Heat pump hot water, honestly
A heat pump water heater is the best electric option available in Australia and it is not close. It is also the most oversold appliance in the category, and the gap between what the marketing says and what you will actually see on a bill is large enough to change decisions.
This page is about that gap: where it comes from, how big it is where you live, and the three situations in which a heat pump is genuinely the wrong answer.
What a heat pump actually does
An electric element converts electricity into heat. It cannot do better than one unit of heat per unit of electricity, and physics will not let it.
A heat pump does something different: it runs a refrigeration circuit backwards. Rather than generating heat, it collects heat that already exists in the outside air and concentrates it into the tank. Because it is moving heat rather than making it, the ratio of heat delivered to electricity consumed — the coefficient of performance, or COP — can be well above one. On a Brisbane afternoon it might be four. That is why a heat pump can run a household's hot water on a third of the electricity an element needs.
It also explains the catch. There is less heat in cold air, so the COP falls as the temperature does. A heat pump is a machine whose efficiency depends on the weather.
The number on the box is not the number you get
Manufacturers quote a COP measured under laboratory conditions — a steady draw, a favourable ambient temperature, a fully warmed system. Typical published figures run from 3.0 to 4.5.
Four things the test does not see:
- Cold mornings. The COP at 5 °C is about three quarters of the COP at 20 °C, and a Canberra winter has a lot of mornings near zero.
- Compressor cycling. Starting and stopping repeatedly is less efficient than running steadily, and a household's hot water demand is nothing like steady.
- Standing losses. The tank and the pipework leak heat all day, about 0.5 kWh a day, whether anyone uses hot water or not.
- Real demand patterns. Four showers in an hour empties a tank faster than the heat pump can refill it, so the backup element cuts in — and the backup element has a COP of 1.
Put those together and the effective annual COP is far lower than the nameplate. This site puts it at about 2.2 in Melbourne. That is not a guess: it is what falls out of calibrating the model against Sustainability Victoria's measured Melbourne running costs, which the model reproduces within 2%.
| City | Mean air temperature | Nameplate COP | Effective annual COP | Shortfall |
|---|---|---|---|---|
| Darwin, NT | 27.6 °C | 3.2 | 2.55 | 20% below nameplate |
| Brisbane, QLD | 20.8 °C | 3.2 | 2.39 | 25% below nameplate |
| Perth, WA | 18.9 °C | 3.2 | 2.34 | 27% below nameplate |
| Sydney, NSW | 18.6 °C | 3.2 | 2.33 | 27% below nameplate |
| Adelaide, SA | 17.4 °C | 3.2 | 2.29 | 29% below nameplate |
| Melbourne, VIC | 15.1 °C | 3.2 | 2.22 | 31% below nameplate |
| Hobart, TAS | 13.1 °C | 3.2 | 2.14 | 33% below nameplate |
| Canberra, ACT | 13.6 °C | 3.2 | 2.14 | 33% below nameplate |
A heat pump moves heat out of the air, so it works less well when the air is cold — and the laboratory test that produces the nameplate figure does not see compressor cycling, standing losses or a household drawing four showers in an hour. These figures are calibrated against Sustainability Victoria's measured Melbourne running costs. A heat pump is still the cheapest electric option everywhere in Australia; it is simply not three and a half times as good as an element.
None of this is an argument against heat pumps. An effective COP of 2.14 in Hobart still means less than half the electricity of an element. It is an argument against believing a quote that assumes 4.0 — because a saving calculated on 4.0 is roughly double the saving you will get.
What that costs, in practice
For a three-person household using 120 litres of hot water a day in Sydney, at the New South Wales reference rate of 33.1c per kilowatt hour:
| System | Electricity a year | Cost a year |
|---|---|---|
| Electric storage, standard rate | 2770 kWh | $917 |
| Electric storage, controlled load at 19.3c | 2770 kWh | $535 |
| Heat pump, standard rate | 1090 kWh | $411 |
Note the middle row. Against a tank already on a controlled load circuit the heat pump saves $124 a year, not the $506 that comparing against the standard rate would suggest. Most electric tanks installed before about 2015 are on controlled load, so check your bill for a second usage line at a lower rate before accepting anyone's saving figure.
