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The gas vs electric hot water debate has been going on for many years and will continue long into the future in all likelihood. Some times the focus is on the greener choice, sometimes it is about the cost, and there are other considerations people make depending on personal needs. Here is a look at some of the things to think about when you are choosing a gas or electric hot water system for your home.

Gas Hot Water Systems

Gas hot water systems are popular for many homeowners, offering advantages and disadvantages. Let’s examine how they function and weigh the pros and cons to help you decide if they fit your needs.

How Gas Water Heaters Work

Gas hot water systems utilise natural gas or (Liquid Petroleum Gas) LPG to heat water. When you turn on a hot tap, the burner ignites, heating a tank full of water. This heated water is then delivered to your taps. Storage tank systems maintain a constant hot water supply, while instantaneous models heat water on demand, eliminating standby losses.

There are two types of gas hot water systems:

  • Gas hot water storage tanks heat and store a set amount of water that can be used whenever needed. As the tank runs out, they instantly heat the water up again.
  • Instantaneous, also called continuous flow, systems only heat water when the hot tap is turned on. This could make them more energy-efficient. But if a lot of places need hot water at the same time, they might not be able to keep up.

Pros And Cons Of Gas Water Heaters


  • Generally lower running costs: Gas can be cheaper than electricity, especially for larger households.
  • Faster heating: Gas systems heat water rapidly and ensure the immediate availability of hot water after regular use.
  • Operational continuity: They can function and supply uninterrupted hot water during power outages.
  • Multiple options: Choose between storage tanks for consistent hot water or instantaneous modes for space-saving efficiency.


  • Safety concerns: Gas appliances require proper ventilation to avoid carbon monoxide risks.
  • Installations and limitations: Not all homes have access to natural gas lines. LPG tanks require refilling and can be more expensive.
  • Higher upfront cost: Gas hot water systems tend to be pricier than electric models.
  • Environmental impact: Gas is a non-renewable resource that contributes to greenhouse gas emissions.

Electric Hot Water Systems

Electric hot water systems offer a clean and efficient alternative to gas models. Let’s explore the inner workings and weigh the advantages and disadvantages to see if they fit your home perfectly.

How Electric Water Heaters Work

Unlike gas heaters, electric models rely on electricity to heat the water. A thermostat regulates the temperature, ensuring a consistent supply of hot water. Like gas systems, electric models come in storage tanks and instantaneous varieties.

There are three types of electric hot water systems:

  • Like an electric kettle, traditional passive electric hot water systems heat water in a tank with an electric element.
  • A heat pump hot water system works better than an electric storage tank system. They don’t make heat; instead, they take it from the air around them and move it to the water tank. In comparison to standard electric systems, this saves a lot of energy.
  • When you turn on the tap, an instantaneous system only gives you hot water. Overall, they might be more efficient because they don’t have to heat a tank constantly, but they need a lot of electricity and work based on the current electricity rate. So, it might cost a lot to use hot water during busy times.

Pros And Cons Of Electric Water Heaters


  • Safer: No risk of carbon monoxide poisoning or gas leaks.
  • Wide availability: Electricity is readily accessible in most locations.
  • Lower upfront cost: Electric hot water systems are generally cheaper to purchase.
  • Potential for solar power: If you have solar panels, you can significantly reduce your running costs.


  • Higher running costs (without solar): Electricity can be expensive for heating water, especially for larger households.
  • Slower heating: Electric water heaters take longer to replenish hot water after heavy usage.
  • Limited tank capacity: Electric storage tanks may struggle to meet high hot water demands.

What are the cost differences?

So if you just look at the bills each month, gas is cheaper in terms of running cost. While the installation of a gas hot water system costs more than installing an electric system, based on the savings you’ll make you can typically get that extra money back in a year or two of use. So then after that time is up your savings kick in.

Installation costs are another factor in the cost differences between an electric hot water system vs gas. An electric hot water system costs less to install and is a simple process to connect it to the power supply. With a gas system, you pay more for the installation and you have to use a licensed gas plumber who has the proper certification to do this and connect it to the gas pipes and make sure the venting is right and so on. It takes longer, needs specialised people and so costs more.

Do you have a gas or electric hot water system now? Hot water system replacement costs will be higher if you’re switching from electric to gas or vice versa since new wiring and gas pipes need to be installed to supply the unit.

Typical Running Costs Of Gas Water Heaters

The typical running costs of gas hot water systems range from $900 to $2000. A gas storage hot water heater price range is $470 – $555 per year, while gas instantaneous hot water systems are typically cheaper to run, at $305 – $400 per year. However, these are indicative costs and do not include installation. The actual running costs for your home could be quite different.

