To replace your hot water system under the NSW Home Energy Saver loan for hot water, first check your eligibility and choose an eligible hot water upgrade. Next, select a participating finance provider, obtain quotes from approved suppliers listed by that provider, and finalise your loan application. Once approved, the installer can replace your existing hot water system with the cost repaid through interest-free repayments over a term of up to 10 years.

Who Can Upgrade Hot Water Systems Using the Home Energy Saver Loan?

The NSW Home Energy Saver Loan for hot water is available to eligible NSW homeowners and landlords who want to replace an existing hot water system with a more energy-efficient heat pump or solar water heater.

To qualify, you generally need to:

• Own a residential property in NSW
• Be an owner-occupier or landlord
• Meet the program’s income eligibility requirements
• Use an approved installer and finance provider

This applies whether you’re replacing an ageing electric storage tank or upgrading from an inefficient gas hot water system.

The aim is to make it easier to switch to heat pumps or solar hot water systems without high upfront costs.

Which Hot Water Systems Can I Replace Under the Home Energy Saver Loan?

You can replace older hot water systems with approved energy-efficient options, including:

• Heat pump hot water systems
• Solar hot water systems

These systems are designed to reduce electricity use and lower ongoing energy bills compared to traditional electric storage units.

Most standard electric and gas hot water systems are only eligible for replacement if the upgrade is to one of the approved efficient alternatives.

How Do I Replace My Hot Water System Under Home Energy Saver?

Replacing your water heater through the NSW Home Energy Saver Loan for hot water is usually managed by a Brighte or Plenti-approved installer.

First, your existing system is assessed, and a suitable replacement is recommended. You then receive a quote, and any eligible rebates or discounts are applied before financing is calculated.

The cost is worked out using this structure:

Amount financed = Total installation cost − Eligible rebates and discounts

Once approved through a provider such as Brighte or Plenti, the installer completes the installation, and repayments begin under an interest-free agreement.

How Much Loan Can I Get to Replace My Hot Water System?

Eligible households can access up to $15,000 in interest-free financing under the NSW Home Energy Saver Program and repay in up to 10 years.

For example:

If a new hot water system costs $4,500 and you receive a $1,000 rebate, you may only need to finance $3,500.

Instead of paying this amount up front, you spread the cost over time (maximum 120-month period) with 0% interest hot water system financing.

Simple repayment guide:

Borrowed amount ÷ repayment term (months) = monthly repayment

In the above case, and assuming you go for maximum repayment duration, it would be $3,500 ÷ 120 (months) = $29.16 per month

Because there is no interest, you only repay the amount you borrow.

Why Apply for The Energy Saver Loan for Hot Water?

The Home Energy Saver loan for hot water upgrade is worth considering because:

• It helps you acquire a highly efficient hot water system with $0 upfront investment.
• You access a 0% interest hot water system loan, so you pay exactly what you borrow.
• You repay the loan for up to 10 years. Your monthly repayments are smaller than your hot water savings, so the systems repay themselves. 
• The loan lets you upgrade to lower running costs compared to older electric or gas systems.
• You get a faster replacement of ageing systems without waiting to save upfront capital.

Final Thought

The NSW Home Energy Saver Loan for hot water makes water heater replacement more accessible by removing upfront cost barriers. Whether you want a heat pump or solar hot water system, you can upgrade immediately, reduce energy use, and repay the system over time with 0% interest financing.

The NSW Government has introduced a Home Energy Saver Program offering eligible households interest-free loans of up to $15,000 for approved energy upgrades.

This means you can now install solar panels, add a battery, upgrade insulation, replace an old hot water system, or switch to more efficient heating and cooling without paying the full cost upfront.

Instead, you’ll spread the cost into manageable repayments and start reducing your energy bills sooner.

Here’s how the NSW Home Energy Saver Loan works, who can apply, and which upgrades deliver the biggest savings.

What Is the NSW Home Energy Saver Loan? 

The NSW Home Energy Saver Loan is a state government program that offers zero-interest, fee-free loans up to $15,000 to help you lower your electricity bills. It is the core part of the NSW Government’s $557 million Home Energy Saver Program.

The loan is designed to solve one main problem: the high upfront cost of clean energy. While most people know that installing things like solar panels, home batteries, heat pumps, or ceiling insulation will significantly cut their power bills, actually buying this equipment requires thousands of dollars in cash that many families simply do not have readily available to spend.

This program removes that entry barrier completely. It acts as a bridge, giving eligible homeowners and landlords the money to fully pay for modern energy-saving upgrades today, allowing you to pay it back smoothly over time instead of all at once.

How the Interest-Free Home Energy Loan Works

The NSW interest-free energy loan operates under a strictly regulated, consumer-first framework that eliminates these hidden traps entirely.

• Principal-Only Direct Repayments: Every single dollar remitted by the borrower reduces the true principal balance of the installed hardware. There is zero compound interest or hidden trailing percentages.
• Absence of Ongoing Administrative Overhead: The program mandates that participating finance partners charge exactly 0 for application setup, monthly account maintenance, or early loan settlement. If you choose to pay down your loan faster than scheduled, you face no financial penalties whatsoever.
• Direct-to-Vendor Settlement Protocols: To prevent financial mismanagement or fraudulent quotes, the capital never touches the homeowner’s everyday bank account. Once a system is fully installed and structurally signed off by the customer, the approved lender releases payment directly to the certified vendor. Your repayment cycle begins sequentially afterwards.

Strict Exclusions: This program cannot be utilised for properties categorised as social housing, community housing, or commercial short-stay holiday accommodations (such as Airbnb properties). Renters are explicitly ineligible for the loan element itself, as financing must attach structurally to a property owner’s profile, though they can access upcoming discount modules. 

What Home Upgrades are Financed Under the NSW Home Loan?

The NSW energy efficiency loan is highly flexible, allowing property owners to mix, match, and bundle diverse energy technologies into a unified installation schedule up to the $15,000 ceiling. 

The program offers the following to support home upgrades:

• Heat pump water heater no interest loans
• Solar water heater zero interest financing
• Reverse cycle air conditioner interest-free payment plans
• Induction cooktop no interest financing options
• EV level 2 charger zero interest payment terms
• DC ceiling fan 0% interest financing structures
• Ceiling insulation interest free upgrade loans
• Draught-proofing no interest funding
• Double glazing zero interest structural financing
• NatHERS assessment 0% interest energy audit funding

How Much Can You Borrow and How Long Do You Have to Repay?

• The Loan Limit: You can borrow any amount up to a maximum of $15,000 per eligible household. This capital can be used to cover a single upgrade or bundled together to fund multiple energy-saving improvements at once.
• The Repayment Period: You have a flexible term of up to 10 years to pay back the borrowed balance. Because the program is completely interest-free and fee-free, spreading the cost over a decade keeps your ongoing monthly instalments exceptionally low and easy to manage.

Since you have 10 full years to pay off the interest-free home energy upgrade loan, your regular monthly or fortnightly payments are split into tiny, easily affordable amounts. At the same time, your new energy-efficient upgrades instantly slash your electricity costs. Because the amount of money you save on your power bill is bigger than the small amount you pay toward the loan, you are left with extra money in your bank account right away.

For example;

If your new system saves you $150 a month on electricity but your loan repayment is only $80 a month, you are instantly $70 ahead each month. Instead of having to find extra money to pay for the equipment, the upgrade actually drops your overall living costs from your very first billing cycle.

Who Can Apply for the NSW Home Energy Saver Loan?

The Home Energy Saver Program divides support based on whether you own, rent, or lease out the property:

• Homeowners: You have the most flexibility. You can apply for the 0% interest-free loan (up to $15,000) to install upgrades today, and you can stack it with a targeted program discount of up to $4,000 off the upfront cost if your combined household income is under $80,000 or you hold a concession card.
• Landlords: You are eligible to apply for the 0% interest-free loan to upgrade your investment properties. While you cannot get the upfront property discounts directly, your tenant might be eligible to apply for the up to $4,000 discount—meaning you can coordinate with your renter to slash the purchase price before you finance the leftover balance interest-free.
• Renters: You cannot apply for the interest-free loan. However, if your combined household income is under $80,000 or you have a concession card, you can apply directly for the upcoming discount of up to $4,000 to install energy-saving upgrades in the home, provided you have written approval from your landlord.

Step-by-Step Guide to Applying for the Home Energy Saver Loan

Navigating the NSW Home Energy Saver Loan application process is straightforward when executed through authorised channels. Follow this precise blueprint on how to apply for the NSW Home Energy Saver Program successfully:

Step 1: Pre-Eligibility Verification

Review your financial records to ensure your combined household taxable income sits beneath the $210,000 baseline. Collect your recent property council rates notice and individual ATO notices of assessment to verify your identity and ownership profile.

Step 2: Select a Participating Government Finance Partner

The state does not process loan applications directly through government departments. Instead, choose between the two accredited fintech administrators: Brighte or Plenti. Both companies feature dedicated digital portals tailored exclusively to this state-backed program.

Step 3: Source a NETCC-Accredited Vendor

Use the provider’s specialised directory to find an installer holding active NETCC (New Energy Tech Consumer Code) credentials. Only tradespeople registered within these strict regulatory frameworks can upload applications into the state system.

Step 4: Request a Comprehensive Itemised Quote

Have your selected vendor complete a physical or digital site analysis of your switchboard, roof condition, and thermal footprint. The vendor will formulate an itemised quote. Under strict program rules, this quote must explicitly display all component warranties and deduct any existing federal or state rebates (such as federal STCs or state-level certificates) before arriving at the final loan balance.

Step 5: Execute the Digital Loan Application

Once you accept the quote, the contractor triggers an automated referral link via Brighte or Plenti directly to your email or smartphone. Click the secure link, fill out the basic credit assessment details, upload your income verification documents, and submit. Approval notifications are typically processed within minutes via automated digital underwriting.

Step 6: Installation, Structural Audit, and Pay-Out

The accredited contractor coordinates an installation date to deploy the hardware at your property. Once the physical work is complete, you will inspect the system and sign a digital completion certificate. The finance partner then pays the installer in full, and your zero-interest repayment schedule commences.

Participating Finance Providers: Brighte and Plenti

To roll out the program seamlessly across the state, the NSW Government partners with two elite leaders in the Australian green finance landscape:

Brighte

Widely recognised for administering large-scale clean energy financing programs for the ACT and Tasmanian governments, Brighte brings exceptional operational experience to the Home Energy Saver NSW rollout. Their robust vendor marketplace connects applicants with highly rated, thoroughly vetted local solar and insulation specialists, ensuring zero upfront friction.

Plenti

Plenti is a premium ASX-listed financial services provider renowned for fast digital processing and flexible lending terms. Plenti’s consumer portal gives applicants clear visibility over their principal balances, providing robust consumer protection mechanisms and automated bank-feed verifications to keep the application process rapid and transparent.

Both lenders are legally bound by strict responsible lending laws under their respective Australian Credit Licences (ACL), ensuring all credit products are clearly communicated and safe for consumers.

Can You Combine the Loan With Other NSW Energy Rebates?

The zero-interest loan coordinates with several prominent frameworks as follows:

Yes. The program is specifically built to complement existing environmental incentives rather than replace them. The state architecture requires all installers to stack available federal and state rebates upfront, effectively reducing the principal amount you need to borrow.

The Upcoming Lower-Income Cash Subsidy

Later in 2026, the NSW Government will introduce a separate $77 million targeted discount pool providing upfront cash subsidies of up to $4,000 for lower-income households (earning under $80,000 annually) or concession card holders.

