Compare water heating running costs
This page provides approximate annual energy costs for various common water heating system types 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 for showering and washing clothes and dishes
- 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 2025 graph
If your house has a rooftop solar (PV) system to generate renewable electricity, the effective running cost of the electric water heating options can be lower if they are operated on the general (or peak) electricity tariff rather than the off-peak tariff, especially if they are controlled by timer so that they only heat water during the middle part of the day. In this case, electric water heaters act as a “solar soak”, make more effective use of the output of the PV system, and generate greater energy bill savings by reducing the amount of electricity that is exported to the grid and increasing the amount of PV-generated electricity that is used in the home. More information on this ‘solar bonus’ is provided with the relevant tables below.
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The annual energy consumption of the different water heating options has been estimated using the calculation methodologies developed for the NatHERS whole of home energy rating tools. This methodology has also been adapted to estimate the additional savings and effective energy cost for houses that have a heat pump water heater operated on a general electricity tariff and a rooftop solar (PV) system.
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 the average default offer tariff in Melbourne, a general (or peak) rate of 29.2 c/kWh, and an off-peak rate of 21.3 c/kWh. To calculate the impact on running costs of heat pump systems when the house has a rooftop solar (PV) system, a feed in tariff of 1.5c/kWh has been used. Natural gas tariffs are based on the standing offer of a major metropolitan 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 the energy cost calculations depend on the type of water heater and the number of people in the household:
- gas storage water heaters – 4.27 c/MJ (1 person), 4.23 c/MJ (2 person), 4.21 c/MJ (3 person), 4.18 c/MJ (4 person)
- gas instantaneous water heaters – 4.34 c/MJ (1 person), 4.30 c/MJ (2 person), 4.26 c/MJ (3 person), 4.23 c/MJ (4 person)
- gas boosted solar water heater – 4.33 c/MJ (1 person), 3.96 c/MJ (2 person), 3.93 c/MJ (3 person), 3.90 c/MJ (4 person).
LPG tariff is based on bulk supply via a 45 kg cylinder in the Melbourne area – 7.07 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: 0.44 kg CO2-e per kWh for electricity; 0.05553 kg CO2-e per MJ for natural gas; and 0.0642 kg CO2-e per MJ for LPG.
Solar and heat pump water heaters efficiency levels are defined by the number of small-scale technology certificates (STCs) they are eligible for in July 2025 in water heating zone 4, which covers Melbourne and most of Victoria.
Water heating running costs update
Figures have been updated to reflect the energy prices in mid-2025. Compared to the last update (September 2024), electricity prices have decreased slightly, while the price of natural gas has increased. The price of LPG has decreased slightly. The 10-year emission coefficient for electricity has decreased. The annual energy cost figures in the tables has been rounded to the nearest five dollars.
1 person (50 litres per day)
Heat pump
| Electricity tariff type | Efficiency rating | Annual energy cost | 10-year Greenhouse Gas emissions (tonnes) |
|---|---|---|---|
| Peak tariff, No PV system | 20 STC | $125 | 1.9 |
| Peak tariff, PV system* | 20 STC | $75 - $85 | 1.9 |
| Peak tariff, PV system and time control* | 20 STC | $20 - $40 | 1.9 |
| Peak tariff, No PV system | 16 STC | $205 | 3.0 |
| Peak tariff, PV system* | 16 STC | $120 - $135 | 3.0 |
| Peak tariff, PV system and time control* | 16 STC | $25 - $60 | 3.0 |
| Off-peak tariff | 20 STC | $95 | 1.9 |
| Off-peak tariff | 16 STC | $150 | 3.0 |
* The effective energy cost of heat pump water heaters run on a peak (or general) electricity tariff will be lower if the house has a rooftop PV system, as some of the electricity used to heat the water will be provided by the PV system. The impact is greatest if the water heater is controlled by timer to operate during the middle part of the day, e.g. 10 am to 4 pm.
