Heat Pump vs Gas vs Electric Hot Water: Real Costs
By eHomes Australia
Hot water is the second-biggest energy cost in most Australian homes, behind heating and cooling. So when your old system dies, the choice between a heat pump, gas, or a plain electric tank is worth a few minutes of real maths. Here’s the short answer: a heat pump like the Emerald is the cheapest to run by a wide margin — around $200 to $300 a year, against roughly $750 to $1,000 for an electric storage tank and $400 to $700 for gas. Over the life of the system that gap pays for the unit several times over.
We quote this comparison every week across Adelaide and Melbourne. Below is the dollars-per-year picture we put in front of people, and where the Emerald payback actually lands.
Heat pump vs gas vs electric: the yearly running cost
The number that matters isn’t the sticker price — it’s what the thing costs you every year to keep running. A heat pump moves heat instead of making it, so it draws far less energy for the same hot shower. Here’s how the three stack up for a typical home:
| System | Energy used / year | Running cost / year | 10-year running cost |
|---|---|---|---|
| Electric storage tank | ~3,000–4,000 kWh | ~$750–$1,000 | ~$7,500–$10,000 |
| Gas storage / instant | Varies (gas + supply charge) | ~$400–$700 | ~$4,000–$7,000 |
| Emerald heat pump | ~800–1,000 kWh | ~$200–$300 | ~$2,000–$3,000 |
| Emerald heat pump on solar | Mostly self-generated | Close to $0 | Close to $0 |
These are indicative figures — your exact cost depends on household size, tariff and how much you run it on solar. We confirm the real numbers for your home at the quote. But the ranking doesn’t change: the heat pump wins on running cost every time, and on solar it’s in a league of its own.
Why is a heat pump so much cheaper to run?
It comes down to one number: COP, the coefficient of performance. A standard electric element sits at 1.0 — one unit of power in, one unit of heat out. The Emerald runs a COP of up to around 3.5, because it pulls warmth out of the surrounding air rather than burning electricity to create it. You get roughly 3.5 units of heat per unit of power. That’s where the 75% saving comes from.
Gas sits in the middle. The gas itself is reasonably cheap per unit, but you’re also paying a daily supply charge for the connection whether you use it or not — and if hot water is the only thing still on gas in your house, you’re paying that charge to run one appliance. Plenty of the homes we visit are keeping a whole gas connection alive just for the hot water tank.
What’s the Emerald payback?
Here’s the part that decides it. The Emerald qualifies for a federal STC rebate worth roughly $600 to $1,000 off at point of sale, depending on your postcode and unit size — we take it straight off the price. Against an electric tank, the running-cost saving pays the unit off in 3 to 5 years. If you’re replacing a tank that’s already failed, the payback drops to under 18 months, because you were going to spend money on a replacement anyway and the only question is which one.
- vs electric storage: 3 to 5 year payback on running-cost savings alone.
- Replacing a dead tank: under 18 months — the comparison is the price difference, not the whole unit.
- On solar in the 10am–3pm window: running cost near zero, so the saving is the full electric-tank bill.
A Christies Beach couple we did last autumn had a 15-year-old electric tank limping along. We worked out they were spending close to $900 a year heating water. The Emerald, after rebate, paid for itself inside two summers — and they run it on their solar now, so it’s barely costing them anything.
Is gas worth keeping?
If you’ve got a near-new gas system running well, there’s no rush to tear it out — do the sums first. But gas prices have climbed, the daily supply charge is dead money if hot water is your last gas appliance, and once you factor that connection cost in, a heat pump usually still wins over the life of the system. If you’re thinking about dropping gas entirely, hot water is the natural first piece to move. We walk through the whole switch in our getting off gas guide.
The Australian Energy Regulator publishes current gas and electricity pricing if you want to check the trend yourself at aer.gov.au.
So which should you choose?
For a home in SA or Victoria — the states we cover for heat pumps — the Emerald is the system we’d put our own money on. Cheapest to run, fast payback, and nearly free if you’ve got solar. The full rundown on the unit itself is in our Emerald heat pump review. The only time we’d pause is a healthy gas system that’s still cheap to run, where waiting a couple of years makes sense.
Is a heat pump cheaper to run than gas?
Usually, yes. An Emerald heat pump runs on about $200–$300 a year against roughly $400–$700 for gas — and gas adds a daily supply charge whether you use it or not. If hot water is your only remaining gas appliance, the heat pump’s advantage grows once that connection cost is counted.
How much does a heat pump save vs an electric tank?
Around 75%. An electric storage tank costs roughly $750–$1,000 a year to run; an Emerald heat pump runs on about $200–$300. Run it on solar in the middle of the day and the running cost drops close to zero, making the saving the full electric-tank bill.
What is the payback on an Emerald heat pump?
Against an electric tank, 3 to 5 years on running-cost savings alone. If you’re replacing a tank that’s already failed, payback drops to under 18 months, because the real comparison is the price difference between units rather than the whole cost of the new one.
Why is a heat pump so efficient?
It moves heat instead of making it. With a COP of up to 3.5, the Emerald draws warmth from the surrounding air and delivers roughly 3.5 units of heat per unit of electricity. A standard electric element is fixed at 1.0, so the heat pump does the same job on about a quarter of the power.
Should I switch from gas hot water to a heat pump?
If your gas system is old or hot water is your last gas appliance, switching usually saves money once the daily supply charge is counted. If you have a near-new, cheap-running gas system, do the sums first — but heat pumps typically win over the life of the system.
Does a heat pump qualify for a rebate?
Yes. Heat pump hot water qualifies for federal STCs worth roughly $600 to $1,000 off, depending on postcode and unit size. It’s taken off the price at point of sale, so eHomes handles the paperwork and you pay the discounted figure — confirmed at your quote.
Want the numbers for your home?
Send us your postcode, your current hot water setup and a recent power bill, and we’ll come back with a side-by-side running cost, your locked-in rebate, and an honest payback. Grab a free quote, or read more on our heat pumps page.
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