Gas Hot Water Systems

17 March 2026 | Blog | 6 min

Hot water works hard in the background of most homes. Showers. Laundry. Dishes. Every day, no thinking required. But it comes at a cost.

Hot water typically accounts for 15–25% of household energy use, making it a large energy contributor after home climate solutions like heating and cooling. That means the hot water system you choose can have a real impact on both your energy bills and your comfort at home.

In this article, we’ll break down the different types of hot water systems available and the key things to consider before choosing one. Household size. Usage patterns. Energy sources. Space. Budget. Convenience. The aim is simple: help you select the right hot water appliance for your home and your needs, without over-engineering the decision.

Key Summary

Gas hot water system types: The main options are storage (tank), instantaneous (continuous flow), and gas-boosted solar systems.

Gas hot water system cost: upfront and running costs depend on unit size, efficiency, installation complexity, retailer tariffs and hot water habits.

Sizing matters: Choosing the right size helps ensure your household has enough hot water when you need it, while avoiding temperature drops and unnecessary running costs.

Safety first: gas hot water systems must be installed and serviced by a licensed gasfitter.

How Gas Hot Water Systems Work

Gas hot water systems rely on three main components to deliver reliable hot water: a burner, a heat exchanger and a thermostat. When hot water is needed, the gas burner ignites and produces a very high, concentrated heat. This heat is transferred through the heat exchanger directly to the water, raising its temperature quickly and efficiently. The thermostat monitors the water temperature and regulates the burner, switching it off or reigniting as needed to maintain safe, consistent hot water.

In storage systems, when the water cools or hot water is used and replaced with cold water, the drop in temperature triggers the thermostat to re-ignite the burner. Gas’s ability to deliver intense heat on demand also makes it ideal for instantaneous (continuous flow) systems. Rather than storing hot water, these systems heat water only as it passes through the unit. The result is rapid heating and consistent temperatures making gas a practical choice for busy households with variable hot water needs.

If you are not sure whether gas is available where you live, you can check to see if gas is available in your street, then review the gas connection process.

Gas Hot Water System Types

Storage Systems

Storage systems heat water in an insulated tank and keep it warm until you need it.

Often suits households that:

Run multiple taps or bathrooms at once - as storage units can supply several outlets simultaneously without a significant drop in pressure or temperature.

Are in an area prone to blackouts as pilot light technology means they'll continue to work when the power is out.

Need to replace a like-for-like system at the lowest cost. Upgrading to continuous flow can be costly if power point and alterations to pipe sizing are required.

Keep in mind you will need space for the tank, and water quality can affect long term performance.

Instantaneous, or Continuous Flow

Continuous flow units heat water as it moves through the system. They are usually compact, and wall mounted.

Often suits households that:

have a high hot water demand - so the hot water doesn’t run out

have limited space and want a compact, wall-mounted unit

prefer heating water only when it is needed.

Gas Boosted Solar

Gas boosted solar systems use solar collectors to pre-heat water, with a gas booster ensuring consistent hot water when sunlight is limited. This combination allows households to take advantage of solar energy to reduce running costs, while still enjoying reliable hot water all year round. Best suited to homes with good roof exposure, these systems offer a balance of efficiency and performance, although they do come with higher upfront costs.

Quick checklist: choosing the best gas hot water system for your home

If you have multiple bathrooms and lots of simultaneous use, start by looking at a correctly sized storage system or a higher capacity continuous flow model.

If space is tight, a continuous flow gas hot water system is often easier to fit.

If you have good roof exposure and want solar contribution, consider gas boosted solar.

Gas Hot Water System Cost

There is no single “typical” price because systems vary in size, efficiency and installation requirements. When budgeting, include:

unit cost (capacity, features, brand),

installation (removal, plumbing, flueing and any gas line changes), and possible alteration to gas pipes or inclusion of a powerpoint if you’re upgrading to an instantaneous system), and

ongoing costs (your retailer plan and how much hot water you use).

If you are building, eligibility, charges and planning requirements can depend on your state and whether a planning permit is required. In Victoria, Planning Scheme Amendment VC250 (from 1 January 2024) prevents a permit being granted to connect new dwellings, apartment developments and residential subdivisions to reticulated natural gas where a planning permit is required. From 1 January 2026, eligible new connections incur an upfront connection fee (currently $2,660 exc GST for a standard connection). Check early for your address and build type.

Comparing Gas, Electric and Solar

Many households compare gas, electric and solar hot water. The best option is the one that fits your budget, your home, and how you use hot water.

Tip: Use a government comparison tool to sense check ongoing costs for your postcode and usage. If you live in NSW, QLD or SA TAS & ACT, you can use Energy Made Easy. For Victorians use Victorian Energy Compare.

Efficiency and Energy Performance

Water heating makes up a significant share of household energy use, so efficiency and habits matter.

When comparing products:

Gas storage and gas instantaneous water heaters must meet minimum energy performance standards (MEPS).

Practical ways to reduce hot water energy use:

keep showers shorter and fix dripping taps,
install a temperature control panel for instantaneous systems (heats water to desired temperature rather than using cold water (after you’ve used energy to heat the water!))
consider efficient showerheads, and
follow manufacturer set up and service recommendations.

Installation, Safety and Compliance

A hot water changeover can involve gas, plumbing, ventilation and safety requirements. Key considerations:

Use a licensed gasfitter for installation and servicing.

Install in a compliant location with required clearances and flueing where applicable.

Check gas supply and pipe sizing if you are upgrading capacity or adding other gas appliances.

Temperature requirements vary by state and premises type. For example, Victoria requires maximum 50°C at tap/shower outlets (45°C for childcare, schools, aged care facilities). A licensed installer will ensure compliance with requirements specific to your location and building type."

If you smell gas or are concerned about safety, follow our steps on Gas leaks and emergencies and contact **Gas Leaks and Emergency services on 1800 GAS LEAK (1800 427 532).**

If you are experiencing circumstances that make you vulnerable, you may be eligible for our Priority Services. Eligible customers may be able to access free gas appliance safety checks and repairs. Click here to find out more or contact our dedicated Customer Care team on 1300 427 777.

Rebates and Incentives

Rebates and offers vary by state and can change over time. Before you buy, check:

Rebates and promotions available in your state, and

any manufacturer promotions.

Always read the terms and conditions and confirm eligibility first.

Maintenance and Lifespan

Lifespan depends on system type, water quality, installation and maintenance. Many units last around 10 to 20 years, but individual results vary.

Follow the manufacturer servicing schedule and use a licensed gasfitter for servicing and safety checks.

Gas Hot Water System FAQs

Important information

This article is general information only and does not take your specific circumstances into account. Costs, eligibility, and connection requirements can differ by state, property type and over time. For product selection, installation and safety advice, speak with a licensed gasfitter and follow the manufacturer instructions.