Typical Running Costs Of Electric Water Heaters

The running costs of electronic water heaters usually depend on whether it’s a storage tank or an instantaneous system, as well as the electricity prices in your area.

In Melbourne, for instance, for a typical 2-3 people household using 90-120L of hot water per day, the following is a cost estimate:

  • Electric storage tank (peak tariff): $730 – $915
  • Electric storage tank (off-peak): $625 – $760
  • Electric instant (peak tariff): $650 – $850

However, the actual running costs can vary depending on your household and the source of the electricity.

Here’s an overview of the cost differences:

Type of Heater Typical Running Cost per Year
Gas Storage $470 – $555
Gas Instantaneous $305 – $400
Electric storage tank (peak tariff) $730 – $915
Electric storage tank (off-peak) $625 – $760
Electric instant (peak tariff) $650 – $850

Lifespan & Long-Term Savings

How long will you live there for?

How long you are going to live in that home is a key part of your decision between an electric hot water system vs gas. If you are going to be there for 5 years or longer you can consider choosing a gas installation as you will be there for long enough to get your money back and then enjoy the big savings. If you are planning on moving in the next couple of years then you might make a different choice that has short term benefits.

When talking about costs, it’s important to note that any repairs can dint your savings. So ask about any maintenance needed after the installation to avoid hot water problems.

Energy Efficiency

Comparing Energy Efficiency Of Gas And Electric Water Heaters

Gas water heaters usually have low operating costs and quick heating intervals. They are known for being efficient because they heat up quickly and can keep running when the power goes out. However, gas systems might not be available everywhere, and they need to be installed in a well-ventilated area because they produce byproducts.

Electric water heaters, on the other hand, use electricity to power heating elements that warm water that is kept in a tank or as it flows through the unit. Gas heaters are more expensive to run and take longer to heat up, but electric heaters are safer, cleaner, and faster to install. Modern electric systems and advanced tariffs also help to make things more efficient and lower costs over time.

While gas heaters might offer lower running costs depending on your fuel prices, electric heaters reign supreme in energy efficiency. If environmental impact and long-term energy savings are your priorities, electric heaters may be the better choice, especially when combined with renewable energy sources.

Tank or tankless?

A closer look at the tank or tankless questions with gas vs electric hot water systems shows that this has a big impact on how much energy a unit uses. With systems that use a tank, they store the heated water so that it is there when the homeowner needs it. There are different tank sizes but that average one for a regular home begins at 250 litres and then as the home gets bigger so does the tank. Tank models though are less energy-efficient than tankless models.

If your big drive to getting a new system is to be more energy-efficient and go green, tankless is for you. However, they are best suited to smaller homes and apartments. Tankless units are more efficient because it is not using energy to heat up a large tank and then keep that tank hot all the time. It generates hot water on demand. It is worth noting here that if green energy is very important to you, solar is also an option!

To know more about how efficient a hot water unit is, you can always check their energy star rating on hot water systems.

Installation and Maintenance

The complexity of installation and maintenance needs can vary significantly between gas and electric hot water systems. Here’s a breakdown of what to expect:

Gas Hot Water Systems:

Installation: Gas hot water systems typically require a more complex installation process than electric models. This is due to the need for a qualified plumber to connect the system to a gas line and ensure proper ventilation to avoid carbon monoxide risks.

Maintenance: Regular servicing by a qualified technician is crucial for gas hot water systems. This ensures safe and efficient operation, including checking for gas leaks and proper flue function. These maintenance needs can add to the overall cost of ownership.

Electric Hot Water Systems:

Installation: Electric hot water systems generally require a simpler installation process. They can be connected to your existing electrical wiring, making them potentially more DIY-friendly for some models. However, consulting a qualified electrician is always recommended for safety and compliance.

Maintenance: Electric hot water systems typically require less maintenance compared to gas systems. Regular checks on the thermostat and pressure relief valve are recommended. However, the lack of complex components generally translates to lower maintenance costs

Gas VS Electric Hot Water System: Conclusion

When deciding whether to have a gas or electric hot water system if you are staying there for a few years, gas makes sense. You save money on your energy bills and will get back the extra installation and system costs. If you are not planning on hanging around then electric makes more sense, especially if you are replacing an electric hot water system. With both gas and electric, tankless is more energy-efficient and so also saves money, however it is not the best option for large buildings.

If you need more help choosing a hot water system, you can contact our knowledgeable Gold Coast plumbers for some advice anytime.