Solar
| Water heater type | Efficiency rating | Annual energy cost | 10-year Greenhouse Gas emissions (tonnes) |
|---|---|---|---|
| Natural gas boosted | 19 STC | $90 | 1.1 |
| Natural gas boosted | 13 STC | $115 | 1.5 |
| Electric boosted – peak tariff | 19 STC | $125 | 1.8 |
| Electric boosted – peak tariff | 14 STC | $155 | 2.3 |
| Electric boosted – off-peak tariff | 19 STC | $90 | 1.8 |
| Electric boosted – off-peak tariff | 14 STC | $115 | 2.3 |
| LPG boosted | 19 STC | $130 | 1.3 |
| LPG boosted | 13 STC | $170 | 1.7 |
Electric
| Water heater type | Efficiency rating | Annual energy cost | 10-year Greenhouse Gas emissions (tonnes) |
|---|---|---|---|
| Peak tariff – storage | N/A | $435 | 6.5 |
| Peak tariff – instant | N/A | $335 | 5.0 |
| Off-peak tariff – storage | N/A | $375 | 7.7 |
Gas
| Water heater type | Efficiency rating | Annual energy cost | 10-year Greenhouse Gas emissions (tonnes) |
|---|---|---|---|
| Natural gas – storage | 5 star | $415 | 5.4 |
| Natural gas – storage | 4 star | $475 | 6.2 |
| Natural gas – instant | 7 star equivalent | $205 | 2.6 |
| Natural gas – instant | 5 star | $250 | 3.2 |
| LPG – storage | 5 star | $685 | 6.2 |
| LPG – storage | 4 star | $790 | 7.1 |
| LPG – instant | 7 star equivalent | $325 | 3.0 |
| LPG – instant | 5 star | $400 | 3.7 |
2 people (90 litres per day)
Heat pump
| Electricity tariff type | Efficiency rating | Annual energy cost | 10-year Greenhouse Gas emissions (tonnes) |
|---|---|---|---|
| Peak tariff, No PV system | 20 STC | $185 | 2.7 |
| Peak tariff, PV system* | 20 STC | $105 - $120 | 2.7 |
| Peak tariff, PV system and time control* | 20 STC | $25 - $55 | 2.7 |
| Peak tariff, No PV system | 16 STC | $295 | 4.4 |
| Peak tariff, PV system* | 16 STC | $170 - $195 | 4.4 |
| Peak tariff, PV system and time control* | 16 STC | $35 - $80 | 4.4 |
| Off-peak tariff | 20 STC | $135 | 2.7 |
| Off-peak tariff | 16 STC | $215 | 4.4 |
* The effective energy cost of heat pump water heaters run on a peak (or general) electricity tariff will be lower if the house has a rooftop PV system, as some of the electricity used to heat the water will be provided by the PV system. The impact is greatest if the water heater is controlled by timer to operate during the middle part of the day, e.g. 10 am to 4 pm.
Solar
| Water heater type | Efficiency rating | Annual energy cost | 10-year Greenhouse Gas emissions (tonnes) |
|---|---|---|---|
| Natural gas boosted | 19 STC | $140 | 1.9 |
| Natural gas boosted | 13 STC | $180 | 2.5 |
| Electric boosted – peak | 19 STC | $210 | 3.1 |
| Electric boosted – peak | 14 STC | $260 | 3.8 |
| Electric boosted – off-peak tariff | 19 STC | $155 | 3.1 |
| Electric boosted – off-peak tariff | 14 STC | $190 | 3.8 |
| LPG boosted | 19 STC | $225 | 2.2 |
| LPG boosted | 13 STC | $295 | 2.9 |
Electric
| Water heater type | Efficiency rating | Annual energy cost | 10-year Greenhouse Gas emissions (tonnes) |
|---|---|---|---|
| Peak tariff – storage | N/A | $670 | 10.0 |
| Peak tariff – instant | N/A | $595 | 8.9 |
| Off-peak tariff – storage | N/A | $535 | 10.9 |
Gas
| Water heater type | Efficiency rating | Annual energy cost | 10-year Greenhouse Gas emissions (tonnes) |
|---|---|---|---|
| Natural gas – storage | 5 star | $545 | 7.1 |
| Natural gas – storage | 4 star | $615 | 8.0 |
| Natural gas – instant | 7 star equivalent | $350 | 4.5 |
| Natural gas – instant | 5 star | $430 | 5.6 |
| LPG – storage | 5 star | $910 | 8.2 |
| LPG – storage | 4 star | $1,025 | 9.3 |
| LPG – instant | 7 star equivalent | $565 | 5.2 |
| LPG – instant | 5 star | $700 | 6.4 |
3 people (120 litres per day)
Heat pump
| Electricity tariff type | Efficiency rating | Annual energy cost | 10-year Greenhouse Gas emissions (tonnes) |
|---|---|---|---|
| Peak tariff, No PV system | 20 STC | $230 | 3.4 |
| Peak tariff, PV system* | 20 STC | $105 - $120 | 3.4 |
| Peak tariff, PV system and time control* | 20 STC | $25 - $55 | 3.4 |
| Peak tariff, No PV system | 16 STC | $365 | 5.5 |
| Peak tariff, PV system* | 16 STC | $170 - $195 | 5.5 |
| Peak tariff, PV system and time control* | 16 STC | $35 - $80 | 5.5 |
| Off-peak tariff | 20 STC | $170 | 3.4 |
| Off-peak tariff | 16 STC | $265 | 5.5 |
* The effective energy cost of heat pump water heaters run on a peak (or general) electricity tariff will be lower if the house has a rooftop PV system, as some of the electricity used to heat the water will be provided by the PV system. The impact is greatest if the water heater is controlled by timer to operate during the middle part of the day, e.g. 10 am to 4 pm.
