Solar Hot Water vs Hot Water Heat Pump: Which is Best for me? – AEF | Australian Energy Foundation

Solar Hot Water vs Hot Water Heat Pump: Which is Best for me?

Hot water comes at a price.

That price is higher with conventional electric and gas systems, lower with solar hot water and heat pumps.

So as electricity and gas costs continue to rise, these more efficient options attract many homeowners. And for good reason.

But once you’ve decided to save with a more economically (and environmentally) friendly system, you’re faced with another question:

Which one should you choose?

Fortunately, finding the answer to this question doesn’t have to take long.

Our research has shown that while both heat pumps and solar thermal systems will give your household hot water at a lower cost to you and the planet, heat pumps are the more convenient and budget-friendly choice for most Australian homes.

To understand why heat pumps are often a better fit, let’s review how each system operates:

Solar Thermal Hot Water Systems

Solar thermal hot water systems are very different than the multi-paneled solar PV arrays that power many buildings. While both feature rooftop panels, a glance at the two will show their difference:

Solar PanelsSolar Hot Water
Solar PanelSolar Hot Water

On the left, a solar PV panel system generates electricity directly from sunlight. The panels are sheets of glass and silicon, cover significant roof space, and help to power the entire house.

On the right, a solar thermal panel contains copper tubes which collect water, heat it in sunlight, and send it to a water storage tank.

Unlike the large PV solar panel systems, solar thermal panels contain only one panel and can only heat water; they can’t power anything else.

Hot Water Heat Pumps

Like your air conditioner and refrigerator, a hot water heat pump pulls heat out of the surrounding air. It then uses electricity to move that ambient heat into the water tank.

Unlike conventional electric-resistive systems, hot water heat pumps merely move heat from one place (air) to another (water); they use no energy to create new heat.

Due to this efficient process, every unit of energy that goes into a heat pump yields three units of energy.

Thus, while conventional electric systems are lucky to achieve 100% efficiency (you get out as much energy as you put in), the average heat pumps provides 300% efficiency.

Hence its lower running cost:

Hot Water Systems Annual Running Costs
Data sourced from Sustainability Victoria’s Hot Water Running Costs and compares running costs of 5.5 star gas storage system, 7 star gas instantaneous system, electric storage off peak system, high-efficiency solar gas boosted system, high-efficiency solar electric boosted system, high-efficiency hot water heat pump on off peak tariff.


And lower environmental impact: 

Hot Water Systems Tonnes of Greenhouse Gas per Year
Data sourced from the Renew hot water booklet.

Solar Hot Water vs Hot Water Heat Pumps

As the above charts show, both solar hot water and heat pumps help homeowners to save money and lower their carbon footprint. But if you’re looking for a more convenient, low-maintenance option, heat pumps usually offer a better deal:

Solar Hot Water SystemHot Water Heat Pump
Only heat water in direct sunlight (not at night, in shade, or on overcast days)Heat water in any weather, any time of the day or night (allowing you to take advantage of off-peak tariffs)
Need electric or gas booster in inclement weather & at nightIn many locations, needs no booster — can reduce electricity use and go off gas grid (saving $200-$300/year)
Upfront cost can be up to 50% more expensive Upfront cost can be up to 50% less expensive 
Extra piping costs (Thermal roof panel’s need for direct sunlight may place it on the opposite side of the house from kitchen and bathrooms)Lower piping costs (heat pump and tank need no sunlight and so can be placed more flexibly)
Exposed to hail, frost, and storm damageEasily sheltered from harmful weather
Use up roof space that could be dedicated to solar panelsNo roof space needed; less noticeable placement possible

When To Consider Solar Hot Water

Heat pumps do require space for a tank in your home. If you don’t have that space and aren’t considering solar panels, a close-coupled solar hot water system (where the tank is installed on the roof) will help you enjoy energy-efficient hot water.

When To Consider Heat Pumps

The only con to heat pumps is that they do make some noise. However, many current models are as quiet as the inside of a library; most are no louder than mild suburban neighborhood traffic. For most households, they pose a more convenient, budget-friendly alternative to solar hot water as well as to electric and gas systems.

There is a way you can combine solar energy and heat pump for maximum savings:

Solar Power + Heat Pump

Of course, the best choice is not having to choose! A full PV solar panel array will power your home and your heat pump with clean, renewable energy that comes from your own roof.

And going solar has recently become more affordable than you might think — most systems pay for themselves within 3-7 years and will cut your electricity bills by 30-60%.

As for hot water, your solar system will cut costs even more by serving as a “hot water battery” to your heat pump. Here’s how:

  1. Time your heat pump to power up around midday, when the sun is highest.
  2. Your heat pump will store free solar energy in the form of hot water.
  3. Your family can use hot solar-powered water any time they want, even when the sun isn’t shining.

This combination time-shift + energy self-consumption will cut your electricity bills even more than just a solar system, or just a heat pump, would on its own.

No need for an expensive electric car or a $10,000 storage battery to store your solar energy — your heat pump system will allow you to store it with an appliance you’d already have anyway.

Interested in learning more about saving $3,000–$6,000 over the course of your hot water system’s lifetime? Check out our homeowner-friendly guide How to Choose Your Perfect Heat Pump for everything you need to make the right decision for you and your home.

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