Reduce water heating costs at home

Last updated: 6 September 2022

Hot water accounts for around 16% of the average Victorian household’s energy costs.

Most hot water is used in the bathroom, followed by the laundry and kitchen.

When you use less hot water you reduce your energy and water costs, and lower your greenhouse gas emissions.

A pie chart showing that hot water accounts for 16% of a total energy bill

Ways to reduce hot water costs

Install a low-flow shower head

Most hot water is used in the shower. Low-flow shower heads use less water than a standard shower head while still providing strong water pressure. When buying a low-flow shower head look for the water rating and flow rate. The higher the water rating and the lower the flow rate, the less energy and water you will use.

A low flow shower head may not be compatible with a gravity fed hot water system, or an old gas instantaneous water heater, as the flow rate might not be high enough to ignite the burner.

Take shorter showers

The shorter the shower, the less hot water you will use. Use a shower timer to motivate you to take showers that are 4-minutes or less.

Wash your clothes in cold water

Delicate and everyday items don’t need to be washed in warm water. Hot water can damage certain fabrics and fade colours. Unless something is really dirty or needs to be sanitised, cold water will do the job.

Fix dripping hot water taps

Insulate exposed hot water pipes

Use closed-cell rubber insulation, which you can find at hardware stores, to insulate hot water pipes that are exposed to the outside air, especially those sections closest to your water heater.

Have your hot water system serviced regularly

Always use a licensed tradesperson, and have the system serviced according to the manufacturer’s instructions.

Replacing your hot water system

Plan for your hot water system’s replacement when it is approaching the end of its life. Most systems should last around 12 to 15 years.

It’s better to know what you’ll replace your system with in advance, so when it does break down, you can quickly have it replaced with an energy-efficient option that’s within your budget. An efficient system will save you money and reduce your environmental impact in the long run.

In an emergency, water heaters are often replaced on a like-for-like basis and could mean an inefficient system is installed. This means that you could have water heating costs that are higher than they need to be for the next decade or longer.

Replacing an inefficient water heater with a high efficiency, more environmentally-friendly option can be eligible for a financial incentive under the Victorian Energy Upgrades scheme. Incentives are available for replacing:

  • electric storage water heater with a heat pump, solar-electric, high efficiency gas or gas-boosted solar system
  • gas water heater with a gas-boosted solar water heater.

A 50% rebate up to $1,000 can also be available from Solar Victoria if you:

  • install a solar or heat pump water heater
  • have a household income under $180,000
  • meet the other eligibility criteria.

For information on the annual running costs of different water heater types for different sized households, see Compare water heating running costs.

Buy the right-sized system

Before buying a new system, you need to consider what size is right for your needs.

There are 2 types of hot water systems:

  • storage
  • instantaneous (also called continuous flow).

To understand the right-sized system, you need to first understand how the systems are sized.

Storage water heaters are sized based on their hot water storage capacity in litres.

Instantaneous water heaters are sized based on their flow rate in litres per minute. The flow rate is usually based on heating the water to around 25°C above the cold water temperature which corresponds to a hot water temperature of around 40°C, a common water temperature when showering.

A hot water system that is too small will be frustrating to use. An undersized storage system may run out of hot water, while an undersized instantaneous system may not be able to handle the use of more than one hot water outlet at a time. A storage water heater that is too big will use more energy than it needs to as it will have higher heat loss through the walls of the cylinder, so will cost more to run.

The right-sized system for you, depends on how many people live in your house and what you use hot water for. For instantaneous systems it will also depend on the number of hot water outlets such as showers in your home.

Your hot water supplier will be able to help you choose the right-sized system.

Most common hot water systems

There are 4 main types of hot water systems.


Water is heated using an electric element. Available in storage and instantaneous models.

Read about electric hot water systems


Water is heated using a gas burner. Available in storage and instantaneous models.

Read about gas hot water systems


Water is heated mainly by the sun’s energy and uses either gas or electric boosting to assist with the heating when there isn’t enough sunshine.

Read about solar hot water systems

Heat pump

These are electric systems that use a heat pump cycle to heat the water using heat extracted from the air., rather than an electric element,

Read about heat pump hot water systems