Solar
| Water heater type | Efficiency rating | Annual energy cost | 10-year Greenhouse Gas emissions (tonnes) |
|---|---|---|---|
| Natural gas boosted | 19 STC | $185 | 2.6 |
| Natural gas boosted | 13 STC | $245 | 3.5 |
| Electric boosted – peak tariff | 19 STC | $285 | 4.3 |
| Electric boosted – peak tariff | 14 STC | $350 | 5.2 |
| Electric boosted – off-peak tariff | 19 STC | $210 | 4.3 |
| Electric boosted – off-peak tariff | 14 STC | $255 | 5.2 |
| LPG boosted | 19 STC | $305 | 2.9 |
| LPG boosted | 13 STC | $410 | 3.9 |
Electric
| Water heater type | Efficiency rating | Annual energy cost | 10-year Greenhouse Gas emissions (tonnes) |
|---|---|---|---|
| Peak tariff – storage | N/A | $840 | 12.6 |
| Peak tariff – instant | N/A | $790 | 11.9 |
| Off-peak tariff – storage | N/A | $650 | 13.4 |
Gas
| Water heater type | Efficiency rating | Annual energy cost | 10-year Greenhouse Gas emissions (tonnes) |
|---|---|---|---|
| Natural gas – storage | 5 star | $645 | 8.5 |
| Natural gas – storage | 4 star | $720 | 9.5 |
| Natural gas – instant | 7 star equivalent | $455 | 5.9 |
| Natural gas – instant | 5 star | $560 | 7.3 |
| LPG – storage | 5 star | $1,080 | 9.8 |
| LPG – storage | 4 star | $1,205 | 10.9 |
| LPG – instant | 7 star equivalent | $740 | 6.8 |
| LPG – instant | 5 star | $920 | 8.4 |
4 people (150 litres per day)
Heat pump
| Electricity tariff type | Efficiency rating | Annual energy cost | 10-year Greenhouse Gas emissions (tonnes) |
|---|---|---|---|
| Peak tariff, No PV system | 20 STC | $275 | 4.1 |
| Peak tariff, PV system* | 20 STC | $150 - $180 | 4.1 |
| Peak tariff, PV system and time control* | 20 STC | $35 - $75 | 4.1 |
| Peak tariff, No PV system | 16 STC | $435 | 6.5 |
| Peak tariff, PV system* | 16 STC | $245 - $290 | 6.5 |
| Peak tariff, PV system and time control* | 16 STC | $50 - $115 | 6.5 |
| Off-peak tariff | 20 STC | $200 | 4.1 |
| Off-peak tariff | 16 STC | $320 | 6.5 |
* The effective energy cost of heat pump water heaters run on a peak (or general) electricity tariff will be lower if the house has a rooftop PV system, as some of the electricity used to heat the water will be provided by the PV system. The impact is greatest if the water heater is controlled by timer to operate during the middle part of the day, e.g. 10 am to 4 pm.
Solar
| Water heater type | Efficiency rating | Annual energy cost | 10-year Greenhouse Gas emissions (tonnes) |
|---|---|---|---|
| Natural gas boosted | 19 STC | $230 | 3.3 |
| Natural gas boosted | 13 STC | $302 | 4.6 |
| Electric boosted – peak tariff | 19 STC | $375 | 5.6 |
| Electric boosted – peak tariff | 14 STC | $450 | 6.7 |
| Electric boosted – off-peak tariff | 19 STC | $275 | 5.6 |
| Electric boosted – off-peak tariff | 14 STC | $330 | 6.7 |
| LPG boosted | 19 STC | $395 | 3.7 |
| LPG boosted | 13 STC | $545 | 5.2 |
Electric
| Water heater type | Efficiency rating | Annual energy cost | 10-year Greenhouse Gas emissions (tonnes) |
|---|---|---|---|
| Peak tariff – storage | N/A | $1,015 | 15.2 |
| Peak tariff – instant | N/A | $980 | 14.7 |
| Off-peak tariff – storage | N/A | $770 | 15.8 |
Gas
| Water heater type | Efficiency rating | Annual energy cost | 10-year Greenhouse Gas emissions (tonnes) |
|---|---|---|---|
| Natural gas – storage | 5 star | $740 | 9.8 |
| Natural gas – storage | 4 star | $820 | 10.9 |
| Natural gas – instant | 7 star equivalent | $555 | 7.3 |
| Natural gas – instant | 5 star | $685 | 9.0 |
| LPG – storage | 5 star | $1,250 | 11.3 |
| LPG – storage | 4 star | $1,385 | 12.6 |
| LPG – instant | 7 star equivalent | $915 | 8.4 |
| LPG – instant | 5 star | $1,135 | 10.4 |
