Is It Worth Replacing My Instant Gas Water Heater with a Heat Pump?

snickerz on 24/06/2025 - 23:58
Last edited 25/06/2025 - 11:27 by 1 other user

Hi everyone, I’m trying to decide whether it’s worth replacing my current instant gas water heating system with a heat pump water heater.

Here's my situation:

My recent 2-month gas bill was $150, out of which $60 was just the supply charge.
The actual gas usage was around $90 for two months, or ~$45/month.
Out of that $45, I estimate that about $10/month goes to gas cooking, and $35/month is for water heating.

So my question is:

If I replace the gas water heater with a heat pump system (which would cost me around $1500–$2000 upfront, after rebates), would it be financially beneficial?

Additional context:

I have a 6.6 kW solar system, and I’m aware that during summer months, my water heating would likely be almost entirely covered by solar.

What I want to figure out is — considering the ongoing gas savings (particularly avoiding the ~$35/month for water heating), and potential solar offset, would this investment make sense in the long term?

I’d love to hear from anyone who’s done a similar switch or run the numbers. Thanks in advance!

Home & Garden Water Heater

Comments

  • Benoffie on 25/06/2025 - 00:10
    +2

    The heat pumps are efficient and you should factor in any bonus rebates for coming off gas.

    But tank life vs instant lifespan just isnt the same. My last Rinnai was still motoring after 20 years. Regardless of gas charges, the unit had paid itself back 10 fold.

    The heat pump, Im hoping I'll get 6-10 years. The electric Thermann tank it replaced died under 5.

    • snickerz on 25/06/2025 - 00:39
      +1

      Thanks for the insight.

      I’ve got a 4-year-old Midea instant gas unit that's been working well.

      Even after all rebates, the heat pump would still cost me $1200–$1500, with just a 5-year warranty and maybe 8–10 years of life. I’m really wondering if it’ll actually pay itself off, or if I’m better off just sticking with my current gas setup for now.

      Appreciate your thoughts!

      • ATTS on 26/06/2025 - 19:19

        Jusy wondering which brand heat pump you going for?

        • snickerz on 27/06/2025 - 00:04

          In the cheap range, Emerald, Aquatech or iStore

  • stratbargain on 25/06/2025 - 07:11
    +9

    Why not also consider replacing the gas cooktop with induction so you can cut gas completely. An extra $70 saving a month will help to see your ROI sooner.

    • snickerz on 26/06/2025 - 12:24

      True. But the Mrs. isnt entirely convinced with the idea of induction top. So the gas cooktop remains.

  • daanish on 25/06/2025 - 07:55
    +7

    I agree with stratbargain about cutting out gas completely. If you're going to replace one gas appliance, run the numbers to replace them all otherwise you're forking out for the supply cost of gas just for the cooktop.

  • saltypete on 25/06/2025 - 08:15

    We switched a couple of years ago now. The HWS and the cooktop were the only things left and the service charge was the major cost.
    We waited until the gas HWS died and swapped out the cooktop.
    A couple of things.
    Seem to be rebates about to get off gas, so do your homework and line these up so you know your costs and opportunities.
    Getting a cooktop to fit the existing cut out to our insanely expensive bench top was a big deal. We found one that required no cutting etc and this cost us a bit.
    You will also need to factor in your switchboard and supply capacity as this is a cost, along with the obvious installation costs.
    We got the HWS installer to cut our gas off at the meter and just cancelled the gas account. Abolishing the gas meter is a cost to you - we didnt see the point of paying.
    Really happy with our heat pump hws, no problems yet but at 2 years its early days.
    Induction cooktop is brilliant.

    • snickerz on 26/06/2025 - 12:26

      I think the best option is to wait for my existing HWS to die before considering to replace it.

      Replacing the gas cooktop is not an option at least for now!

  • ESEMCE on 25/06/2025 - 08:40
    +4

    Highly unlikely.
    Even if you could cut off the gas entirely it would be borderline.

    Replace it with whatever you want when it NEEDS to be replaced.

  • Switchblade88 on 25/06/2025 - 09:34
    +2

    You're paying $1/day for the insult of a meter read even with no usage. If your system is $2k then it's paid for itself within 6 years.

    And since you've got solar, you've rightly noted that your actual running costs will be negligible. Sounds like a super easy choice to switch!

  • dtc on 25/06/2025 - 09:34

    I have just done it. However its unlikely to be financially worthwhile unless you need to replace it - replacing something that works, even if the replacement has cheaper running costs, is very rarely worth it.

    I replaced with a quality heat pump (reclaim) not a $1000 jobbie but I guess we will see how long it lasts (but dont believe that tank systems have much shorter life spans; my in laws house has a tank that is around 35 years old and going fine, my instant gas systems (I had two), one was over 20 years old and still going and one was about 7 yrs old and carked it, so I took the plunge. Heat pumps are still a bit variable but should get quite a few years). I also have solar so 98% of the running costs are now covered by solar 'for free' (well, for the foregone feed in tariff).

    Do the figures - if you replace both the hot water and the cooktop then its probably $3k including installation at the very minimum (there is no point replacing just the HWS because most of the cost is the supply charge, so you need to replace the cooktop as well). Probably more likely to be over $4k all up.

    What will you save - if your supply charge is $30pm then $360 per year plus a bit through solar, say maybe $450 per year. So that is a 6 year pay off. Not terrible. However if the cost is over $4500 then you are hitting a point in time when the pay off period may be longer than the life of the replacement / its quite a long pay off time and may not be worth it.

  • cloudy on 25/06/2025 - 10:20

    One thing most people get wrong is using current pricing and thinking its the same in the future. I did the same with my solar system Feed in Tariff. As more people jumped on solar its gone down like 80%.

    Daily gas charge, used to pay for the pipes, works best when shared between everyone. As more and more people transition off gas less and less people are left with the infrastructure bill. I'd take a guess and say your daily charge will go up and up fast than what many can imagine as more people move off gas in victoria.

    • plmko on 25/06/2025 - 10:38
      +1

      They've just announce reversal of Gas connection and appliance laws.

      • MrThing on 25/06/2025 - 12:49

        Just because they cancelled it now, doesn't mean it wont reappear in the future

        and anywway, the future is electric not gas…..gas is all sold overseas and they make better bank for it there hence the forecast shortages in 2029+

  • apple2016 on 25/06/2025 - 12:06

    I’m aware that during summer months, my water heating would likely be almost entirely covered by solar.

    This does not always hold good. The days or times you need hot water most are generally no hot sunny days.
    Once the tank is depleted it takes a long time for it to heat up.

    • Switchblade88 on 25/06/2025 - 16:10

      Well, it is fully electric so it'll just heat from the grid instead of being free via solar. OP isn't going to run out of hot water.

  • Naigrabzo on 25/06/2025 - 12:23

    Depends on your climate. Imagine your tank is depleted AND it's -6 outside. How long before you can have hot water? With gas, I know I get it in 30 seconds.

    Calculate your ROI and go from there.

    IMHO there is no urgency to switch unless the govt gives us more. WAY more.

  • MrThing on 25/06/2025 - 12:48

    depending on your hot water useagae and solar useage and generation…it "could" be better to install a stainless steel electric hot water tank and set it up on a timer.

    Much cheaper than a heat pump and more reliable as well…..but that all depends on how well your solar works during winter

  • seanfoite on 25/06/2025 - 13:16

    Based on your numbers provided doesn't really seem worth it at the moment. If anything, i would be waiting until you want induction cooktop (maybe as part of a kitchen reno) and then take the plunge.

  • Megatron on 25/06/2025 - 14:35
    +1

    If your HWS system isnt broken, then in my opinion it doesnt make sense. If your system was broken and there was a replacement cost regardless, then I would think it would have made sense.

    $35 a month is not going to return the replacement value.. With heat pump Water heaters, they recommend that you should always choose the top tier brands, so assume your cost is going to be $2000 which in your offset account (assuming you have a mortgage) at 5.5% is currently returning $9 a month approx.. so if you account for the opportunity cost, your net benefit is $26 a month. So at $2000, your ROI is 6.5 years and by that time your unit is going to near EOL. Then think about the replacement cost at that point as you will have not rebates to use and will be paying a full price.

    If you dont have a battery, perhaps look at spending money on a battery and save electricity costs by storing your energy. And when your HWS system dies, then you can look at replacing your HWS with electric for a even better benefit with a battery to do cheap heating in winters ;)

  • GordonD on 25/06/2025 - 15:33

    My gas instant hot water system broke a couple of months back.

    A new gas instant hot water system was the same price as a heat pump system with rebates. The saving wouldn't have been much in running costs, but if I'd been able to turn off the gas supply and not pay the $30/month standing costs of having gas supplied to my home any longer. For me that would have only required getting my gas stove ripped out and replacing with an electric stove top. I never use the griller or oven in my stove.

    In the end I replaced gas with new gas, but only because the heat pump was a lot bigger and would have blocked access to that side of my house. You could walk easily between the fence and the tiny gas instant system, but not between the quite large heat pump and the fence.

    I'm not sure I made the right decision.

    • seanfoite on 25/06/2025 - 16:22

      pretty logical choice all things considered. I'm considering heat pump but the size and need for a compressor is offputting.

    • sumyungguy on 25/06/2025 - 17:55

      I would have made the same decision, love my Rinnai Infinity!

  • Ponsonby on 25/06/2025 - 16:28
    +1

    As an aside, anyone with a heat pump for hot water should consider the advantages of a timer, especially if you do not have solar. This is because heat pump efficiency is much greater in the middle of the day - trying to heat water by taking heat out of the air is much harder work in the middle of a cold night. Our timer is set to run 10am to 4pm.

  • viTRifY13 on 25/06/2025 - 23:09

    Next power outage and you'll be kicking yourself for getting off a reliable gas connection!

    And with cheap coal being phased out, your electricity pricing is going to sky rocket in the evenings when you want to have a hot shower / cook. Sure, you can install batteries and be fully off grid, but that's $$$ and I'd rather dump excess funds against a mortgage or go on holiday than stress about saving a few dollars a year

    Plus, it's unlikely your existing electrical connections would support a large unit, so you'd be looking at potentially running larger gauge wiring if you want a high output unit - not something that can be easily retrofitted

    • lgacb08 on 26/06/2025 - 20:20

      Nah, my friend once lost power for a few days in a row couple of years back and their gas instant was off too, had to visit friend 30 min away for shower everyday.
      With electric storage or heat pump it'd buy you at least another day or two, a week long outage is extremely rare, if you anticipate for that then better look at battery now, it's silly not to with the amount of money government is throwing out at the moment.
      Heat pump can run of normal power socket, resistive tank runs on the same wiring, you only need dedicate circuit for it but if you don't have infrastructure for resistive storage tank then heat pump is the more sensible option.

      • yoho on 27/06/2025 - 12:15

        I keep a small <500W inverter (<$30) just for this scenario (connect to 12V battery). It is sufficient to power the instant HWS (i.e. provide the starting spark).

        • lgacb08 on 27/06/2025 - 16:16

          Well yes if you're smart and handy enough. For the average Joe remaining hot water in the tank could give them some time to adjust. If a power outage is long enough for storage tank to go cold then you have other bigger problems to worry about such as food in the fridge.
          On the other hand an outage at morning or evening peak on a gas instantaneous is much more fun to deal with.

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