I remember fielding thousands of calls from homeowners eager to find out the status of their solar hot water rebate. It was 2012, and the federal rebate abruptly came to an end. 250,000 households across Australia had claimed the rebate, which also extended to heat pumps. Most of these systems would have been replaced by now, and in their place likely rests another solar hot water system.
While solar hot water is certainly a fantastic alternative to fully electric and gas systems, many households do not realise that the booster in almost all solar hot water systems is gas. This means that cloudy days, or times when your system needs heating at nighttime, will see your solar hot water using gas to heat the water. This often results in unexpected and unwanted high gas bills. This is especially true for homes in Australia’s south.
If your solar hot water system is at least 3 years old, it might be worth switching to a heat pump. Let’s explore why.
Australia’s love affair with solar
Australia is known as the sunburnt country for a reason. We enjoy some of the highest solar radiation in the world. We soak up 4 to 6 kilowatt-hours of solar energy per square metre per day. This is greater than most other parts of the world:
- Australia: 4–6 kWh/m²/day (desert areas can reach 7–8).
- Europe: 2–4 kWh/m²/day (Germany, despite its cloudy weather, leads Europe in solar uptake).
- USA: 3–6 kWh/m²/day (sunny states like Arizona match parts of Australia).
- Japan: around 3–4.5 kWh/m²/day.
The abundance of sunshine has meant that 10% of Aussie homes source their hot water from a solar hot water system. Unlike solar panels that generate electricity, solar hot water systems use the sun’s direct heat to warm up the water. Panels or tubes are mounted on the roof for water to run through and for the sun to heat. This results in free heating of your water – but it only occurs when the sun is shining. Southern states have much to lose in this equation, where sunlight exposure is much less than in Northern states.
Solar hot water vs Heat pump hot water systems
Unlike solar hot water, heat pump hot water systems use warm air around the system to heat the water. This means that the system is not reliant on the sun and can operate even at night. Where solar hot water systems are primarily boosted by gas, heat pumps are almost always electric boosted. If you have a solar system, this could mean that the times that your heat pump needs boosting can be almost entirely offset by your solar.
Heat pumps
- Work like a reverse fridge: they pull heat from the air and transfer it to water.
- Typical efficiency (Coefficient of Performance, COP): 3–4.
- This means for every 1 unit of electricity, they deliver 3–4 units of heat.
- In plain terms: 300–400% efficient compared to standard electric resistance heaters.
- On extremely cold days, an electric booster is needed, which reduces efficiency.
Solar hot water
- Use roof-mounted collectors to capture sunlight and heat water directly.
- On sunny days, they can cover 60–90% of a household’s hot water needs with minimal gas use (only for the booster).
- Efficiency depends on sunlight, collector orientation, storage tank size, and climate.
- On cloudy or cold days, the gas booster kicks in, which reduces overall efficiency.
Let’s take a look at the winning hot water systems in each of the states.
Queensland & Northern Territory
- Sun exposure: very high year-round.
- Solar hot water: can cover 80–90% of hot water needs annually with minimal boosting.
- Heat pumps: still efficient (COP 3–4), but since ambient air is already warm, gains aren’t as dramatic.
- Winner: Solar hot water usually comes out ahead here because of consistent sunshine.
Western Australia & South Australia
- Sun exposure: strong, though winters are cooler.
- Solar hot water: meets around 70–85% of needs annually.
- Heat pumps: still run efficiently in winter because temps rarely plunge too low.
- Winner: Close call, but solar hot water generally edges ahead in Perth and Adelaide.
New South Wales
- Sun exposure: decent, but more cloud and seasonal variation.
- Solar hot water: around 60–75% annual contribution.
- Heat pumps: operate steadily with COP 3–4, even in winter.
- Winner: Heat pumps are more consistent, though solar still performs well in northern NSW.
Victoria & Tasmania
- Sun exposure: lower, especially in winter.
- Solar hot water: contribution drops to 50–60% annually, with heavy reliance on boosters in winter.
- Heat pumps: maintain efficiency (COP 2.5–3.5) even in cold climates, though they work harder.
- Winner: Heat pumps outperform solar hot water here due to reliability in low sun conditions.
In consistent sunny regions (say, Queensland or northern WA), a solar hot water system often outperforms a heat pump in terms of renewable contribution, because most energy comes straight from the sun.
In cooler, cloudier climates (like Tasmania or Victoria in winter), heat pumps are often more reliable and efficient overall, because they don’t depend on direct sunlight.
If we put numbers on it:
- Solar hot water can cut water heating energy use by about 50–80% annually.
- Heat pumps usually cut it by 60–75% annually compared to electric storage heaters.
Should you swap your solar hot water system for a heat pump?
The question of swapping out your solar hot water system for a heat pump boils down to:
- The age of your system: while there’s no age restriction to receive Small-scale Technology Certificates (STCs), the Victorian and New South Wales rebates require that the solar hot water system be at least 3 years old. In addition, if you’re still sporting a solar hot water system from the federal rebate era, it is likely time to upgrade anyway!
- Where you live: Northern states are likely better off with a solar hot water system. Southern states are almost always better off with a heat pump.
- Whether you have solar: A solar system is likely to completely offset any electricity used to boost your heat pump. Home battery storage will mean that your heat pump hot water system is completely covered by your solar generation. As solar hot water systems are generally gas boosted, a solar system will not directly offset the gas usage, but may be able to offset its cost in electricity savings.
- Your bills: If your gas bills are astronomical as a result of your solar hot water system, it is worth investigating the potential savings from swapping to a heat pump.
- Looking to ditch gas: If you want to free yourself from the tether of gas, then swapping out your system for a heat pump will bring you a step closer.
What realistic savings can you expect?
If you’re realistically looking at ditching your solar hot water system in favour of a heat pump, these are the savings you can expect per year:
Victoria
- Average gas-boosted solar HWS: ~12–16 GJ of gas per year (≈ $400–$550).
- Heat pump: ~1,000–1,200 kWh/year (≈ $250–$350).
- Realistic savings: $150–$250 per year, plus removing gas daily supply charges (~$250/year if fully disconnected).
South Australia
- Gas-boosted solar: ~10–14 GJ/year (≈ $350–$500).
- Heat pump: ~900–1,100 kWh/year (≈ $220–$320).
- Savings: $130–$200 per year, plus potential gas supply charge savings.
Tasmania
- Gas is less common, but where it’s used, usage is similar to VIC.
- Swap to a heat pump and you could save $150–$250/year, plus supply charge if you ditch gas.
Southern NSW/ACT
- Gas-boosted solar: ~11–15 GJ/year (≈ $380–$520).
- Heat pump: ~1,000–1,200 kWh/year (≈ $250–$350).
- Savings: $150–$200 per year, plus gas disconnection benefits.
The final word
Swapping your solar hot water system could save you hundreds in the short term and thousands over 10 years (the average lifespan of a hot water system). If your household uses gas only for hot water, switching to a heat pump can cut out the gas connection entirely, saving another $250–$300/year in supply charges. That means the realistic total savings jump to $400–$600/year in southern states.
Solar hot water still has its place, and Australia’s northern states stand to benefit the most from it – but I would place my money on heat pumps to deliver consistent hot water with minimal need for boosting.