If your household falls into this bracket, the strategic sequence is critical: you are strongly advised to apply for the cash subsidy first. Once the $4,000 discount is deducted from your system price, you can use the NSW government loan for home energy upgrades to finance the remaining balance completely interest-free. This stacked approach can drop the self-funding payback period of a premium solar and battery setup to under four years.

Which Energy Upgrades Deliver the Biggest Savings?

To maximise the impact of your $15,000 allocation, it helps to understand which technological combinations yield the highest financial returns relative to their installation costs.

1. Hybrid Solar & Battery Storage Systems

Deploying a zero-interest solar loan NSW 2026 configuration is the most effective way to eliminate power bills. While solar panels wipe out your daytime running costs, adding a battery ensures you remain insulated from high peak-tariff rates (typically levied between 5:00 PM and 9:00 PM). By storing afternoon solar power and running your home off battery power at night, you can slash your grid reliance by up to 80-90%.

2. Commercial-Grade Hot Water Heat Pumps

Water heating represents roughly 25% of the average Australian household’s total energy footprint. Conventional electric hot water tanks act as large, inefficient resistive heating elements. By switching to a modern heat pump, the system extracts ambient warmth from the surrounding air to heat your water supply. This process uses up to 75% less electricity and can be easily programmed to run entirely during peak solar generation hours.

3. Thermal Mass Improvements via Ceiling Insulation

Introducing high-grade interest-free financing for insulation in NSW addresses the root cause of high utility bills. If a building features poor thermal resistance, your climate systems must work overtime to maintain comfortable indoor temperatures. Upgrading your ceiling insulation to a high R-value traps conditioned air inside, lowering your heating and cooling expenses by up to 30% completely passively.

Is the NSW Home Energy Saver Program Worth It?

If you intend to hold your property for the foreseeable future, the program is highly worth it. Under standard commercial green finance terms, borrowing $15,000 over 10 years at an average 7.5% interest rate would cost you roughly $6,400 in interest alone. 

By completely eliminating that interest overhead, the state ensures that 100% of the utility savings generated by your new equipment flow directly back into your household budget from day one.

You are effectively taking money that would have been spent on ever-increasing power bills and redirecting it into an asset that builds long-term equity in your home. It provides an ironclad defence against cost-of-living challenges while contributing directly to a cleaner, more resilient state grid.

Common Questions About the NSW Home Energy Saver Loan

Is 0% this a grant or a loan?

It is an interest-free loan that must be fully repaid over an agreed term of up to 10 years. It is not a free grant or an unconditional handout, though it features zero interest and zero ongoing fees.

Can I apply for a zero-interest solar loan in NSW if I already have solar?

Yes. If you already have a functional solar array, you can use the NSW zero-interest loan for solar pathway to install a companion battery storage bank, complete a comprehensive switchboard upgrade, add high-quality ceiling insulation, or replace your old gas cooktop with an induction model.

Can renters apply for the interest-free loan?

No. Because the loan requires structural hardware modifications to the property title, the loan is strictly reserved for owner-occupiers and landlords. However, renters will be eligible to access the upcoming targeted energy discounts later in 2026, provided they obtain documented permission from their landlord.

What happens if I decide to sell my home before the 10-year loan is fully paid off?

If you sell the property, the outstanding balance of your loan must be fully settled at the point of property transfer, typically using proceeds from the sale during settlement, as the loan cannot be transferred to the new buyer.

How do I apply for the Home Energy Saver loan?

Visit the official NSW Government Home Energy Saver gateway at energy.nsw.gov.au/home-energy-saver to confirm your property’s eligibility and access the authorised Brighte and Plenti vendor directories.

Why are other rebates deducted before the home energy saver loan is granted?

To keep your debt as small as possible. By law, installers must apply federal and state discounts to your quote first. This ensures you only borrow the remaining balance, keeping your loan amount small and your monthly repayments at an absolute minimum. It also preserves the government’s budget, so it can help more households.

What if the financed product home energy saver loan breaks?

You are fully protected by the Australian Consumer Law. Because the program requires all installers to be NETCC-accredited, your hardware features strict product warranties.

• The Warranty Still Applies: The installer or manufacturer is legally required to repair or replace the broken unit at no cost to you.
• You Must Keep Paying: Even if your system stops working temporarily, your loan repayments to Brighte or Plenti cannot stop. Your finance agreement is entirely separate from your hardware issue.

Showers are longer. Appliances run more often, and families are juggling work-from-home schedules.

At the same time, energy prices keep rising, and space inside modern homes keeps shrinking.

This change explains why tankless water heaters are essential to our homes. They are becoming a serious alternative to traditional storage tanks across Australia.

According to industry data from plumbing suppliers and energy reports, on-demand systems now make up a growing share of new hot water installations.

This is especially true in renovations and higher-density housing. 

Rheem is one of the most recognisable hot water brands in Australia that has been at the centre of that change. Rheem’s tankless lineup covers both gas and electric tankless water heater options.

Some rely on natural gas. Others are fully electric. The best options include:

• Rheem RTGH Condensing Gas Tankless
• Rheem RTG Non-Condensing Outdoor Gas Tankless
• Rheem IKONIC Condensing Gas Tankless
• Rheem ThermaForce Condensing Gas Tankless
• Rheem RTG Indoor Non-Condensing Gas Tankless
• Rheem RTEX-08kW Electric Tankless
• Rheem RTEX-06T Electric Tankless
• Rheem RTEX-11 Electric Tankless
• Rheem RTEX-27 Electric Tankless
• Rheem RTEX-36 Electric Tankless

This guide breaks down the best Rheem tankless water heaters available, explains how they actually work in real homes and helps you decide which type fits your situation.

10 Best Rheem Tankless Water Heaters in Australia

After comparing different Rheem tankless water heater models, we found the following to offer the best combination of efficiency, reliability, and value for Australian homes.

1 Rheem RTGH Condensing Gas Tankless

The RTGH series is the best overall Rheem gas tankless water heater.

These condensing units are meant for homes that require a continuous hot water supply from various points. They are condensing models that re-use heat that would otherwise be wasted into the atmosphere.

The series is well-suited for indoor installation and accommodates either natural gas or LPG systems.

The flow rate is strong enough for households with multiple facilities like showers, faucets, and appliances being in operation concurrently.

The series features a sophisticated control system for regulating steady outlet temperature levels even when subjected to changes in demand.

Key features and specs 

• Condensing gas technology
• Indoor/outdoor model
• High flow capacity
• Digital temperature control
• Warranty: 15-year heat exchanger, 5-year parts, 1-year labor
• Up to 0.93 UEF
• GPM 8.4
• Fuel is propane gas
• Depth/height/width: 9x23x18

Why Buy: Designed for larger families requiring continuous access to hot water without storage constraints

Price: ~AUD1,800 – 3,000 

Best for: Multifamily homes with bathrooms.

2 Rheem RTG Non-Condensing Outdoor Gas Tankless

If you’re looking for a solid outdoor gas tankless heater that won’t leave you running out of hot water in the middle of a shower, the Rheem RTG Outdoor Gas Tankless is worth a close look.

It’s one of Rheem’s non‑condensing outdoor models designed for straightforward installation and dependable everyday use, especially if you’ve got propane supplied to your home. 

This unit is built around simplicity and performance.

It offers a continuous flow of hot water without relying on a bulky tank.

That means you only heat water when you need it — showers, dishes, laundry — all without massive standby losses. 

One of the standout things here is the efficiency.

With a UEF rating of up to 0.82, this tankless system can be around 34% more efficient than a standard 50‑gallon tank heater. That’s real savings over time, especially if you’re replacing an older, less efficient unit. 

Key features and specs:

• Up to 0.82 UEF efficiency rating
• Continuous hot water delivery
• Hot‑Start Programming™ to reduce cold bursts
• Designed for outdoor mounting
• Lighter, smaller profile than older units
• 15‑year heat exchanger warranty, 5-year part, 1-year labour 
• GPM 7
• Fuel is propane gas
• Depth/height/width: 9x20x13 inches

Why buy: A dependable outdoor propane gas tankless option that balances efficiency with solid everyday performance.

Price: ~AUD800 – AUD1,500 (supply only)

Best for: Medium to larger homes with outdoor space and propane supply

3 Rheem IKONIC Condensing Gas Tankless

The Rheem IKONIC Condensing Gas Tankless heater sits near the top of Rheem’s gas tankless range.

It’s a step up from basic models with features that matter if you want real performance, efficiency and smart everyday behaviour from your hot water system.

What makes it even better is how much heat it extracts from the gas it burns.

With a 0.96 UEF efficiency rating, it’s significantly more efficient than older tank systems and many non‑condensing tankless units. That means less wasted energy and lower ongoing costs.

This unit is designed to handle real household demand.

It delivers around 10.1 gallons per minute, which translates to dependable hot water for showers, laundry and dishwasher use without that unpleasant “cold splash” you sometimes get when a system can’t keep up. 

Key features and specs

• Super high 0.96 UEF efficiency
• ~10.1 GPM continuous hot water
• Stainless steel primary and secondary heat exchangers
• Hot‑Start Programming™ to reduce cold bursts
• Field convertible between natural gas and LPG
• Indoor installation with flexible venting
• Warranty is 15-year heat exchanger, 5-year parts and 1-year labour
• Depth/height/width: 13.69×28.56×17.31 inches

Why buy: A powerful condensing gas unit that delivers strong flow and excellent energy efficiency without sacrificing convenience.

Price: ~AUD1,800 –AUD3,000 (supply only)

Best for: Medium to large homes with steady hot water demand

4 Rheem ThermaForce Condensing Gas Tankless

The Rheem ThermaForce Condensing Gas Tankless heater is one of the strongest options in Rheem’s high‑efficiency lineup.

It’s designed for homeowners who want serious hot water performance without the delays. It does that with a solid mix of power, simplicity and durability. 

Right away, the max flow rate of around 10.1 gallons per minute tells you this model can keep pace with multiple fixtures running at once.

That kind of steady delivery is exactly what busy Australian homes want, especially during morning rush hour or dinner prep. 

Another thing that makes it the best is how it balances efficiency and durability.

It carries a UEF rating of 0.90, which is strong for a condensing gas model.

That translates to noticeable energy savings in some cases, reducing gas costs by up to around 32% compared to older non‑condensing units. 

Key features and specs

• Up to 0.90 UEF efficiency
• ~10.1 GPM continuous hot water
• Condensing gas technology
• Flexible installation with adjustable intake
• Illuminated touchscreen controls
• Durable with only four moving parts
• Depth/height/width: 10x29x17 inches
• Warranty: 15-year heat exchanger, 5-year parts, 1-year labour (Residential). Commercial 5-year heat exchanger, 5-year parts.

Why buy: Great balance of strong output, efficiency, and straightforward daily use.

Price: ~AUD1,800 – AUD3,000  (supply only)

Best for: Medium to large homes with busy hot water demand

5 Rheem RTG Indoor Non-Condensing Gas Tankless

The Rheem RTG Indoor Gas Tankless heater is a reliable gas‑powered tankless system designed for indoor use.

If you’re switching from a traditional hot water tank or replacing an older inline unit, this one feels familiar in how it works, but smarter and more efficient.

This RTG model is part of Rheem’s high‑efficiency non‑condensing series.

It doesn’t have the extra condensing loop some of the premium gas units do, but it still delivers continuous hot water with fewer losses than old storage tanks. 

Since it is designed for indoor mounting, you don’t need separate weatherproof housings, and it’s compatible with common venting configurations. 

This unit puts out a continuous flow rate that’s strong enough for whole‑house use, meaning you can be running a shower and dishwasher without the water suddenly running cold.

