Is Gas Hot Water Being Phased Out? Exploring the Future of Hot Water Systems

Although touted as a ‘cleaner’ alternative to traditional electric hot water systems, gas hot water systems nonetheless use fossil fuel. So, is gas hot water being phased out because of this?

In this post, we explore the future of hot water systems and consider why gas systems may be on the way out. And discuss your options for a time when gas, like the fossils it comes from, is left in the past.

Why Gas Hot Water Systems May Be on the Decline

Gas hot water systems use either natural gas or LPG (liquefied petroleum gas). One is a fossil fuel. The other is derived from fossil fuels, being a by-product of either crude oil refining or natural gas processing.

Granted, neither has traditionally received as much bad press as crude oil on the environmental front but nevertheless, both are finite resources and contribute to greenhouse gas emissions. Therefore, they’re on the ‘hit’ list as governments globally push a shift towards more environmentally sustainable hot water systems.

And, realistically – gas hot water systems are yesterday’s technology! Today’s modern hot water systems e.g. heat pumps and solar systems, are far more energy-efficient and cost effective. They also reduce your carbon-footprint.

For example, according to the Australian Renewable Energy Agency (ARENA):

• Modern heat pumps are typically up to 300% more efficient than conventional gas hot water systems. I.e. where your gas system may use 100 units of energy to heat a certain amount of water, a heat pump will use perhaps 30 – 40 units to heat the same amount of water. 
• As a household, you can save up to 60-75% on your water heating costs simply by switching from gas to a heat pump system.
• Switching out your gas HWS to a solar system can reduce your carbon emissions by 1.5 to 3 tonnes annually.

But if energy-efficiency, hot water cost savings, and sustainability doesn’t tempt you to make the switch, there’s also the rising cost of gas. Plus the introduction of tariffs designed to make modern hot water systems more attractive (and old ones, like gas, less attractive!). 

Then there is the fact that in some states, gas HW systems are already being, or have been, phased out. Indeed, you probably won’t be able to buy a new gas HW system anywhere in Australia within 10 years! 

In other words, the reasons to switch up your hot water system are steadily mounting, ably aided and abetted by some substantial state and Federal government initiatives…

Government Initiatives Promoting Renewable Hot Water Solutions 

The Federal government is investing heavily in organisations, like the Australian Renewable Energy Agency (ARENA), set up to encourage the adoption of renewable energy technologies. 

The various state governments are also on board with initiatives like the:

• NSW Energy Savings Scheme (ESS), 
• Victorian Energy Upgrades Scheme (VEU), and 
• QLD Business Energy Saving and Transformation Rebates Scheme (QBEST)

NSW Energy Savings Scheme (ESS)

The NSW ESS offers financial incentives to households and small businesses in NSW to encourage the uptake of modern energy-efficient appliances, including hot water solutions. It covers heat pumps and solar hot water systems, and offers substantial discounts or rebates to help offset the initial purchase and installation costs.

Victorian Energy Upgrades Scheme (VEU)

The VEU Scheme likewise supports and encourages the transition to energy-efficient appliances and systems with rebates and incentives for Victorian households and businesses. In particular, it covers the installation costs of heat pump and solar hot water systems. This reduces upfront costs to make energy-efficient hot water options more accessible to more homes and businesses.

QLD Business Energy Saving and Transformation Rebates Scheme (QBEST)

QBEST targets Queensland small to medium-sized businesses with rebates and financial support for energy-efficient upgrades, including heat pump and solar hot water systems. 

If you’d like to know whether you qualify for any of these rebates, just click on the form at the bottom of the page! One of our friendly, experienced team here at Efficient Energy Group will be in touch pronto.

The Shift Toward Greener Energy: Heat Pumps and Solar Alternatives

Heat pumps and solar-powered hot water systems top the list of sustainable alternatives to gas.

Heat Pumps

Heat pumps work like reverse engineered refrigerators. Where a fridge pumps warm air out to keep the interior cool a heat pump does the opposite. It pumps warm air in for heating. In a hot water system, that heat heats your water.

Solar

Solar-powered hot water systems have been around for a long time so it’s not surprising they’re also the most common type of green energy hot water system. They harness the (free) power of the sun to heat water. 

The advantage heat pumps have over solar systems though is their ability to generate hot water 24 / 7 – rain, hail, or darkness. Where a solar system shuts down at night or is less efficient on cloudy days (so requires an electric booster), a heat pump can keep running because there is usually enough ambient heat in the air. 

Both technologies though align well with the increasing push for greener energy. And, whilst they may cost more initially to install than electric or gas systems, the long-term savings for both your wallet and the environment make them well worth the outlay.

Comparative Costs: Gas vs. Heat Pump Hot Water Systems

Now let’s compare the pair with a quick look at the comparative costs of a gas HW system vs heat pump system. We’ve factored in your likely upfront purchase and installation costs, operating expenses, and long-term savings.

Purchase and Installation

• A gas hot water unit will generally set you back between $800 and $2,000 depending on the size and efficiency of the system. Installation costs add another $700 to $1,500 depending on location.
• A heat pump unit costs $3,000 to $5,000. Add another $1,000 to $2,000 to install it. However, if you’re eligible, government rebates and incentives will bring these costs down quite significantly. Check your eligibility by completing the form at the bottom of the page. 

Running Costs

• Expect to pay anywhere from $500 to $1,000 a year to run your gas hot water system. The actual amount will obviously vary depending on gas prices, usage, and system efficiency. 
• By comparison, a heat pump system will cost just $150 to $400 a year to run, or around a third of the cost of a gas system! So – it will very quickly pay off the difference in purchase and installation costs.

Long-Term Savings

Your heat pump hot water system comes with a higher initial investment. But… its lower operating costs will end up saving you a LOT of money long-term. Indeed, over the space of 10 years the total cost of the system, including purchase and installation, could be up to two-thirds that of a similar capacity gas system!

Furthermore, it will claw back the cost difference, and pay for itself, within 3 – 7 years depending on the specific costs. Or it could take even less time if you’ve gone through a state rebate program to buy it!

Final Thoughts About Gas vs. Heat Pump Hot Water Systems 

While the lower initial upfront costs of a gas hot water system might be tempting, the fact is that long-term, it will cost you a LOT more in running costs compared to a heat pump system. Those costs are only going to rise too because the Federal and state governments are on a mission to phase out old inefficient, energy intensive technologies, and appliances! Like electric and gas hot water systems… Therefore, it’s probably a good idea to consider your (greener, more energy-efficient) options sooner rather than later. 

If you’re in NSW, Victoria, or Queensland, there is a rebate scheme waiting to help eligible homes and businesses! Are you eligible? Contact us via the form below and we’ll let you know.