How Much Does a Gas Hot Water System Cost? [2024]

On average, hot water systems consume between a quarter and one third of household energy bills, depending on the type of system you choose.

Gas hot water systems are around 30% cheaper to run than electric systems, but they can also cost more upfront. Read this guide to find out how much a gas hot water system costs and what else you need to know.

• What is a gas hot water system?
• What are the different types of gas hot water systems?
• How much does a gas hot water system cost?
• How much does it cost to install a gas hot water system?
• What factors influence the costs of gas hot water systems?
• How much does it cost to run a gas hot water system?
• Is gas hot water cheaper than electric?
• What is the lifespan of a gas hot water system?
• Does my gas hot water specialist need to be licensed?
• How do I choose the best gas hot water system installer?

What is a gas hot water system?

Gas hot water systems heat water in buildings using natural gas or LPG. They are less common than electric hot water systems, but are still used in over a third of Australian homes.

What are the different types of gas hot water systems?

There are 4 main types of gas hot water systems:

• Gas storage systems consist of a storage tank and heating mechanism. These are the most common type of gas hot water system.
• Instantaneous flow or tankless systems heat water on an as-needed basis. This type of gas hot water system costs more, but also saves energy.
• Gas-solar storage systems that supplement gas heating with solar power.
• Heat pump systems that extract heat from the surrounding air to help heat water.

How much does a gas hot water system cost?*

The price of gas hot water systems mainly depends on the type and size of system you choose. Expect to pay between:

• Storage gas hot water system – $800 - $1,800
• Instant gas hot water system – $700 - $1,900
• Solar-assisted storage system – $2,500 - $3,500
• Heat pump system – $2,500 - $4,000

This is the cost to buy the gas hot water system only. Your system will need to be installed by a licensed plumber or gas fitter.
 

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How much does it cost to install a gas hot water system?*

The cost of hot water system installation is usually not included when you buy a new system, as this needs to be handled by a licensed professional. Expect to pay between $200 and $400 for most systems.

This installation cost mainly depends on your location and whether you're installing a new gas hot water system or replacing an old one. Installing a new system will cost more, as additional piping is needed.

Solar hot water systems cost about twice as much to install as standard systems. These may be installed on the roof or as a split system, with the solar panels being on the roof and a storage tank installed at ground level.

The best way of finding out the cost of your job is to get quotes from local gas hot water installers. This will give you a sense of what market rates currently are, and what you can afford.

What factors influence the costs of gas hot water systems?

The cost to purchase and install a gas hot water system can depend on a number of factors, including:

• The type, brand and size of your system
• Whether you're installing a new system or replacing an existing fixture
• If you're switching from electric to gas heating
• How much hardware needs to be installed, from piping to solar panels
• Local rates for installers in your area

How much does it cost to run a gas hot water system?*

One advantage of gas hot water systems over electric systems is that they are cheaper to run, which will save you money in the long term.

Running costs for gas hot water systems depend on the size of your household. Based on average consumption and a gas price of 2 cents/MJ, expect to pay around:

• $215 per year for 1-2 people
• $360 per year for 3-5 people
• $500 per year for 6-8 people

Running costs will be reduced when using a heat pump or solar hot water system with gas as a backup, but these systems are more expensive to buy and install upfront.

Is gas hot water cheaper than electric?*

Electric hot water systems generally cost less to buy than gas systems, but they cost more to run in the long term. Depending on the system and your energy tariff, gas heating can be up to 30% cheaper, even compared to an off-peak electricity tariff.

You may be eligible for a rebate if you're switching your hot water from electric to gas or solar. Depending on your circumstances and where you live, this could help you to save between $300 and $700 on the cost of your new hot water system.

What is the lifespan of a gas hot water system?

Once installed, you can expect a gas hot water system to last for at least 10 years. After this point, it may start to lose energy efficiency and will be at higher risk of developing faults, so it can be worth replacing it with a new system to avoid costly problems.

Does my gas hot water specialist need to be licensed?

Yes. All states and territories in Australia require gas fitters to be licensed. For this, they need to hold the appropriate qualification and experience. Some plumbers are also licensed as gas fitters, though you should confirm this before hiring them.

Using someone who is not licensed could put the health and safety of you and your family at risk.

How do I choose the best gas hot water system installer?

When you're ready to get quotes from gas hot water installers near you, you need to make sure the installer you choose is right for the job. Some questions to ask them include:

• Are you appropriately qualified, accredited or licensed?
• Do you hold valid insurance (professional indemnity and public liability insurance)?
• Can you provide a written quote?
• How long will the job take?
• Do you have references I can follow up?

*Costs and prices in this article are indicative and should only be used as a guide. They also vary locally and are subject to market forces.