How to reduce your hot water bill

Fact Checked

This Canstar Blue guide gives an overview of different hot water systems, what they could cost to run and how you could save on your hot water bills. 

According to the Federal Government’s energy department, 15%-30% of Australian household energy usage is from water heating. While these figures may seem daunting, Canstar Blue has some ideas for reducing hot water costs without ditching hot showers.

Five ways to reduce your hot water bill

For those looking to reduce the electricity usage of their hot water system, we’ve compiled the following five tips to try to reduce your hot water bill.

1. Use less hot water

This may be easier said than done, but the simplest way to reduce your hot water bill is to reduce the amount of hot water you use.

Some quick ways to cut down on usage could be:

• Run your washing machine with cold water
• Avoid using the hot water boost function on your smart meter
• Cut back on shower time
• Avoid hand-washing dishes
• Run your dishwasher on an eco or economy setting

2. Consider your electricity tariff

Understanding electricity tariffs and which one best suits your needs can help you to avoid expensive peak periods.

• If you own a storage hot water system: a time of use tariff might be a cheaper option, assuming your system is set to refill and heat during off-peak and shoulder periods
• If you own an instantaneous system: a time of use tariff may be the more expensive option if you shower in the morning and at night. Flat rates or block flat rate tariffs might be the better option

Another option for those with electric hot water systems is a ‘controlled load’. This refers to a tariff where hot water is metered and charged at a lower rate to the rest of a home’s energy usage. Controlled loads won’t be available in all areas or with certain models of water heaters, but it can be a great choice if available.

3. Insulate the hot water system pipes and heater

Insulating the pipes running from the hot water system will reduce the heat lost as the water flows to your home. Insulation on hot water systems can be done as an inexpensive DIY, otherwise contact a handyman for assistance. For more information on insulating your hot water system pipes, check out Your Homes’ guide.

4. Keep your hot water system well maintained

Hot water systems may be sturdy, but they still need maintenance. For example, a storage model hot water tank typically contains a sacrificial anode to attract rust inducing minerals. If the sacrificial anode is not replaced, the hot water system will unknowingly rust from the inside. 

At first, your hot water system will have to consume more energy to produce the same amount of hot water, but if left too long, your hot water system may blow out completely. This requires a qualified technician, but you should only have to get it checked once every five years.

5. Ensure you have the right-sized system

A storage hot water system that frequently runs out of hot water may need to be upsized. The more a hot water system has to fill and heat a tank of water, the more energy will be consumed. So be careful when upgrading the size of a hot water tank, as it will take more energy to heat the larger volume of water despite not being used.

Types of hot water systems in Australia

There are two basic models of water heaters available for domestic use – storage and instantaneous (or continuous) flow systems.

• Storage-based: water stored in a tank and kept hot, ready at all times. Off-peak systems only heat during off-peak times
• Instantaneous: water is heated only as required and not stored in a tank

Storage-based systems are typically cheaper to purchase upfront, but consumers may find more long-term savings with an instantaneous system.

Hot water systems are usually powered by one or more of these methods:

• Electricity
• Natural gas
• LPG
• Solar
• Heat pump

A storage-based hot water system can use any one of the above methods. However, an instantaneous system is typically powered using electricity, natural gas or LPG.

Single rate electricity plans in Australia

While you are looking at lowering your water bill, you might want to consider your electricity bill. If you haven’t compared your electricity plan and changed it in the last 12 months, then there is a high chance that you are paying the default market price for electricity. Check out the Canstar Blue electricity plan comparison tool below for some of the cheapest plans on the market.

What is the average cost of hot water?

The average cost of heating water will vary greatly depending on a number of factors.

• The number of people in a household
• Electricity tariff
• The insulation of connection pipes
• The type of hot water system

Prior to making any decisions, spend some time understanding both models of hot water systems and what the average annual electricity costs could be for your circumstances and location.

For example, Canstar Blue’s calculations show that the average annual energy costs for gas hot water systems can vary from $630 to $1,159, depending on the type of gas hot water system installed. However, hot water systems powered by other energy sources may be more cost efficient and individual costs will likely fluctuate significantly depending on location and energy usage.

Gas plans in Australia

If you are using a hot water system that depends on natural gas, then it might be a good idea to compare your current or future gas plan. The below gas plans are some of the cheapest on the market and can give you an idea if you are paying too much for your plan.

Which hot water system is best for reducing your bill?

The best hot water system for you will depend on a number of factors, as there is no ‘one-size-fits-all’ option. However, if you’re in the market for a new system, why not consider a more energy efficient model. It may cost more upfront, but with time, you should be able to reduce your hot water bill and save in the long run.

If you still need more clarity on hot water system brands and models, check out Canstar Blue’s annual hot water system ratings. Everyday Aussies have rated the best hot water system brands across a range of categories – from reliability to effectiveness, value for money and overall satisfaction. