Compare water heating running costs
This page provides approximate annual energy costs for various types of common water heating systems for different household sizes. It also shows the estimated greenhouse gas emissions of the different options over a 10-year period.
This provides a fairer comparison of emissions between systems that use gas and electricity, as over this time the greenhouse intensity of Victoria’s electricity supply will become much lower.
These calculations should be used as a guide only.
Your water heating energy costs will depend on:
- the number of people in your household
- how you use hot water
- your energy tariffs
- your climate
- how efficient the system is
- the length and insulation of connecting pipes
- the flow rates (water efficiency) of taps and showers.
Annual energy cost in 2023 graph
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Annual energy costs are based on a Melbourne household with the stated number of people and average daily hot water use.
For gas instantaneous and gas boosted solar water heaters the running costs and greenhouse emissions take the electricity use into account.
Electricity tariffs are based on a general (or peak) rate of 31.9 c/kWh, and an off-peak rate of 25.0 c/kWh. Natural gas tariffs are based on the standing offer of a major gas retailer using a typical "declining block" structure for a house with gas heating, water heating and cooking, which means the more gas that is used during each billing period, the cheaper the unit cost.
The natural gas tariffs used for our calculations depend on the type of water heater and the number of people in the household: gas storage water heaters – 3.24 c/MJ (1 and 2 person) and 3.18 c/MJ (3 and 4 person); gas instantaneous water heaters – 3.33c/MJ (1 and 2 person) and 3.24 c/MJ (3 and 4 person); solar-natural gas boost water heater - 3.41 c/MJ (1 and 2 person) and 3.37 c/MJ (3 and 4 person). LPG tariff is based on bulk supply in Melbourne area – 5.5 c/MJ.
Energy tariffs do not include the annual supply charge or cylinder rental fee. Annual costs for your household will depend on your actual energy tariffs and daily hot water use. This will depend on the frequency and length of showers, the flow rate of the shower rose and shower temperature, use of hot water in clothes washing, and use of hot water for dishwashing and bathing, etc.
10-year greenhouse gas emissions are based on the estimated average emissions coefficient of the different fuels over the next ten years: 0.473kg CO2-e per kWh for electricity; 0.05553kg CO2-e per MJ for natural gas; 0.0642kg CO2-e per MJ for LPG; and, 0.005 CO2-e per MJ for plantation-grown bulk firewood.
Solar and heat pump water heaters efficiency levels are based on the following STC allocations in Zone 4 (southern Victoria) in 2015: solar gas boost - standard (29), high efficiency (33); electric boosted solar - standard (27), high efficiency (31); heat pump - standard (28), high efficiency (35).
Water heating running costs update
Figures have been updated to reflect the gas price increase of 1 Feb 2023 and the electricity price increase of 1 July 2023. Prices of other fuels remain the same. The 10-year emission coefficient for electricity has been updated (it has gone down a bit), based on the emission coefficient data released in 2022.
1 person (50 litres per day)
Heat pump
| Water heater type | Energy star rating | Annual energy cost | 10-year Greenhouse Gas emissions (tonnes) |
|---|---|---|---|
| Peak tariff | High efficiency | $125 | 1.8 |
| Peak tariff | Standard | $170 | 2.5 |
| Off-peak tariff | High efficiency | $100 | 1.9 |
| Off-peak tariff | Standard | $140 | 2.6 |
Solar
| Water heater type | Energy star rating | Annual energy cost | 10-year Greenhouse Gas emissions (tonnes) |
|---|---|---|---|
| Natural gas boosted | High efficiency | $65 | 1.0 |
| Natural gas boosted | Standard | $80 | 1.2 |
| Electric boosted – peak tariff | High efficiency | $85 | 1.2 |
| Electric boosted – peak tariff | Standard | $150 | 2.2 |
| Electric boosted – off-peak tariff | High efficiency | $80 | 1.4 |
| Electric boosted – off-peak tariff | Standard | $140 | 2.6 |
| LPG boosted | High efficiency | $80 | 1.0 |
| LPG boosted | Standard | $105 | 1.4 |
Electric
| Water heater type | Energy star rating | Annual energy cost | 10-year Greenhouse Gas emissions (tonnes) |
|---|---|---|---|
| Peak tariff – storage | N/A | $475 | 7.0 |
| Peak tariff – instant | N/A | $365 | 5.4 |
| Off-peak tariff – storage | N/A | $440 | 8.3 |
Gas
| Water heater type | Energy star rating | Annual energy cost | 10-year Greenhouse Gas emissions (tonnes) |
|---|---|---|---|
| Natural gas – storage | 5.0 | $315 | 5.4 |
| Natural gas – storage | 4 | $365 | 6.2 |
| Natural gas – instant | 7 | $160 | 2.6 |
| Natural gas – instant | 6 | $175 | 2.9 |
| LPG – storage | 5 | $535 | 6.2 |
| LPG – storage | 4 | $615 | 7.1 |
| LPG – instant | 7 | $255 | 3.0 |
