Cold climatesDo heat pump hot water systems work in cold climates?How heat pumps cope with frosty mornings in Canberra, Hobart and the Victorian high country, what the minimum operating temperature means, and what to look for.
• NoiseHow noisy is a heat pump hot water system?Typical heat pump hot water noise levels in decibels, where to put the unit so it doesn't annoy you or the neighbours, and how timers help.
• Size guideHeat pump hot water size guide: what tank size do you need?How to pick a heat pump hot water tank size for your household, with litres-per-person guidance from official sources and the things that push you up a size.
• All-in-one vs splitAll-in-one vs split heat pump hot water systemsThe difference between all-in-one (integrated) and split heat pump hot water systems, and which suits small yards, cold climates, noise limits and replacements.