Utilising instant hot water systems

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Utilising instant hot water systems

Some businesses, like hairdressers, need guaranteed hot water all the time. Other businesses only need hot water occasionally. If either of these scenarios sounds applicable, you may need a gas or electric instant hot water system.

This type of system only consumes energy when it’s being used. If you buy a gas instant hot water system, you should look for one that has at least six stars. According to CHOICE, gas models with electronic ignition are more economical than units with a pilot light.[1] You can also run them with natural gas or the more expensive LPG.

Research by Sustainability Victoria shows that gas instant hot water systems are cheaper to run than their instant electric counterparts (see the hot water costs table). One of the reasons for this is that instant electric water heaters have to be connected to the day rate tariff.

The cheapest option however is solar hot water that’s boosted by electricity or gas. It’s far cheaper to run than instant hot water. If you are using hot water in different parts of your building, get a licensed plumber to advise on whether it’s more cost-effective to:

  • install multiple instant hot water systems, or
  • one big hot water storage system with piping.


Hot water costs – 250 litres of hot water per day[2]

Water heater type [3] 250L/Day – Cost per annum

Gas storage – natural gas (5 to 3 Star) [4]


Gas instantaneous – natural gas (6 to 4 Star) [4]

Gas storage – natural gas (5 to 3 Star) [4] $991–$1,180
Gas instantaneous – natural gas (6 to 4 Star) [4] $927–$1,129
Electric storage – peak tariff  $1,609
Electric instantaneous – peak tariff  $1,337
Electric storage – off peak tariff  $1,035
Solar/natural gas boosted [5] $209
Solar/electric boosted – off peak tariff [5] $399
Solar/gas – LPG boosted [5] $442
Heat pump – peak tariff [6] $644
Heat pump – off peak tariff [6] $414


Urban Escape Hairdressers, VIC

Urban Escape Hairdressing runs four separate instant hot water systems installed underneath and very close to the basins. When the tap is off, there is no electricity being used so they are not wasting energy on heating water unnecessarily. This has significantly cut their hot water energy costs.[7]

  • 1. Source: CHOICE
  • 2. Source – Sustainability Victoria:  EnergyCut.info/hot-water-leaflet and EnergyCut.info/sv-hotwater
  • 3. Based on energy tariffs of: natural gas (1.75 c/MJ), LPG (4 c/MJ), peak electricity (28 c/kWh), off-peak electricity (18 c/kWh).
  • 4. All gas hot water systems are star rated – the more stars the more energy efficient they are and the cheaper to run.
  • 5. Based on a 70% solar contribution at rated delivery. Costs of 100 L/day based on unit with small rated delivery, and costs for all other uses based on a unit with a large rated delivery.
  • 6. Based on a 60% solar contribution at rated delivery.
  • 7. EnergyCut.info/urban-escape-hairdressers