It’s not the absolute highest‑capacity model Rheem makes, but for most families, it’s more than adequate, and it does it without the bulk or noise you sometimes see in older gas models. 

Key features and specs

• High‑efficiency non‑condensing gas system
• Designed for indoor installation
• Continuous hot water delivery
• Hot‑Start Programming™
• Compatible with standard venting
• GPM is 7
• Fuel is natural gas
• Depth/height/width: 10x24x13 inches

Why buy: A dependable indoor gas tankless system that balances performance and value without unnecessary complexity.

Price: ~AUD900 – AUD1,400 (supply only)

Best for: Medium households with natural gas access and indoor installation space

6 Rheem RTEX-08kW Electric Tankless

The Rheem RTEX‑08 Electric Tankless is one of the smaller but surprisingly capable electric on‑demand water heaters in Rheem’s Professional Classic line.

This unit is built for homes or specific fixtures where space is tight, yet reliable hot water is still a priority. It’s compact, energy‑lean and doesn’t waste heat while it waits.

This is exactly what you want if you’re tired of running out of hot water or overpaying to keep a big tank warm all day. 

Rheem built this model with practical performance in mind.

It can deliver up to about 1.4 GPM (gallons per minute) of continuous hot water, which translates to enough hot flow for a typical kitchen sink or a low‑flow shower head.

The built‑in digital thermostat lets you dial in temperatures in one‑degree increments between roughly 26 °C and 60 °C — that’s precise control.

Key features and specs

• Up to ~1.4 GPM continuous hot water delivery
• Digital temperature control (in 1°F/1°C increments)
• 99.8 % energy efficient with no standby loss
• Compact, corrosion‑resistant housing
• No venting required (electric operation)
• 5‑year heating chamber, 1-year parts warranty

Why buy: Ideal electric tankless pick for small spaces or single‑point use without gas lines.

Price: ~AUD350 – AUD500 (supply only)

Best for: Under‑sink installation, kitchen points‑of‑use, or small bathrooms where gas isn’t an option.

7 Rheem RTEX-06T Electric Tankless

The Rheem RTEX-06T Electric Tankless unit is one of the most compact and easy-to-fit on-demand heaters in Rheem’s Professional Classic range.

It’s small in size, but it delivers surprisingly practical performance for places where you don’t need a full house system.

This includes kitchen sinks, small bathrooms, laundry rooms, or anywhere a traditional hot water tank feels too big or out of place. 

There’s no gas line, no venting and no bulky storage tank. You mount it close to the point of use, and it heats water only when you need it.

This unit is rated for 6 kW of electrical output, which gives you enough hot water for low-flow fixtures.

It won’t power multiple bathrooms at once, and it’s not meant to replace a whole-house system in larger homes. However, that’s also why it’s so affordable and easy to install. 

Key features and specs

• 6.5 kW electric output
• Precise digital temperature control
• Flow rate up to 0.25 GPM
• Compact and corrosion-resistant housing
• 99.8 % energy efficiency
• No venting required
• 5-year leaks, 1-year parts
• Depth/height/width: 3x7x11 inches

Why buy: A straightforward and budget-friendly electric tankless option for single fixtures or small usage points.

Price: ~AUD300 – AUD450 (supply only)

Best for: Small bathrooms, laundry sinks, kitchen points-of-use where gas isn’t needed or available

8 Rheem RTEX-11 Electric Tankless

The Rheem RTEX-11 Electric Tankless is one of the most versatile electric on-demand water heaters.

It works especially well in smaller homes, apartments* or medium bathrooms where demand is steady but not overwhelming.

With an 11 kW output, this model can deliver around 2–3 gallons per minute of continuous hot water.

That’s enough for everyday tasks like showering, washing dishes and laundry cycles without that annoying drop in temperature you sometimes get with undersized units.

Like other Rheem electric tankless heaters, the RTEX-11 turns on only when water flows through it. That means no energy wasted keeping a big tank heated all day.

This on-demand operation saves power and keeps your utility bills tighter. This is a plus when you’re trying to manage running costs over the long haul. 

Another everyday benefit is the digital temperature control.

You can fine-tune the outlet temperature in precise increments. This makes a noticeable difference if you’re switching between tasks.

Key features

• 11 kW electric output for balanced performance
• Continuous hot water delivery 3.2 GPM
• Precise digital temperature control
• 99.8 % energy efficiency
• Compact, corrosion-resistant housing
• 5-year heating chamber warranty and 1-year parts

Why buy: Great choice for everyday use where gas isn’t an option, but you still want reliable hot water for showers and chores.

Price: ~AUD400 – AUD600 (supply only)

Best for: Small to medium homes or bathroom points where consistent hot water is needed

9 Rheem RTEX-27 Electric Tankless

If you need solid hot water performance without gas, the Rheem RTEX-27 Electric Tankless sits in a really practical middle ground.

It is bigger and more capable than the smaller RTEX-08 or RTEX-11 models.

The heater is built for homes where you want whole-house hot water or at least multiple outlets running at the same time, but you want to keep things electric, simple, and efficient. 

This model pushes out around 27 kW of electrical power.

This means it can support multiple showers and appliances running together, especially in regions where the incoming water isn’t super cold. That’s exactly what makes it a solid choice for everyday Australian home use.

In addition, it only uses energy when water flows through it, so you don’t waste a cent heating water you’re not using.

Another important feature is the digital temperature control. You get precise and step-by-step control of your water temperature, which is easily adjustable on the unit.

Key features and specs

• Up to 0.94 UEF
• 27 kW electric output for higher-demand homes
• Continuous hot water delivery capable of serving multiple outlets
• Precise digital temperature control (26°C – 60°C)
• 2.7-4.9 GPM
• 99.8 % efficient
• 5-year heating chamber and 1-year parts warranty

Why buy: A powerful electric tankless option that can handle whole-home hot water demands without resorting to gas.

Price: ~AUD600 – AUD800 (supply only)

Best for: Medium to large homes that want all-electric hot water with strong flow rates

10 Rheem RTEX-36 Electric Tankless

The Rheem RTEX-36 Electric Tankless heater steps up to around 36 kW of power and can deliver continuous hot water at up to around 6.5 GPM flow.

This is enough for several showers, a dishwasher and a washing machine running at once without that frustrating dip in temperature.

That’s the kind of performance that feels most like a traditional tank system but without the bulk or standby heat loss.

Everything about this unit leans into on-demand efficiency. It stays quiet. It heats only when you open a tap. And because it skips the big storage tank, there’s no energy wasted keeping a reservoir warm around the clock.

That’s simple and real savings, especially in fully electric homes. 

Temperature control is straightforward and precise.

A digital thermostat lets you tune the water exactly where you want it, in one-degree steps between about 26 °C and 60 °C. 

Key features

• UEF of up to 0.94
• Up to 6.5 GPM continuous hot water
• 99.8 % efficiency 
• Precise digital temperature control in 1 °C increments
• Indoor installation
• Durable housing and replacement-friendly heating elements
• 5-year heating chamber and 1-year parts  warranty
• Depth/height/width: 3.5×18.25×21.63 inches

Why buy: Most powerful all-electric tankless option in the Rheem range, perfect for bigger homes without gas.

Price: ~AUD700 – AUD900 (supply only)

Best for: Larger all-electric homes needing strong hot water flow

What Is a Tankless Water Heater?

A tankless water heater, also known as a demand-type or instantaneous water heater, heats water only when you need it.

There’s no storage tank sitting full all day.

When you open a tap, cold water flows through a heat exchanger inside the unit. The system heats it instantly and sends hot water straight to the outlet.

That’s how simple and powerful it is.

Usually, traditional storage systems heat a fixed volume of water and keep it hot around the clock. Once that tank empties, you wait.

Meanwhile, tankless systems don’t store water at all. They respond to demand instead.

When it comes to electric tankless water heater models, they use heating elements powered by electricity. On the other hand, gas models use burners fed by natural gas or LPG.

Both do the same job.

However, they behave differently depending on flow rate, climate and household size.

In Australia, tankless systems tend to suit:

• Homes with limited indoor space
• Apartments and townhouses
• Renovations where tanks are impractical
• Families that want steady hot water rather than a stored supply

Why Choose a Rheem Tankless Water Heater?

Choosing a hot water system is more than just picking a brand.

It’s about daily convenience, energy efficiency and knowing your home will have reliable hot water for years.

Here is why you need to choose Rheem tankless water heaters.

# Save space

The first thing that captures the attention of a homeowner regarding a Rheem tankless water heater is the slim design.

Storage tank water heaters take up a lot of space in a laundry room, a storage area like a garage, or an under-stair storage space. However, a tankless water heater is sleek and mounted on the wall.

It makes a lot of difference when space is an issue in apartments or homes. You’re creating space that ultimately translates to an orderly life.

# Save energy

In Rheem’s tankless solutions, hot water is only made whenever it’s needed.

In traditional water heaters, water stays hot the entire day, even when there’s no one using it, which translates to losing money through electricity or gas.

Tankless systems cut the losses.

Condensing units such as the RTGH or IKONIC, improve even further on this aspect because they also recapture lost heat.

So they are much more energy-efficient than conventional gas heaters.

# Continuous Hot Water

By the way, there is nothing annoying than running out of hot water mid-shower. Tankless Rheem units give you instant access to hot water, meaning that there’s never a pause in showers, baths, or appliance use. It can handle multiple showers or baths or other appliance use related to hot water, such as a soak or an evening bath, provided the unit is appropriately scaled.

# Water conservation

Since water heats instantly, you do not need to turn on the tap while waiting for it to heat up. This has the effect of saving water in the long run, which is beneficial for your wallet as well as the environment. Australian households that use tankless solutions have reported a reduction in water usage.

# Smart technology

A number of models of the Rheem brand feature digital temperature adjustments, diagnostic notifications, or even wireless-enabled models in the newer versions. This allows the user to make adjustments to the temperature setting, as well as monitor the system’s performance. This is not just a convenience feature, but it also extends the system’s life while ensuring the safety of your family.

Electric vs Gas Tankless Water Heaters: Which Is Better for Australian Homes?

Electric Tankless Heaters are incredibly compact.

They’re about the size of a briefcase. They don’t need a gas line which makes them much cheaper to “place.”

However, they pull a massive amount of power.

In Australia, you usually need a dedicated high-amp circuit. They are perfect for apartments or isolated bathrooms but can struggle to run three showers at once in a cold Tasmanian winter.

Gas Tankless Heaters are perfect for performance.

They can deliver a much higher volume of water per minute. If you’re on natural gas, the running costs are often lower than electric.

If you aren’t on a gas main, you can use LPG bottles.

The downside is that they need to be vented to the outside and if you’re switching from an old electric tank, the initial plumbing and gas-fitting work can be a bit of an investment.

How to Choose the Right Rheem Tankless Water Heater

Choosing the right Rheem tankless water heater means matching the unit to how your household actually uses hot water, the climate you live in, and whether electricity or gas makes more sense for your setup.

Here is what you need to consider.

Determine your hot water demand (flow rate)

Begin with the amount of hot water you require simultaneously. Tankless water heaters require hot water on demand since they don’t have a hot water storage.

A shower alone consumes approximately 9 to 12 litres of water a minute, with other sources like the faucet, washing machine, or dishwasher not being left out.

Whether it’s a single person or two people, a smaller electric option may be sufficient.

For a family where two showers are commonly used concurrently, especially during the morning rush, a high-output gas option or a large electric option, such as the RTEX-27 or RTEX-36, will be necessary.

This is a key consideration, as the most frequent complaint about a tankless option is that “it’s not working the way it should without a tank.

Account for incoming water temperature and climate

The Australian climate varies widely.