That controlled load point is worth dwelling on, because it is the single most common way heat pump savings get overstated in Australia. Most electric storage tanks installed before about 2015 are on a controlled load circuit. Check your bill for a second usage line at a lower rate before you accept anyone's saving figure.
When a heat pump is the wrong answer
When your existing electric tank is on controlled load and still working
As above: the saving drops to around $175 a year in New South Wales against an installed cost of $3,000 to $6,000 before rebates. That is a payback beyond a decade, which is longer than the heat pump's expected life. Wait for the tank to fail, then replace it with a heat pump.
When you are keeping gas for cooking and heating anyway
If the gas connection is staying regardless, hot water only carries a share of the daily supply charge, and gas instantaneous becomes very hard to beat on cost — it wins on running cost in five of the six mainland states with mains gas. The heat pump case becomes an emissions and future-proofing case rather than a financial one, which is a legitimate reason to do it but a different one.
When there is nowhere sensible to put it
A heat pump has a compressor and a fan. It makes roughly the noise of an outdoor air conditioning unit, for several hours a day, often overnight if it is timed for off-peak. Against a bedroom window, or a neighbour's, that is a real problem and one that is much cheaper to think about before installation than after. Integrated units also need clearance for airflow, which rules out some of the tight side-passage spots where the old tank sat.
Getting the most out of one
Run it in the middle of the day if you have solar
This is the single biggest improvement available. A heat pump is the only hot water system whose run can be scheduled, and running it between 10am and 3pm does two things at once: the air is warmest, so the COP is at its best, and the electricity comes off your own roof. The cost of that electricity is not the retail rate and not zero — it is the export credit you gave up, which across most of Australia in 2026 is 3 to 5 cents. Tell the calculator you have solar and it models this.
Size it for the household, not the house
An undersized tank means the backup element runs, and the backup element throws away the entire advantage. A 270 litre unit suits most households of three or four; five or more people usually want 300 litres or a larger compressor.
Check the warranty terms against the rebate rules
In New South Wales, systems with a storage volume of 700 litres or less must carry a five-year warranty on both the tank and the heat pump unit to qualify for the state incentive. Some cheaper imports do not, and the discount quietly disappears. Ask which warranty applies to which component.
Frequently asked questions
What COP will I actually get from a heat pump water heater?
Somewhere between 2.1 and 2.6 as an annual average across Australia, against a nameplate figure of 3.0 to 4.5. Darwin is best at about 2.55, Hobart and Canberra worst at about 2.14, and the rest of the capitals fall between. The figure varies through the year as well — the same unit does considerably better in February than in July.
Are heat pump water heaters noisy?
They make roughly the noise of an outdoor air conditioning condenser, in the region of 37 to 50 decibels at a metre depending on the model, for the several hours a day they run. That is unobtrusive in a back corner and genuinely annoying under a bedroom window. If the unit will be timed to run overnight on an off-peak tariff, think about placement carefully — this is the most common complaint from owners and it is entirely avoidable.
Do heat pumps work in cold weather?
Yes, and Australian winters are nowhere near the limit of the technology. Efficiency falls with temperature — at 5 °C a unit delivers about three quarters of its 20 °C performance — and most units have an electric element that assists below a threshold. Even Hobart, the coldest capital, sees an effective annual COP above 2. Frost is a consideration for siting rather than a reason to choose something else.
How long does a heat pump water heater last?
About 12 years, which is similar to a storage tank and shorter than an instantaneous gas unit or solar thermal collectors. There is more to go wrong than in a tank with an element — a compressor, a fan, a refrigerant circuit — and an annual check is worth budgeting around $50 for. The calculator's twenty-year view assumes the unit is replaced once within that horizon.
Is a heat pump better than solar hot water?
On running cost, solar thermal usually edges it, particularly with a gas booster. On total cost over ten years a heat pump generally wins, because it costs $4,500 fitted against $7,500 for solar thermal. Solar thermal needs suitable north-facing roof and lasts longer, so it tends to win again over twenty years. The honest answer is that they are close, and the deciding factors are usually your roof and how long you intend to stay.