Hot water heat pumps

Traditional electric resistance hot water cylinders are still electric, and often cheaper to install. However they can use more energy, which will cost you more to run and produce more emissions.  

Up front, a new traditional cylinder costs around $4000 to buy and install (compared to $7,000 for a hot water heat pump). This may seem like a cheap and easy option, until you consider the running costs. Hot water cylinders cost about $480 per year to run, compared to $180 for a hot water heat pump.  

Due to the higher electricity use required to heat the water directly using an element, hot water cylinders produce around 3.5 times more carbon emissions than hot water heat pumps*, making hot water heat pumps the better choice for the environment too. 

If you have rooftop solar, the cost and emissions comparison between a traditional electric resistance hot water system and a hot water heat pump is more similar, and lower overall than if you’re drawing all your electricity from the grid.

Gas continuous flow – or ‘infinity’ systems are often favoured for their instant heat, and seemingly limitless hot water.

If you are replacing a gas system with a hot water heat pump, you might want to consider one with a large cylinder, as this will ensure you don't notice any difference in your hot water supply – just a smaller bill at the end of the month.

A new gas system costs about the same to purchase and install as a traditional electric resistance hot water cylinder, at about $4000 – which is cheaper up front than a hot water heat pump. However, their running costs are much higher, and they produce around 7 times more carbon emissions.

Piped gas systems cost around $275 a year to run, or $860 a year when fixed costs are included, compared to $180 for a hot water heat pump. LPG systems cost around $610 a year to run, or $750 a year when 45kg bottle rental is included*  

Hot water heat pumps are cheapest and most efficient when coupled with rooftop solar. Instead of being powered on demand by the electricity grid, your home's hot water is heated using energy from solar panels during daylight hours.

The water can then remain hot for use later, while significantly lowering the costs of energy, and can be topped up using energy from the grid when it’s needed.

By combining rooftop solar with a hot water heat pump, you can achieve further savings on your hot water heating, in addition to those made by making the switch to a hot water heat pump.

Even better, the efficiency of the hot water heat pump means that there will be more energy from your solar system left over to power your other appliances.

Rooftop solar

If your hot water cylinder is coming up to the end of its expected 15-year life span, it may be time to start thinking about getting a hot water heat pump when it comes time to replace your old tech – rather than switching like for like.

As people replace old hot water cylinders, hot water heat pumps are expected to become much more widely used and popular across New Zealand homes.

There are some types of homes where they will be best suited and have the most benefit:

• Bigger families with more hot water use – If you go through a lot of hot water in your home, you’ll stand to make more energy and cost savings by switching to a hot water heat pump – which means a better return on your investment.
• Standalone homes – Installation and retrofitting of a hot water heat pump is easier in a standalone home, given the outdoor space and plumbing requirements. 
• New builds – New standalone homes, townhouses and even low-rise apartments can incorporate space for hot water heat pumps up front, more easily than an existing home.   
• Homes with underfloor heating or radiators – Your hot water heat pump isn’t just for heating the water that comes out of your tap – it can be used to heat your home too. If you have underfloor heating or radiators, you can get a hot water heat pump system that will power these.

Two key data sources are used for cost, energy and emissions calculations: the Electric Homes Technical Report, Rewiring Aotearoa, March 2024(external link) and internal EECA analysis. (EECA is the government agency that backs Gen Less).   

While every house and situation will be different, the costs and savings presented here are reflective of an average New Zealand household of ‘2.8’ people, and don’t include finance/interest costs. This household situation could reflect a household with 3 people where the energy per person is slightly lower than average.

Assumptions used in cost/savings calculations: 

• Electricity variable cost: 24.2c/kWh or 18c/kWh off-peak/ripple. 
• Electricity connection cost: Not included in any calculations – homes are assumed on-grid in all cases. 
• Piped gas variable cost: 11c/kWh. 
• Piped gas connection cost: $1.60 per day ($587 per year). 
• LPG variable cost: 24.4c/kWh. 
• LPG bottle rental (2 x 45 kg bottles): $5.75 per bottle per month ($138 per year for two bottles).