| LPG – instant | 6 | $280 | 3.3 |
2 people (90 litres per day)
Heat pump
| Water heater type | Energy star rating | Annual energy cost | 10-year Greenhouse Gas emissions (tonnes) |
|---|---|---|---|
| Peak tariff | High efficiency | $190 | 2.8 |
| Peak tariff | Standard | $245 | 3.6 |
| Off-peak tariff | High efficiency | $150 | 2.7 |
| Off-peak tariff | Standard | $190 | 3.6 |
Solar
| Water heater type | Energy star rating | Annual energy cost | 10-year Greenhouse Gas emissions (tonnes) |
|---|---|---|---|
| Natural gas boosted | High efficiency | $100 | 1.5 |
| Natural gas boosted | Standard | $125 | 1.9 |
| Electric boosted – peak | High efficiency | $175 | 2.5 |
| Electric boosted – peak | Standard | $265 | 3.9 |
| Electric boosted – off-peak tariff | High efficiency | $155 | 2.8 |
| Electric boosted – off-peak tariff | Standard | $235 | 4.4 |
| LPG boosted | High efficiency | $130 | 1.7 |
| LPG boosted | Standard | $175 | 2.1 |
Electric
| Water heater type | Energy star rating | Annual energy cost | 10-year Greenhouse Gas emissions (tonnes) |
|---|---|---|---|
| Peak tariff – storage | N/A | $730 | 10.8 |
| Peak tariff – instant | N/A | $650 | 9.6 |
| Off-peak tariff – storage | N/A | $625 | 11.8 |
Gas
| Water heater type | Energy star rating | Annual energy cost | 10-year Greenhouse Gas emissions (tonnes) |
|---|---|---|---|
| Natural gas – storage | 5 | $420 | 7.1 |
| Natural gas – storage | 4 | $470 | 8.0 |
| Natural gas – instant | 7 | $275 | 4.5 |
| Natural gas – instant | 6 | $305 | 5.0 |
| LPG – storage | 5 | $710 | 8.2 |
| LPG – storage | 4 | $800 | 9.3 |
| LPG – instant | 7 | $445 | 5.2 |
| LPG – instant | 6 | $490 | 5.8 |
3 people (120 litres per day)
Heat pump
| Water heater type | Energy star rating | Annual energy cost | 10-year Greenhouse Gas emissions (tonnes) |
|---|---|---|---|
| Peak tariff | High efficiency | $235 | 3.5 |
| Peak tariff | Standard | $300 | 4.4 |
| Off-peak tariff | High efficiency | $180 | 3.4 |
| Off-peak tariff | Standard | $230 | 4.3 |
Solar
| Water heater type | Energy star rating | Annual energy cost | 10-year Greenhouse Gas emissions (tonnes) |
|---|---|---|---|
| Natural gas boosted | High efficiency | $135 | 2.0 |
| Natural gas boosted | Standard | $165 | 2.6 |
| Electric boosted – peak tariff | High efficiency | $260 | 3.8 |
| Electric boosted – peak tariff | Standard | $365 | 5.4 |
| Electric boosted – off-peak tariff | High efficiency | $220 | 4.1 |
| Electric boosted – off-peak tariff | Standard | $315 | 5.9 |
| LPG boosted | High efficiency | $185 | 2.3 |
| LPG boosted | Standard | $235 | 2.9 |
Electric
| Water heater type | Energy star rating | Annual energy cost | 10-year Greenhouse Gas emissions (tonnes) |
|---|---|---|---|
| Peak tariff – storage | N/A | $915 | 13.5 |
| Peak tariff – instant | N/A | $860 | 12.7 |
| Off-peak tariff – storage | N/A | $760 | 14.4 |
Gas
| Water heater type | Energy star rating | Annual energy cost | 10-year Greenhouse Gas emissions (tonnes) |
|---|---|---|---|
| Natural gas – storage | 5 | $495 | 8.5 |
| Natural gas – storage | 4 | $555 | 9.5 |
| Natural gas – instant | 7 | $360 | 5.9 |
| Natural gas – instant | 6 | $400 | 6.6 |
| LPG – storage | 5 | $840 | 9.8 |
| LPG – storage | 4 | $940 | 10.9 |
| LPG – instant | 7 | $580 | 6.8 |
| LPG – instant | 6 | $645 | 7.6 |
4 people (150 litres per day)
Heat pump
| Water heater type | Energy star rating | Annual energy cost | 10-year Greenhouse Gas emissions (tonnes) |
|---|---|---|---|
| Peak tariff | High efficiency | $290 | 4.2 |
| Peak tariff | Standard | $355 | 5.2 |
| Off-peak tariff | High efficiency | $215 | 4.0 |
| Off-peak tariff | Standard | $265 | 5.0 |
Solar
| Water heater type | Energy star rating | Annual energy cost | 10-year Greenhouse Gas emissions (tonnes) |
|---|---|---|---|
| Natural gas boosted | High efficiency | $170 | 2.7 |
| Natural gas boosted | Standard | $210 | 3.3 |
| Electric boosted – peak tariff | High efficiency | $355 | 5.2 |
| Electric boosted – peak tariff | Standard | $480 | 7.1 |
| Electric boosted – off-peak tariff | High efficiency | $300 | 5.6 |
| Electric boosted – off-peak tariff | Standard | $405 | 7.6 |
| LPG boosted | High efficiency | $245 | 3.0 |
| LPG boosted | Standard | $305 | 3.7 |
Electric
| Water heater type | Energy star rating | Annual energy cost | 10-year Greenhouse Gas emissions (tonnes) |
|---|---|---|---|
| Peak tariff – storage | N/A | $1,105 | 16.3 |
| Peak tariff – instant | N/A | $1,070 | 15.8 |
| Off-peak tariff – storage | N/A | $900 | 17.0 |
Gas
| Water heater type | Energy star rating | Annual energy cost | 10-year Greenhouse Gas emissions (tonnes) |
|---|---|---|---|
| Natural gas – storage | 5 | $575 | 9.8 |
| Natural gas – storage | 4 | $635 | 10.9 |
| Natural gas – instant | 7 | $440 | 7.3 |
| Natural gas – instant | 6 | $490 | 8.1 |
| LPG – storage | 5 | $970 | 11.3 |
| LPG – storage | 4 | $1,080 | 12.6 |
| LPG – instant | 7 | $720 | 8.4 |
| LPG – instant | 6 | $800 | 9.4 |