Thus, it affects the functionality of the tankless water-heating system. In warmer climates, the water entering the system does not require much heating and makes it easier to set up an electric-powered tankless water heating system.

For colder climates or where the mains water is quite cold, it requires more work to heat the water to the level of the shower.

Tankless gas heaters are more convenient with cold water because they produce a high amount of heating power.

If you are located in southern states or are in a region where it tends to be cold during winter, a gas tankless heater is more suitable because it helps to ensure a stable rate of flow with a consistent temperature.

Disregarding climate patterns, common errors include electric heater selection.

Choose fuel type and efficiency

Your fuel choices depend on what is available within your household. Electric tankless water heaters have a number of desirable characteristics.

They are space-saving equipment, as they don’t occupy a lot of space.

Moreover, they are noise-free and don’t need ventilation. But they need sufficient electrical power. Large water heaters often require upgrades.

Gas tankless models, on the other hand, offer greater flow rates and perform better in a larger residence.

They do require adequate venting and gas delivery, but their greatest strength lies in their functionality with multiple hot water points in use at one time.

The most efficient gas type would be the condensing gas models, but non-condensing models are cheaper.

Installation Costs & Requirements in Australia

Installing a tankless unit isn’t a DIY job. In Australia, you need a licensed plumber (and often a licensed gas fitter or electrician).

Expect to pay between AUD800 and AUD2,000 for installation.

If you are switching from a tank to a tankless system, it’s pricier because the plumber has to reroute the pipes. If you’re just swapping an old tankless for a new one, it’s a quick half-day job.

Running Costs & Energy Efficiency Explained

Tankless heaters are generally much cheaper to run. A 6-star gas unit can save you up to 30% on your gas bill compared to an old storage tank.

Why?

Because there’s no “standing heat loss.” You aren’t paying to keep water hot while you’re at work or sleeping.

Maintenance, Lifespan & Warranty (Rheem Systems)

Rheem systems are built to last 15-20 years, whereas most tanks start leaking around year 10.

• Maintenance: You should “flush” your unit once a year with a descaling solution, especially in areas with hard water (like Adelaide or Perth). This removes the calcium buildup on the heat exchanger.

• Warranty: Most Rheem gas units carry a 10-12 year warranty on the heat exchanger. T

Common Problems With Tankless Water Heaters (And How to Avoid Them)

• Insufficient hot water for simultaneous use: This usually happens when the unit is undersized for the household. Avoid it by calculating how many showers and taps are likely to run at the same time and choosing a model with enough output to handle that demand comfortably.

• Temperature fluctuations during use: Sudden changes in water temperature can occur if flow rates vary too much or the system isn’t correctly set up. Proper installation, stable water pressure, and using fixtures with consistent flow help keep temperatures steady.

• Delayed hot water at the tap: Tankless systems heat water instantly, but they still need time for hot water to travel through the pipes. Installing a recirculation system or shortening pipe runs where possible can reduce waiting time.

• Electrical limitations with electric models: Some electric tankless water heaters require higher amperage than older homes can supply. Checking your switchboard capacity before installation prevents unexpected upgrade costs later.

Final Verdict: Are Rheem Tankless Water Heaters Worth Buying in Australia?

If you’re still using a massive 300L electric tank that was installed in 2005, you are literally throwing money down the drain.

Rheem’s 2026 lineup is efficient, reliable and backed by a local support network that is hard to beat.

People with apartments, office spaces, or those with massive solar arrays who want to get off the gas grid should buy electric models.

Meanwhile, families who need high-volume water and want the most proven and reliable technology for multiple bathrooms.

FAQs 

Yet in many Australian homes, water heating remains one of the most significant single energy costs, quietly consuming electricity or gas every day of the year.

In 2025, that matters more than it used to.

Energy prices remain elevated. Solar uptake is widespread.

Gas is becoming less attractive. And households are under growing pressure to reduce ongoing running costs without sacrificing comfort.

Against that backdrop, heat pump water heaters stand out as a practical, proven upgrade — not a niche option or future concept, but a system that aligns with how Australian homes are already changing.

1 Lower Energy Use is the Core Advantage

Heat pump water heaters use significantly less electricity than conventional electric storage systems.

Instead of heating water directly, they transfer heat from the surrounding air into the water tank.

This approach requires significantly less electrical input, resulting in a substantial reduction in energy consumption for hot water.

For households where water heating accounts for a large share of total energy use, this difference alone can reshape annual power bills.

The saving is structural.

It doesn’t rely on habits, timers, or behavioural change.
The system is simply more efficient by design.

2 Australian Climate Conditions Suit Heat Pump Systems

Heat pump performance depends on access to ambient warmth. In Australia, that requirement is rarely a limitation.

Across most regions, including the southern states, average air temperatures remain well within the operating range required for efficient heat transfer throughout the year. In warmer and coastal areas, conditions are even more favourable.

This makes heat pump systems a natural fit for Australian housing, rather than a technology that has to work against the local climate.

3 Electricity Prices Strengthen the Case

Electricity costs have become a long-term concern for households, not a short-term spike.

While tariffs fluctuate, the broader trend has made high-consumption appliances more expensive to run year after year.

Reducing demand, rather than attempting to predict future prices, offers a more reliable path to cost control.

Because heat pump water heaters draw much less power, households are less exposed to price increases over time.

The benefit compounds annually, rather than offering a one-off saving.

4 Strong Alignment With Rooftop Solar

Australia now has one of the highest rates of residential solar adoption in the world. Heat pump water heaters integrate well with this reality.

Many systems can be programmed to operate during daylight hours, using electricity generated on-site rather than exporting it back to the grid at a low feed-in rate.

In effect, the hot water tank becomes a form of energy storage. Solar power is converted into hot water during the day and used later, reducing evening grid demand.

For solar households, this pairing improves self-consumption and overall system value.

5 Gas is Becoming Less Appealing for New and Existing Homes

Gas hot water systems have traditionally been seen as reliable and cost-effective. That position is weakening.

Gas prices have risen, supply uncertainty has increased, and new housing developments are increasingly moving away from gas connections altogether. In some areas, electrification is now the default approach.

Heat pump systems offer a way to move fully electric without accepting high running costs. They eliminate reliance on gas while keeping operating expenses low.

6 Rebates Materially Reduce Upfront Costs

The initial purchase price is often the main barrier to adoption. Heat pump systems cost more upfront than basic electric tanks.

However, federal and state rebate schemes significantly reduce this gap. Depending on location and system type, incentives can lower the installed cost by a meaningful amount.

When rebates are applied and running cost savings are factored in, total ownership cost over the life of the system often compares favourably with traditional options.

7 Long-term Operating Costs Remain Consistently Low

Once installed, heat pump water heaters deliver ongoing savings without further intervention.

They use less electricity every day, across all seasons.

Over the lifespan of the system, this translates into substantial cumulative reductions in energy expenditure.

Unlike short-term efficiency measures, this benefit does not fade over time. The system continues to perform in the same way year after year.

8 Modern Systems Have Addressed Earlier Concerns

Earlier generations of heat pump water heaters faced criticism for noise, slow recovery times, and inconsistent performance in cooler conditions.

Current models have resolved many of these issues. Improvements in fan design, insulation, controls, and refrigerants have led to quieter operation and more stable output.

When correctly specified and installed, modern systems provide reliable hot water comparable to conventional storage units.

9 Suitable for a Wide Range of Households

Heat pump water heaters are not limited to a narrow household profile.

They are well-suited to:

• Family homes with high daily hot water demand
• Couples seeking predictable running costs
• Homes replacing ageing electric storage tanks
• Properties transitioning away from gas
• New builds aiming for higher energy ratings
  

System sizing and placement are critical, but when these factors are handled properly, suitability is broad.

10 Maintenance Requirements are Modest

Maintenance for heat pump systems is generally straightforward.

There is no combustion process, no flue, and no gas infrastructure to inspect. Routine checks typically involve ensuring clear airflow and general system condition.

This simplicity contributes to lower long-term maintenance costs and fewer failure points.

11 Consistent Comfort Remains the Priority

Efficiency gains are only valuable if comfort is maintained.

A properly sized heat pump water heater provides consistent hot water, even during periods of high demand. Issues such as running out of hot water are more commonly linked to undersized systems than to the technology itself.

When matched correctly to household usage, performance meets everyday expectations without compromise.

12 Alignment with Future Housing Standards

Energy efficiency expectations for homes are increasing. Buyers, tenants, and regulators are paying closer attention to operating costs and emissions.

All-electric, low-consumption systems are becoming the preferred baseline rather than an upgrade.

Heat pump water heaters fit squarely within this direction, offering longevity in a changing regulatory and market environment.

Final Thought

In 2025, heat pump water heaters will no longer be an early-adopter choice in Australia.

They offer:

• Substantially lower energy use
• Strong compatibility with solar power
• Reduced reliance on gas
• Stable long-term running costs
• Proven performance in local conditions
  

For households replacing an existing system or planning a new installation, they represent a rational, future-ready option rather than a speculative one.

They do not change how hot water feels. They shift the cost of production. And for many Australian homes, that difference now matters.

Then suddenly everyone’s talking about it. The shower goes cold, the dishes pile up, and someone’s outside tapping the tank like that’ll magically fix it.

In most homes across Australia, heating water quietly chews through a big chunk of the power bill. About a quarter, sometimes more, according to the Australian Department of Energy.

And if your system’s old or just not right for how your household uses water, you’ll feel it, both in the bills and in the morning when the water turns icy halfway through.

The truth is, no one system suits everyone. What works fine in Queensland might be hopeless in a cold bit of Victoria. Even how far your bathroom is from the tank can make a difference.

So, how do you get the right hot water heater for your home?

The answer is in our guide. 

This isn’t one of those complicated guides. It’s just a simple run-through of what matters so you can pick a system that actually fits how you live.

How to Pick the Right Hot Water Heater in Australia

1. Start with the Size of Your Household

The first thing to think about is who’s living under your roof and how they use hot water.

A single person who showers in the morning and runs one load of washing a week won’t need the same setup as a family with kids who all shower one after the other.

For smaller households, a tank around 125 to 160 litres usually does the job. For a family of four or five, look closer to 250 or even 315 litres.

And if you’ve got teenagers, go bigger. You’ll thank yourself later when no one ends up standing there with shampoo in their hair waiting for hot water to come back.

If you’re thinking about a continuous flow or instant system, you don’t need to worry about tank size at all.

What matters is the flow rate.

The higher the rate, the more taps you can run at once without losing pressure. That’s the real test of comfort.

2. The Type of Energy Makes All the Difference

Next up is what powers the system. In Australia, you’re looking at electricity, gas, solar, or a heat pump. Each one has its good and bad points.

Electric heaters are the most common.

They’re cheap to install, simple, and easy to replace. The downside is they’re not cheap to run.

Power prices have been climbing for years, and if your heater runs during the day instead of off-peak, you’ll see it on your bill.

Gas is usually better if your home already has a connection. It heats water fast and works well even when the weather turns cold.

Continuous gas systems are popular because they only heat what you use. That means less waste and lower bills.

Then there’s solar, which everyone likes the idea of. It’s clean, it’s quiet, and the energy’s free once it’s set up. The catch is the cost upfront.

Panels, storage tanks, installation — it all adds up. But government rebates can take some of the sting out, and once it’s in, it pays you back every sunny day.

Heat pumps are another smart option. They pull warmth from the air to heat the water, a bit like a fridge in reverse.

They cost more to buy but can cut your power use by two-thirds. If you live somewhere warm like Queensland or northern NSW, they’re excellent.

3. Match the Climate Where You Live

The climate where you live makes a huge difference.

