WHY DOES HOT WATER USE SO MUCH ENERGY?

Heating water with a conventional element and storage tank takes a lot of energy, and in most Australian homes it is one of the biggest electricity uses all year round. You have three ways to cut the cost: heat the water when your solar is producing, switch to a heat pump, or do both.

This guide covers how much power a hot water system uses, how controlled load works today, and what a heat pump could save you.

Household size and habits. Long showers, hot water washes and a high flow showerhead all add up.

Tank temperature. Energy Made Easy suggests a thermostat setting between 60°C and 65°C. Do not turn it below 60°C, because that is the temperature that keeps Legionella in check.

When you heat. Controlled load, your general rate and your own solar all cost different amounts.

The type of system. An electric element and a heat pump use very different amounts of power for the same hot water.

HOW MUCH ELECTRICITY DOES A HOT WATER SYSTEM USE?

An electric storage system heats water with an element, so every kilowatt hour (kWh) of electricity becomes about one kWh of heat. A heat pump moves heat from the air into the water instead, so it can deliver three to four kWh of heat for every kWh of electricity it uses. The ACT Government's buyers guide estimates that heating a 300 litre tank to 60°C takes about 14 kWh a day with an electric element and about 4.7 kWh a day with a heat pump, roughly two thirds less.

These are estimates. Your numbers depend on household size, tank size, climate and the rate you pay, so multiply the kWh by the rate on your bill. If you are on a cheaper controlled load rate, the gap will be smaller.

WHAT ARE CONTROLLED LOADS FOR HOT WATER?

A controlled load is a separate circuit for your hot water system. Your electricity network switches it on at set times, and in return the electricity costs less than your general rate. The controlled load rate is shown on your bill and varies by retailer.

There are two common types. In Ausgrid's network area, which covers most of Newcastle and the Hunter:

• Controlled load 1 suits large tanks, about 250 to 630 litres. Power is on for at least six hours in each day.
• Controlled load 2 suits smaller tanks, about 100 to 250 litres. Power is on for at least sixteen hours in each day, including at least four hours between 7am and 5pm.

The old rule that controlled load 1 runs from about 11pm to 7am no longer holds for everyone. In July 2024 Ausgrid changed the controlled load 1 switching times for customers with a smart meter, so tanks can also heat during the day using solar. Ask your retailer or check your bill for your own times.

How to Tell if You Are on Controlled Load

Look at your electricity bill for a separate line called controlled load, sometimes numbered 1 or 2. Your hot water system will also be on its own circuit at the switchboard, and an electrician can confirm this for you.

Why Controlled Load and Solar Do Not Mix Well

Your solar system connects to your general supply, but a controlled load hot water system sits on its own separate circuit. That usually means your solar cannot heat the tank directly, which is why many solar households use a timer or a solar diverter instead.

THINGS HAVE CHANGED

For years, solar households were better off exporting during the day and heating their water at the cheaper night rate. That has flipped. Export payments are now well below what you pay to buy electricity, so a kWh of solar used at home is worth more than a kWh sent to the grid. Using solar to heat your water during the day is often a better deal than relying on the controlled load.

Midday is when many solar homes are exporting at the same time, which is one reason export payments are lowest then. As a simple example, if you are paid 5 cents per kWh for exports and pay 30 cents per kWh to buy electricity, using a kWh at home instead of exporting it is worth 25 cents more. Hot water is a good way to use that midday solar, because a tank can store the energy until you need it.

WHAT ARE HEAT PUMPS & HOW DO HEAT PUMPS WORK?

Heat pump hot water systems typically achieve a coefficient of performance (CoP) of 3 to 4. That means they deliver three to four times as much heat as the electricity they use, which is why they cost so much less to run than an electric element.

1. A fan pulls air across a coil, and a refrigerant inside the coil absorbs the heat in that air and turns into a gas.
2. A compressor squeezes the gas, which raises its temperature well above the temperature of the water.
3. The hot gas passes its heat to the water in the tank, and the refrigerant turns back into a liquid.
4. An expansion valve drops the pressure, the refrigerant cools down, and the cycle starts again.

Image courtesy of Thermann hot water systems

INTEGRATED OR SPLIT SYSTEMS

Most home heat pump hot water systems come in two layouts. An integrated system has the heat pump sitting on top of the tank as one unit, usually outdoors. A split system has the tank separate from the heat pump unit, so the tank can sit indoors or in a different spot. Ask your installer which suits your space.

HEAT PUMP HOT WATER REBATES IN NSW

Two discounts can lower the price of a heat pump hot water system in NSW. Both are taken off your quote by the installer, so you do not apply for a rebate yourself.

NSW Hot Water Upgrade Incentive (Energy Savings Scheme): up to $640 when replacing an electric hot water system with a heat pump, or up to $330 when replacing a gas system. The heat pump needs a minimum 5 year warranty and must be installed by an accredited provider.

NSW Hot Water Upgrade Incentive (Energy Savings Scheme): up to $640 when replacing an electric hot water system with a heat pump, or up to $330 when replacing a gas system. The heat pump needs a minimum 5 year warranty and must be installed by an accredited provider. * Federal Small scale Renewable Energy Scheme: usually a few hundred dollars, and more than $600 in some areas, depending on your climate zone and the efficiency of the system. The value shrinks each year and the scheme ends in 2030, so installing sooner earns a bigger discount than waiting. Amounts and rules change, so confirm the current figures with your installer or the NSW Government before you buy.