In places like Brisbane or Perth, a heat pump or solar system runs beautifully because it’s generally warm and sunny.

But if you live in Hobart, Canberra, or anywhere that gets chilly winters, solar might struggle in the colder months. In those areas, gas or a hybrid setup usually performs better.

If your home’s near the coast, think about corrosion too. Salt air can be rough on metal.

Look for systems made from stainless steel or with solid anti-rust protection. It’s one of those small details that saves you money later.

4. Storage Tank or Instant System

This one trips a lot of people up. Storage systems keep a tank of water hot all day. Instant systems heat the water only when you need it.

Storage is simple and reliable. It suits households that use water in steady patterns.

The downside is that it keeps heating water even when you’re not using much, which wastes energy.

Instant systems, on the other hand, give you hot water whenever you want without running out.

They’re compact and perfect if space is tight. You just need to make sure your home’s gas or power setup can handle it.

5. Think About Where the System Will Go

Some of us don’t think about this until the installer shows up.

Where the system sits actually matters. If the tank or unit is too far from your kitchen or bathroom, you’ll lose heat through the pipes and wait longer for hot water to arrive.

Ideally, place it near where you use hot water the most.

Outdoor systems need to be protected from harsh weather, while indoor ones need proper ventilation if they run on gas.

A licensed plumber will help you determine the safest and most efficient location.

6. Understand the Running Costs

The price tag on the box isn’t the full story. What really matters is what it costs to run every month. Electric systems usually cost the most in the long run.

Gas sits somewhere in the middle. Solar and heat pumps can save you hundreds each year once they’re running efficiently.

If you’re planning to stay in your home a while, it’s worth spending a bit more upfront for a system that uses less energy. It’s the same idea as buying a car.

The cheaper one might look good at first, but you’ll end up paying more for fuel later.

7. Maintenance and Lifespan

We all forget about maintenance until something breaks. But a bit of care each year keeps a system running smoothly and saves you from nasty surprises.

Electric and gas tanks usually last around ten years with proper servicing.

Solar and heat pumps can last fifteen or more years if you replace the small parts like valves and anodes when needed.

It’s worth having a plumber do a quick check once or twice a year. They’ll look for leaks, test the pressure valve, and make sure everything’s safe.

A simple inspection can add years to the system’s life.

8. Check for Government Rebates and Energy Ratings

There’s some good news here.

Choosing an efficient system can actually earn you money back. Many states and territories offer rebates for solar and heat pump systems.

Also, don’t skip the energy rating label.

More stars usually mean lower running costs. Even one extra star can save a decent amount of money each year without you having to change a thing.

9. Watch Out for Common Mistakes

The most common mistake is buying purely on price. The cheapest option might look fine at the store, but if it’s the wrong size or energy type, you’ll regret it later.

Another is replacing your old system with the same model without checking what’s changed. Technology moves fast.

A modern heat pump or solar hybrid can easily cut your bills in half compared to something built ten years ago.

And don’t try to install it yourself.

It might seem simple, but a bad installation can lead to leaks, poor performance, or even safety risks. Always get a qualified plumber to handle it.

What It All Means

Choosing the right hot water heater doesn’t sound like a big deal until you get it wrong. But the right system will quietly make your life easier and cheaper every day.

Take the time to look at your home, your climate, and your household habits before you decide. Ask a licensed plumber for advice if you’re unsure.

In the end, the best system is the one that gives you steady hot water, keeps your bills under control, and lasts for years without a fuss.

For the average Aussie family, water heating accounts for a massive 15% to 30% of the total electricity bill, depending on location and system type.

In high-consumption areas like Perth, this figure can soar even higher. The choice of a hot water system, therefore, is not a minor appliance purchase—it’s a long-term financial strategy.

The Rheem heat pump promises to completely shift this financial burden.

Who Is Rheem, and Why Does It Matter?

Rheem is an Australian manufacturing leader with over 85 years of history in the hot water industry.

This experience makes it one of the most trusted and recognisable names for reliable systems built for local conditions.

The company’s goal with the AmbiPower is to bridge its legacy of durability with the urgent demand for energy efficiency.

It matters because it offers Australian homeowners a proven and strong system to drastically cut hot water energy consumption, which accounts for up to 30% of household power bills.

Furthermore, Rheem partners extensively with plumbers and renewable energy installers across the country.

It ensures there are enough systems and experts for local installation, plus a strong after-sales support via its established national service network.

In short, choosing the Rheem brand means investing in a product backed by the largest and most reliable support system in the Australian market.

How a Rheem Heat Pump Actually Works

A heat pump operates on a completely different principle from the electric element it replaces. Think of the Rheem heat pump as an air conditioner on a reverse cycle.

Here is the simple step process:

1. The unit uses a fan to draw in warmth from the surrounding air (even very cold air contains usable heat energy). 
2. The air is then passed through an evaporator coil. This is actually where a liquid refrigerant absorbs the heat and turns it into vapour. 
3. The vapour is then compressed. This simple act drastically increases the temperature and the pressure of the vapour.
4. This super-heated gas is circulated through a heat exchanger, transferring its thermal energy directly into the water tank. 

The effectiveness of this process is measured by the Coefficient of Performance (COP).

The Rheem AmbiPower 280e achieves a maximum COP of 5.2.

This means that for every 1kW of electricity used to run the compressor, the system delivers an incredible 5.2kW of heating power to the water.

This is how it achieves over 400% efficiency compared to a standard electric heater.

What Makes Rheem Heat Pumps Stand Out?

🟥 Top-Tier Thermal Efficiency (COP of 5.2): The primary selling point is the AmbiPower’s exceptional Coefficient of Performance (COP) of up to 5.2. This places it at the peak of integrated heat pump efficiency in Australia. 

🟥 Durability and All-Climate Operation (Down to -6 degrees Celsius). Rheem engineers its products to handle the full spectrum of Australian climates. This minimises the need for the less-efficient backup electric element in cold weather.

🟥 EcoNet enabled: This is similar to having a smart and energy-efficient assistant. It is easy to monitor and control your heat pump through this EcoNet app.

🟥 Brushless DC condenser motors (BLDC): The motors are set in the efficient manner. They’re quiet and keep your system running well for years. 

🟥 The Power of the National Network: Ultimately, the biggest stand-out feature is the backing of the Rheem organisation. This guarantees that homeowners benefit from the most established supply chain in the country.

PlusOne® diagnostic & Bluetooth® 1 connectivity: This combination makes the system’s inspection and troubleshooting easy.

🟥 Variable speed scroll compressor & inverter drive: This feature really adapts to your heating and cooling requirements in real time.

🟥 Swept Wing Fan technology: For Aussies who love quiet heat pumps, the Rheem option is the best. It is designed to minimise noise significantly.

🟥 7 mm condenser copper coil 2: This coil offers better heat transfer which means better performance.

🟥 Inverted reversing valve: This feature helps your system switch between cooling and heating.

The Models:

AmbiPower MDc- 180 Heat Pump (in R513a) and AmbiPower 5kW Split Heat Pump System — Which One Suits You?

Rheem offers several configurations to suit different household sizes and site requirements.

We focus on two primary models that cater to distinct segments of the market: the compact and all-in-one MDc-180 and the high-capacity and space-saving 5kW Split System.

Ambipower MDc- 180 Heat Pump (in R513a) – The Compact size for all climates Solution

The MDc-180 is Rheem’s next-generation, integrated 180-litre heat pump, designed as a direct, drop-in replacement for traditional electric tanks in small-to-medium households.

It prioritises a small footprint and exceptional cold-climate performance. 

Specifications: Rheem Ambipower MDc- 180 Heat Pump (in R513a)

• Dimensions: (H x W),1810mm×532mm (Compact footprint)
• Capacity (Nominal): 178 L
• Operating Range: -7 °C to +43∘°C
• Noise Level: ≤ 48dB(A)
• No. of People: 1-4
• Warranty: 7 years

What we like about the MDc-180 Heat Pump (in R513a)

• An operational range down to -7 degrees Celsius makes this one of the most reliable options for cold-climate regions like Tasmania and the Central Tablelands. This helps reduce reliance on the boost element.
• The use of R513a ensures a significantly reduced Global Warming Potential compared to older R134a models.
• Its slim profile (532mm width) is excellent for tight installation spaces often found in smaller homes or units.
• Advanced wrap-around heating for uniform and faster water temperature recovery compared to older heat pump designs.

What could be better

• At ≤ 48dB (A), it’s quiet. However, it is marginally louder than some competitors that fall under bD (A).

✔️ Best for: Small households (1-4 people) or those replacing an electric system in a very cold climate where space is a challenge and reliability below zero is paramount.

AmbiPower 5kW Split Heat Pump System – Premium, Efficient & Built for full frost protection

The AmbiPower 5kW Split System is Rheem’s high-capacity and flexible heat pump solution. It separates the compact heat pump unit from the large storage tank.

This helps it address installation challenges and delivers powerful hot water recovery using the superior R290 refrigerant.

Specifications: AmbiPower 5kW Split Heat Pump System

• System Type: Split (External Heat Pump Unit, Separate Tank)
• Tank Options,315L Vitreous Enamel or 325L Stainless Steel
• COP: ∼4.5 (at 19∘°C ambient up to 5.1 in warmer conditions)
• Refrigerant: R290 (Ultra-Low GWP of 0.02)
• No. of people: 4–6 people
• Heating Capacity: 4.5kW (at 19∘°C ambient)
• Operating Range: −6∘°C to +43∘°C
• Frost Protection: Full frost protection
• Tank Warranty: 10 years

What we like about the AmbiPower 5kW Split Heat Pump System

• Installation flexibility, as the tank and heat pump unit can be separated by up to 5 meters. This is important because it allows the tank to be installed indoors (e.g., in a garage or cellar) while the outdoor unit operates efficiently. 

• It is designed for full frost protection across all Australian climates, offering robust performance in areas prone to heavy or frequent frost.

• The powerful 4.5kW module and large tank capacity ensure a high hot water recovery rate. This easily meets the peak demand of large households.

• The 10-year cylinder supply warranty is the longest Rheem offers for its heat pump range and this provides long-term confidence.

• Uses R290 which is an Ultra-Low Global Warming Potential refrigerant that sets a high standard for sustainability.

What could be better

• As a split system with a premium, high-capacity tank, the total installed cost is typically higher than that of integrated models.

• Installation requires connecting the refrigeration unit to the water tank via plumbing. This is slightly more complex than the simple ‘all-in-one’ units.

✔️ Best for: Large households (4–6 people) seeking maximum installation flexibility, high hot water capacity/recovery and the strongest system for cold climates where full frost protection and a long tank warranty are non-negotiable.

Rheem’s Smart Tech: Modes That Let You Control Every Watt 

One thing Rheem did right with the AmbiPower series is the control panel.

It doesn’t feel confusing.

You don’t sit there thinking, “Which button is going to break something?” Instead, the system gives you a handful of modes that fit real-life situations.

You pick what you want, and it does the rest.

Here’s how each one works.

🟥 Energy Saver Mode (Default)

This is the mode most people leave it on, and honestly, you can run the system for years without touching anything else.

It leans on the heat pump to do most of the work, which keeps your running costs low.

If things get chilly outside or you suddenly need a quick boost, the electric element steps in.

You get solid efficiency without stressing about running out of hot water. It’s very much a “just let it do its thing” setting.

🟥 Heat Pump Only Mode

This one is for people who want the absolute lowest running cost and are happy to trade a bit of speed for it.

The electric element sits out completely.

Everything runs off the compressor. Great if you’ve got solar and want the tank heating in the middle of the day while the sun is doing the heavy lifting.

Just know it heats slower, so back-to-back showers might push it.

🟥 High Demand Mode

Imagine visitors staying over, kids having long showers, washing machine running non-stop — chaos. This mode is for that.

Both the heat pump and the electric element fire up together, so the tank refills fast. It’s the quickest way to recover the whole system when you know you’re going to be using a lot of hot water.

🟥 Electric Only Mode

This one feels like a throwback. The heat pump turns off, and the unit heats water the old-school way — straight electricity.

It’s quick but expensive to run.

Most people only use it in a pinch, like if the weather is freezing or something needs a top-up urgently. 

🟥 Vacation / Away Mode

If you’re heading out for a few days or longer, this mode keeps the tank warm enough to stay safe while cutting down on your power use.

It doesn’t heat water you’re not going to use. Once you’re back, switching out of this mode sends it right back to normal operation. It’s that simple.

How Much Do You Save on Installing a Rheem Heat Pump

If you’ve been wondering whether a Rheem heat pump is worth the money, the short answer is: most people end up saving more than they expect.

The savings show up in two places — what you spend up front, and what you keep in your pocket every year after.

Let’s break this down.

1. The Long-Term Savings (Where the Real Wins Happen)

The biggest shift happens once the system is running. Heat pumps use far less electricity than old electric tanks. In some homes, it’s close to 70% less. That’s massive.

On average, most households keep around AUD500–AUD550 a year that would’ve gone straight to the power company.

Some save more, especially if they’re on the higher end of electricity rates or have a busy household that chews through hot water.

Yes, heat pumps cost more upfront than a basic electric tank. Everyone knows that part. But those yearly savings slowly chip away at the price difference.

Most homes hit the break-even point in three to seven years, depending on hot water usage and local energy rates.

After that, it’s just pure savings every year the unit keeps working.

2. The Upfront Savings (This Part Surprises People)

A lot of homeowners in Australia don’t realise how many financial incentives are available. And they stack.

• Federal Tax Credit:

If your Rheem model meets the required efficiency standards, you can get up to AUD2,000 back on your taxes. That instantly knocks a big chunk off the purchase.

• State and Local Rebates:

Depending on where you live, your state or even your local utility might offer additional rebates for upgrading to an efficient system.

These vary a lot, but sometimes they’re hundreds of dollars on top of the federal credit.

Put everything together, and the upfront cost can drop far lower than what people assume.

In some cases, homeowners find that the rebates bring the total cost close to — or even below — a traditional electric tank install.

Performance, Installation, and Support: What You Can Expect From Rheem

Performance Across Aussie Conditions

Australia’s climate is all over the place. You’ve got humid summers up north, icy mornings down south, and everything else in between.

Rheem clearly had that in mind when they built the AmbiPower range because these units aren’t picky about where they live.

• Strong Cold-Weather Performance

Let’s start with the colder states.

Anyone in Victoria or Tasmania knows winter can hit hard, and many heat pumps struggle once the temperature drops.

The R290 models — like the AmbiPower 280e and the 5kW Split — handle low temperatures far better than older designs.

They’re rated to keep running efficiently even when the air outside hits –6°C, which is seriously impressive.

Why does that matter?

It’s because the colder it gets, the more other systems rely on their electric element. That electric element is the expensive part to run.

The better the heat pump performs in the cold, the more money you keep in your wallet. Simple as that.

• High Efficiency in Warm Areas

Now swing over to Queensland or Western Australia, where it feels like summer lasts ten months of the year. Heat pumps absolutely thrive in these areas.

With so much warm air to work with, the AmbiPower units often reach a COP above 5.2. Simply, the system makes a lot of hot water for very little electricity.

This is where people with solar really win. The heat pump runs almost effortlessly, heating the tank fast while your panels handle the bulk of the work.

• Safety Built In

No matter the climate, Rheem keeps things stable. Every model includes the controls needed to maintain water at 60°C, which is the sweet spot for safety and for preventing bacterial issues.

And they do it without chewing through electricity like an old electric tank would.

The insulation is thick, the temperature controls are reliable, and everything feels like it was built with long-term use in mind.

Installation Experience

Replacing an existing electric storage unit with an AmbiPower heat pump is designed to be a straightforward process for certified Rheem installers.

• Integrated Units (280e / MDc-180)

These are the simple ones. Everything is built into a single outdoor unit, so most of the time it’s a straight replacement.

The installer disconnects your old tank, slides the new one in, hooks up the same plumbing and electrical lines, and that’s all. 

• Split Systems (5kW)

These take a little more coordination.

However, they also give you more flexibility. The heat pump sits outside, and the tank can go indoors or somewhere more tucked away.

You’ll usually have a plumber handling the tank and water lines and a refrigeration tech running the refrigerant piping to link the two parts.

It’s a bit more involved, but it solves the “I don’t have space for a giant cylinder outside” problem that many homes run into.

• Airflow Needs

One thing every heat pump needs is space to breathe. The unit has to pull in warm air and push out cooler air.

If it’s crammed into a tight corner or boxed in behind fencing, it won’t run efficiently.

Installers make sure there’s enough open space around it so it can do its job without recycling its own cold exhaust air.

Comparing the Rheem Heat Pump  to Other Brands

The Australian heat pump market is highly competitive, featuring both integrated (all-in-one) and split systems.

Rheem AmbiPower distinguishes itself by balancing near-top-tier efficiency with unrivalled national support and reliability.

Here is how the Rheem AmbiPower compares against key competitors:

Pros of Rheem Heat Pump Hot Water Systems

• They’re seriously efficient, especially compared to older electric tanks. Most people notice the drop in their power bill pretty quickly.
• The units hold up really well in colder states, which is something a lot of heat pumps struggle with. The R290 models don’t tap the backup element nearly as often, so you’re not losing savings in winter.
• The integrated designs are easy to install. A lot of plumbers appreciate that it’s almost a straight swap for the old tank.
• The split systems give you flexibility with placement, which helps if your outdoor area is cramped or awkward.
• They heat water fast for a heat pump, especially in warmer climates.
• They keep water at safe temperatures without wasting energy. 
• Rheem has a big installer network, so support and parts aren’t a headache.

Cons of Rheem Heat Pump Hot Water Systems

• They cost more upfront than basic electric systems, even though they pay themselves back over time.
• Like any heat pump, they need good airflow, so you can’t just tuck them into a tiny corner and forget about them.
• The split system setup involves both a plumber and a refrigeration tech, which can mean a longer installation window.
• Some people notice a bit of noise from the outdoor unit, especially at night, depending on where it’s placed.

Rheem Heat Pump Review 

⭐️ Price (Net of Rebates): 7.5 / 10

The upfront price still limits some people from buying. But once the rebates kick in, the final cost looks a lot friendlier.

With the federal credits and what many states offer, you end up paying far less than expected. For what the system delivers, the value is genuinely solid.

⭐️ Warranty & Support: 9.5 / 10

This is where Rheem really shines. The warranty is generous—up to 10 years on the tank—but the real winning piece is their service network.

If something goes wrong, there’s almost always someone close by who can fix it without leaving you waiting for weeks.

⭐️ Performance (Cold/Recovery): 8.5 / 10

A lot of heat pumps start struggling once the temperature drops, but this one keeps going.

It handles cold mornings down to -6°C without leaning too hard on the electric backup. Recovery times stay strong, too, so households don’t end up running out of hot water just because it’s winter.

⭐️ Efficiency (COP): 9.0 / 10

This unit sits near the top of the efficiency chart. With a COP up to about 5.2, it turns a tiny amount of electricity into a surprising amount of hot water.

Over the years, that adds up to real savings—honestly, one of the biggest reasons people switch in the first place.

So, is the Rheem Heat Pump Worth it?

Yes, the Rheem AmbiPower Heat Pump is an outstanding long-term investment for the vast majority of Australian households.

The worth of the system is proven through two major factors.

Financially, the AmbiPower’s COP  ≤ 5.2 drives energy savings of up to 73% on your hot water bill.

This means the investment is often paid back within 3 to 7 years through savings alone, generating pure profit for the remainder of its life.

Operationally, the value lies in reliability. Choosing Rheem guarantees you are backed by the largest service network in the country.

You get a product built for Australian extremes with excellent cold-weather performance and a long-life cylinder warranty, ensuring minimal downtime and maximum peace of mind.

Final Verdict

If you’re serious about cutting your energy bills and want hot water you can rely on, the Rheem AmbiPower heat pump is a solid pick.

Yes, the upfront cost is higher than a standard electric tank. But once you factor in rebates, federal incentives, and the long-term energy savings, the numbers start looking really good.

It’s not just about money, either.

Rheem has been in the Australian hot water game for over 85 years, so you’re getting a system built for local conditions.

Add in the nationwide installer network and long cylinder warranty, and you’ve got a setup that’s designed to last, with support you can actually count on.

FAQs

If yes, this is exactly where you need to be.

In Australia, gas water heaters have been the preferred option for water heating for decades due to their low installation costs, ability to function reliably in cold regions, and dependability. 

However, heat pump water heaters have become the talk of the town recently after a spike in gas prices and new government incentives offered in an effort to push energy efficient technology into the Australian market.

So, in 2025, which one actually makes the most sense? Let’s analyse it using actual expenses, real figures, and a healthy dose of common sense.

Gas Vs Heat Pump Water Heaters: How They Work

Before beginning to analyse them and choosing the right fit for your household, it is important to understand the key difference between these two types of water heaters, i.e., the way they operate.

Simply put, gas water heaters use a flame to directly heat water by burning natural gas or LPG. Heat pump water heaters, on the other hand, work like a reverse refrigerator by using energy to draw heat from the air and transfer it to your water tank.

Their cost and environmental performance are directly influenced by the way they generate heat.

Upfront Costs: Which One Hits the Wallet Harder?

Let’s begin with the aspect that is seen to affect the buying decisions of Australians most of the time and truly concerns everyone: the upfront expense of installing a water heater.

Looking at the price ranges, gas water heaters definitely seem cheaper. Yet, the rising energy prices and various rebate schemes offered by the Australian government for heat pump water heater installations urge us to give equal consideration to other options. 

Government Incentives and Rebates

This is where heat pump water heaters will stand out in your analysis of both systems.

Australian government is taking solid measures for environmental sustainability and reducing the carbon footprint. Small-scale Technology Certificates (STCs), offered by the Australian Government’s Small-scale Renewable Energy Scheme (SRES), are one such initiative that can help you reduce installation costs by $800 to $1,200.

Furthermore, with incentives, state-level initiatives like the NSW Energy Savings Scheme and Victorian Energy Upgrades can lower the ultimate cost to almost $2,000.

In contrast, gas water heating systems hardly ever qualify for any such incentives.

Operating Expenses: Another Game-Changer

Based on the statistics from the Australian Government’s Energy Rating:

• Operating a gas storage water heater normally costs around $400 to $600 every year.
• The typical cost of a heat pump water heater is only $150 to $250 annually, depending on the model and consumption.

This amounts to a yearly operating cost reduction of about 60% for those using a heat pump water heater. Consequently, it is safe to say that the greater initial cost of a heat pump could be readily compensated for by the $2,000 to $3,000 you could save over a period of ten years.

The Benefit of Solar Energy

Its energy efficiency already earns a heat pump water some extra points, but this helps it climb the ladder up even higher. A heat pump can operate virtually for free throughout the day if your house already has rooftop solar.

No matter how sunny the weather gets, gas water heating systems will continue to burn fossil fuels, thus they cannot benefit from your solar energy.

For this reason, solar-compatible heat pumps such as iStore or Rheem Ambiheat are becoming increasingly popular throughout Australia, especially in Queensland, Western Australia, and New South Wales, which have the highest rates of solar installations.

Noise, Maintenance, Performance & Lifespan

Noise:

Like a refrigerator, heat pumps have a soft hum that ranges from 45 to 50 dB. So, placement needs to be well thought out if noise is an issue. Gas systems, on the other hand, are almost silent.

Maintenance: 

Gas heaters need to have their burners, pilot lights and leaks checked on a regular basis. Most heat pumps, however, require yearly maintenance and filter cleaning only.

Performance in cold weather: 

The idea that heat pumps “don’t work in winter” is among the most pervasive misconceptions about them. In severely cold climates or places with little ventilation, gas water heating systems do continue to have a slight edge, but for 95% of Australian houses, the performance difference has vanished.

Lifespan: 

Although heat pumps frequently outlast gas systems with fewer moving components, both have an average lifespan of 10 to 15 years.

Gas Water Heater Vs Heat Pump Water Heater: The Ultimate Choice

Gas water heating systems still make sense if you live in a chilly climate without solar power because it’s simple, consistent, and dependable.

However, a heat pump water heater is the better long-term investment for the majority of Australian homes, particularly those with solar panels or those fed up with erratic increases in gas prices.

Not only is a heat pump water heater better, but it’s the next big thing if you want to reduce your energy costs, future-proof your house, and support Australia’s clean energy agenda.

Looking Ahead

Moving from gas to a heat pump may seem like a significant change, but so was going from flip phones to smartphones.

Technology has advanced, prices have decreased, and there are noticeable savings. So, you should give the heat pump water heater careful consideration, whether you’re building, remodelling or just ready for lower bills.

FAQs

Well, you’re not alone.

To answer the questions lingering in your head, almost half of that energy bill is usually attributed to the heating and cooling systems in Australian households.

In fact, homeowners in Australia are beginning to realise the little-known fact that their hot water systems consume about a quarter of the energy used by their household.

For this reason, Australian households are quickly switching to heat pump water heaters.

They are not just another eco-trend. Rather, these are among the best investments you can make to lower your long-term energy expenses.

They’re a smarter, cleaner, and far more efficient way to keep the hot water running without burning a hole in your wallet. 

However, a major question arises once you decide to join the movement: which system should you actually purchase?

Rinnai and iStore are two names you’ve undoubtedly seen everywhere if you’ve done even five minutes of research. Both claim to future-proof your hot-water system, save energy costs, and are common in Australian houses.

But in terms of reliability, cost, and performance, which one truly delivers?

To help you make this long-term investment, let’s examine how Australia’s most common choices, Rinnai and iStore, differ from one another, their respective functions, and which heat pump water heater offers the best value for your money.

How do heat pump water heaters work?

Unlike a conventional electric water heater, a heat pump water heater does not directly produce heat. Rather, like a refrigerator in reverse, it draws heat from the air and moves it into the water tank.

Prior to comparing Rinnai and iStore, it is helpful to understand how heat pump water heaters generally work and what makes these systems so unique.

Unlike a conventional electric water heater, a heat pump water heater does not directly produce heat. Rather, like a refrigerator in reverse, it draws heat from the air and moves it into the water tank.

This method is among the most efficient ways to heat water because it uses up to 70% less power compared to traditional water heaters. 

Now, let’s see which of these two famous brands does it better by comparing their specs.

Rinnai Heat Pump Water Heaters: Built on the foundation of reliability

Renowned for its gas systems, Rinnai has been a household name in Australian homes for a long time.

The company is now branching out into heat pump technologies. Its line, like the Rinnai Enviroflo series, is designed for individuals who demand reliability and easy integration into existing systems.

What Makes Rinnai Stand Out

Better Performance in Cooler Climates: 

A robust compressor built into Rinnai systems ensures dependable operation even in colder temperatures. In southern areas where mornings can be cold, like Adelaide or Melbourne, that is a significant benefit.

Quiet Operation: 

The machine operates with little noise, much like a contemporary refrigerator, which makes it appropriate for indoor installations or smaller residences.

Option for Hybrid Technology: 

If the air temperature falls too low, certain Rinnai models have electric backup heating elements that start up automatically.

Don’t Forget:

Slightly Higher Power Draw: In the same circumstances, Rinnai heat pumps typically use a little more electricity than iStore systems.

Less Smart Integration: Rinnai’s control system seems more conventional than iStore’s, with fewer choices for app-based monitoring.

What Rinnai Heat Pump Water Heaters Are Perfect For

Rinnai is best for homeowners who place a high value on performance, brand reputation, and reliability in a variety of conditions. For homes that require reliable hot water without worrying about technological aspects, this system is “set-and-forget.”

iStore Heat Pump Water Heaters: Designed for Eco-Friendly, Smart Lifestyle

The iStore technology is known for being an extremely efficient solution that works well with solar energy systems. Developed in Australia for Australian circumstances, it’s been developed with the country’s long summers and significant temperature changes in mind.

What Makes Rinnai Stand Out

Superior Efficiency:

With a Coefficient of Performance (COP) of up to 4.0, the iStore 270L model may produce up to 4 kW of heating energy for every 1 kW of electricity it consumes. Compared to most similar systems, this is much higher.

Solar-Ready Design: 

You may maximise your daytime self-generated energy by integrating iStore with rooftop solar systems.

Smart Control System: 

You may schedule your water heating cycles to coincide with your solar output or off-peak tariffs by using the app connectivity.

Quieter Operation: 

It’s one of the quieter alternatives available because the compressor and fan are made to function smoothly.

Don’t Forget:

Best in Warm to Moderate Climates: Although effective, the performance of iStore systems may noticeably degrade in very cold climates. States with continuously warm ambient air, such as Queensland, NSW, and WA, are ideal for them.

Greater Upfront Cost: You will probably have to pay a bit more upfront because of the technology and solar integration possibilities, but the long-term benefits will usually offset it.

What iStore’s Heat Pump Water Heaters Are Perfect For

These systems are perfect for homeowners who care about the environment and want to use as little energy as possible, particularly those who already have solar power systems or intend to add one soon.

Energy Savings in the Real World

Let’s take a moment to discuss numbers. Using a typical electric water heating system, the average Australian household of four spends between $800 and $1000 annually on hot water.

Depending on consumption and the region where you live, a Rinnai heat pump water heater can reduce that by about 60%.

When combined with rooftop solar, the iStore can increase those savings even more, by as much as 70–75%.

That difference can result in additional savings of hundreds or even thousands of dollars over ten years.

Installation and Maintenance: Rinnai vs iStore

Although both Rinnai and iStore provide comparatively easy installations, it’s important to note a few distinctions:

• Retrofitting Rinnai units into existing systems is a little bit simpler, particularly if you’re replacing an outdated electric tank.
• For optimal operation, iStore installations need enough ventilation and are frequently advised for garages or shady outdoor spaces.

Heat pumps from both brands have modest maintenance requirements, requiring just occasional air filter cleaning and professional service every few years.

Let’s Sum It Up

The name on the unit isn’t the only factor in choosing the best heat pump water heater for your Australian home. It all comes down to selecting the system that best suits your long-term energy objectives, climate, and lifestyle.

Regardless of your preference for iStore’s state-of-the-art efficiency or Rinnai’s dependability, both represent significant advancements in reducing costs and carbon emissions.

Now is the best time to switch because of government discounts and growing energy costs. Both your electricity bill and your future self will appreciate it.

FAQs

But the real power-hungry culprit is something we rarely think about: hot water.

Every shower, laundry cycle, and dishwashing load adds up fast. According to energy.gov.au, hot water systems account for up to 25% of household energy use. That’s a quarter of your electricity bill just to stay clean.

For decades, most homes have relied on traditional electric or gas water heaters. They’ve done the job, sure, but they quietly chew through power 24/7. The result? Hundreds of dollars are lost every year.

But in 2025, there’s a better option: the heat pump hot water system.

Across Australia, from Perth to Parramatta, homeowners are making the switch. Why? Because a heat pump can cut water heating costs by up to 70%, all while reducing emissions.

Let’s break down what that really means for your wallet.

Why Heat Pumps Are Changing the Game

A heat pump doesn’t create heat like electric or gas heaters do, it moves it. It works almost like an air conditioner in reverse, pulling warmth from the surrounding air and transferring it into your water tank. Even on a cold morning, there’s enough heat in the air for the system to capture and amplify.

Because it does not burn electricity or gas to produce heat, it uses much less energy.

Most systems can produce three to four times more heat energy than the electricity they consume. That’s why switching to a heat pump can reduce your energy use for water heating by 60–75%.

If you’re spending around $1,200 a year on hot water now, that could drop to $300 or less with a heat pump. That’s a saving of almost $900 a year, and that’s before you add solar power into the mix.

What are the Upfront Costs?

Let’s be upfront: A heat pump costs more to buy and install than a basic electric heater.

A good quality 250-litre system in Australia typically costs between $2,500 and $4,000, installed.

By comparison:

A regular electric system costs around $1,200–$1,800.

A gas storage heater costs $1,500–$2,000.

But here’s where it gets interesting. Australia’s federal and state governments offer rebates that bring the cost down significantly.

Under the Small-scale Renewable Energy Scheme (SRES). Homeowners can claim Small-scale Technology Certificates (STCs) worth $600–$1,000, depending on location and model.

Then, some states offer even more help:

Victoria: The Solar Homes Program offers up to $1,000 extra.

New South Wales: The Energy Savings Scheme (ESS) provides discounts through approved suppliers.

Queensland and South Australia: Have regional incentives and trade-in offers.

After rebates, most Australians end up paying around $1,800–$2,500 net for a new heat pump. That’s close to what you’d pay to replace an old electric heater, but the savings that follow are on another level.

What Are the Running Costs?

The biggest reason heat pumps are taking off is their running cost. Once installed, the difference is immediate.

A standard electric water heater uses about 3,500–4,000 kilowatt-hours (kWh) of electricity every year. At an average power rate of $0.30 per kWh, that’s around $1,200 annually.

A heat pump only needs about 800–1,200 kWh per year, costing $240–$360 annually.

That’s a saving of $800–$900 each year without changing how you use hot water.

And if your home already has rooftop solar, you can set your heat pump to run during the day when solar power is free. Even without solar, the system pays for itself in 3–5 years, and then keeps saving you money for a decade or more.

Running costs and ROI graphs for types of heaters 

The total cost is calculated as: Upfront Cost + (Annual Energy Cost $\times$ 10 years) + (Annual Maintenance Cost $\times$ 10 years).

Water Heater System 10-Year Cost Breakdown

The table below details the cost breakdown for each water heater system over 10 years.

The data clearly illustrates that:

• Conventional Electric (Tank) has the highest total cost in both periods due to high annual energy consumption.
• Conventional Gas (Tank) has a very competitive total cost because of its relatively low upfront cost and moderate annual energy cost.
• The Heat Pump (Hybrid) system, despite the highest upfront cost, demonstrates a significant advantage in energy savings, leading to a much lower 10-year total cost than the Tankless Gas system.

Note: These figures are based on mid-range estimates and can vary significantly based on regional energy prices, installation complexity, unit size, and specific usage habits. For example, the Heat Pump’s energy cost savings are substantial, but its higher upfront cost is factored in.

Key Takeaways

How to Estimate Your Water Heater Running Cost

To figure out what your water heating really costs, you only need three quick steps.

Follow this simple method; it works for any heat pump or electric system.

Step 1: Find Your Household’s Hot Water Use

Most Australians use about 50–60 litres of hot water per person per day.

Multiply that by the number of people in your household.

Example: A family of four uses roughly 220 litres per day.

Step 2: Calculate the Energy Needed

Heating one litre of water by 45°C (for example, from 15°C to 60°C) requires 0.052 kWh of energy.

So:

220 litres × 0.052 = 11.4 kWh per day of heat energy needed.

Over a year:

11.4 × 365 = 4,161 kWh of heat.

Step 3: Apply Your Heat Pump’s Efficiency

A good heat pump has a Coefficient of Performance (COP) of about 3.5, meaning it uses one unit of electricity to produce 3.5 units of heat.

So:

4,161 ÷ 3.5 = 1,189 kWh per year of actual electricity use.

At an average rate of $0.30 per kWh:

1,189 × $0.30 = $357 per year.

Maintenance and Durability

One more thing people often forget; maintenance. Gas and solar systems need more frequent servicing to stay efficient.

Gas units have burners and valves that wear down. Solar hot water systems need their pumps, pipes, and roof panels checked regularly. Those visits cost time and money.

A heat pump, on the other hand, is low-maintenance. You just keep the area around it clear, clean the air filter once or twice a year, and get a basic service check every few years.

That’s it.

And because modern brands like Rheem Ambiheat, Reclaim Energy, and Stiebel Eltron are built for Australian conditions, most come with 5–10-year warranties. So you’re covered for the long haul.

Other Costs Permit & Inspection Fees

Some councils or states require permits for major plumbing or electrical work.

These can cost $100–$250, depending on your location and the type of system installed. Plumbers or electricians usually handle the paperwork, but you’ll still pay for it in your invoice.

Venting or Flue Upgrades

If you’re replacing a gas system, you may need a new flue or vent to meet current safety standards.

This typically adds $150–$400, especially for older homes where vents are outdated or rusted. Switching from gas to electric or heat pump? The old vent may need to be sealed off safely.

Gas Line Extensions or Removal

Changing your system type can also affect your gas line.

If your new heater is electric or solar, you may choose to cap or remove the gas line, costing $200–$600. If you’re installing a new gas unit, you might need a line extension, which can cost $300–$800, depending on distance and access.

Electrical Upgrades

Heat pumps and solar hot water systems often need dedicated circuits or upgraded wiring.  If your switchboard is old, an electrician may need to install a new circuit breaker or cable run. 

Expect an extra $250–$600. Homes with solar systems may need smart controls or timers added to optimise performance.

Asbestos Removal

Older homes (built before the 1990s) can have asbestos behind the water heater or in the flue.

If found, only a licensed remover can handle it, adding $500–$1,000 depending on the area. It’s rare, but it’s a safety must-do.

Roof Structure or Mounting Issues (Solar Systems Only)

For solar hot water systems, your roof must be strong enough to handle heavy storage tanks and collectors.

If not, you may need reinforcement work or mounting frames, which can cost $300–$1,200. Homes with flat roofs might also need tilt frames to position panels for better sunlight.

Environmental Costs and Long-Term Value

The cost story doesn’t stop with your power bill. Switching to a heat pump also cuts your household emissions dramatically.

According to YourHome.gov.au, replacing an electric water heater with a heat pump can reduce annual carbon emissions by up to three tonnes of CO₂. That’s like taking a small car off the road every year.

And as Australia continues shifting toward renewable energy, the electricity that powers your heat pump will become even cleaner.

So not only are you saving money, but you’re also helping reduce the national energy load and contributing to a greener grid.

Top Factors Affecting Heat Pump Running Costs

When it comes to heat pump water heaters, the running cost isn’t fixed.

It varies depending on where you live, your energy source, and how well your system is installed. Below are the top factors that make the biggest difference to your electricity bill and overall efficiency.

Climate & Temperature

Heat pump efficiency depends heavily on your local climate. In warmer regions like Queensland, Northern Territory, and Western Australia, annual energy use averages 500–700 kWh, translating to roughly $150–$230 per year.

Mild climates such as New South Wales or South Australia consume 700–900 kWh/year (about $200–$300), while cooler regions like Victoria or Tasmania require 900–1,200 kWh/year, or $270–$400 annually.

Even at the higher end, heat pumps remain far cheaper to operate than gas or traditional electric systems.

Electricity Tariff & Solar Power

The cost of electricity in your area directly affects your heat pump’s running expenses. Homes on higher electricity tariffs will spend more, but pairing a heat pump with solar PV panels can drastically reduce costs. 

Many homeowners save up to 60% on water heating bills when using solar-generated electricity. The more power you draw from your panels instead of the grid, the lower your ongoing costs.

Installation & Placement

Installation quality and system placement influence performance and energy use. Positioning the outdoor unit in a well-ventilated, sunlit area helps it operate efficiently, while shaded or enclosed spots can increase consumption by 10–20%. 

A professional installer ensures proper insulation, airflow, and plumbing setup, reducing heat loss and maximising savings long-term.

Upfront Costs & Rebates

While heat pumps cost more upfront:

Typically $2,500–$4,000 installed, rebates and government incentives offset much of that. The Small-scale Renewable Energy Scheme (SRES) can provide $800–$1,200 in savings, reducing the payback period to under five years.

With running costs as low as $150–$300 per year, they quickly become one of the most cost-efficient water heating options in Australia.

When a Heat Pump Makes the Most Financial Sense

A heat pump is a no-brainer if:

• You’re replacing an old electric system.
• You already have rooftop solar.
• You use a lot of hot water daily (large family or frequent laundry).
• You plan to stay in your home for at least five years.

If you tick two or more of these boxes, the payback period becomes shorter, often just three years. After that, it’s pure profit in energy savings.

Even landlords are beginning to install heat pumps because of their long-term value. The ongoing running costs are so low that they boost property appeal without extra tenant expenses.

Real-World Example

Take an example from Emerald Energy Systems in New South Wales. A homeowner in Epping replaced their old 250-litre electric unit with a 200-litre Emerald heat pump.

Over just 52 days, their electricity use for hot water dropped by 75.5%. Their total hot water cost for that period? $3.50.

That’s less than the price of a cup of coffee for nearly two months of hot showers. Multiply that across a year, and you can see why so many Australians are switching.

The Final Word

If you want to cut household energy costs fast, your hot water system is the best place to start.

A heat pump might cost a little more at first, but it’s a clear long-term winner. It uses a third of the power of an electric system, lasts as long as gas, and works in almost any climate.

Most importantly, it saves real money; hundreds every year, thousands over time.

It’s like installing an extra set of solar panels, but without touching your roof.

So next time you step into a hot shower, imagine the warmth powered not by gas or coal, but by the clean air outside your home, and costing you almost nothing.

That’s the power of a heat pump.

That’s smart, sustainable Australian living.

From city apartments in Melbourne to coastal homes in Queensland, thousands of homes in Australia are currently switching from outdated gas or electric water heaters to the much more efficient heat pump hot water system. 

The way we heat our water is changing at a national level, so this isn’t just another home improvement. And to be honest, the system seems well worth the hype. 

It offers quiet and smart operations combined with affordability, in contrast to the outdated systems that not only have long heat-up times but also cause a spike in the power bills. 

What is the reason behind the success of this system? Does it make sense for your house as well? Let’s dig deeper.

What Is a Heat Pump Hot Water System?

A heat pump hot water system warms the water in a tank by drawing heat from the surrounding air.

Despite sounding very high-tech, the idea is actually quite straightforward and extremely energy efficient. Think of it as the opposite of an air conditioner. 

Heat pump systems just transfer heat from one location to another, as opposed to directly producing it like electric or gas systems do. 

As a result, they consume significantly less energy, which translates to reduced electricity bills and a reduced carbon footprint.

Why the Big Switch?

Smart Australian households are increasingly choosing heat pump water heaters for a few key reasons.

1. Significant Energy Savings

First, let’s address the obvious: price. 

The efficiency of heat pump hot water systems can surpass that of traditional electric water heaters by up to 70%. So, upgrading your water heating system might save you hundreds of dollars on your yearly energy costs, especially if your existing system is more than ten years old. 

With Australia’s inflation having risen to 30-year high, and electricity costs on the rise, who wouldn’t want to prepare their house for the future?

2. Government rebates make it an obvious choice

Switching to a heat pump hot water system is now easier and less expensive than ever, thanks to large government grants being offered in various Australian states.

Installing an energy-efficiency system can sometimes be done for less than $1,000 when rebates and incentives are applied. Compared to replacing an outdated gas or electric unit, this is usually less expensive, and the energy bill savings make the offer even more appealing.

It’s a unique win-win situation where you save money up front and also reduce your electricity costs over time. But here’s the catch: these rebates won’t be around forever!

As funding moves towards more extensive renewable projects, the federal and state governments are progressively withdrawing their support.

This tendency is highlighted in a report by ARENA, which also advises homeowners to take immediate action while incentives such as STCs, VEU(Victoria), and ESC (NSW) are still available.

3. Better for the environment 

Making eco-friendly decisions at home is becoming the norm in Australia. 

Compared to conventional models, heat pump systems emit substantially less carbon dioxide since they use ambient air and very little electricity. They are nearly carbon-neutral when combined with solar energy. 

So, if you have rooftop solar already installed, it makes sense to move to a heat pump water heater now and complete your transition to energy independence for your household.

Is a Heat Pump Hot Water System a Reliable Choice?

Indeed, heat pump water heaters are far more sophisticated now than they were in the past.

Newer systems are compact, operate quietly, and are made to function well in a variety of environments, including icy winter mornings.

Well-known manufacturers like Rinnai, Sanden, and Stiebel Eltron provide versions made especially for Australian weather conditions.

The majority have been tested in thousands of homes nationwide and come with extensive warranties.

Many families report fewer disruptions since they require less maintenance and have fewer moving components than gas systems.

Installing a heat pump water heater: what to expect?

In case you are worried, making the conversion from an electric system to a heat pump hot water system is typically simple. Most units are easily compatible with your current plumbing and can be fitted in the same footprint.

In most cases, installers can remove your old water heating system and install the new heat pump water heater in a single day.

Additionally, a lot of businesses now provide packaged offers that account for government rebates up front, saving you the trouble of subsequently filing a claim.

Just be sure to collaborate with a certified, skilled installer who can help you choose the ideal system for your house.

Let’s debunk some common myths.

You might have heard certain rumours concerning heat pump systems. Let’s clarify:

• “Only warm climates can use them.”

False. Contemporary systems are designed to function at temperatures as low as 5°C.

• “The cost of installing them is too high.”

The initial cost in Australia is less than most people believe because of government rebates. Moreover, the savings on energy bills soon cover the expense.

• “Their hot water production is insufficient.”

Modern heat pump hot water systems are available in a variety of capacities, including large-capacity models for large households. Unless you enjoy taking hour-long showers, you will never run out.

Is it time for an upgrade?

Your water heater is probably operating inefficiently and costs you more than it should if it is older than eight to ten years. 

Whether you are driven by your concern for the environment, your wallet, or both, it is probably time to consider a heat pump hot water system as your next improvement.

A consistent supply of hot water throughout the year, cheaper energy costs, a smaller carbon impact, and the ability to get rebates, all can be achieved with this one upgrade. 

It’s a contemporary solution to a very old problem!

The Bottom Line

It’s easy to understand why an unprecedented number of Australians are switching to heat pump hot water systems.

They are eco-friendly, effective, and now more reasonably priced than before because of government support. A heat pump is a wise, long-term investment for your house, whether you’re building a new one, remodelling an existing one, or simply attempting to save money.

Who knows? After a few years, we may question why we didn’t convert sooner.

Are you also considering switching? If you have any questions, comments, or experiences about heat pump water heaters, please drop a comment.

It’s one minor improvement that can have a significant impact.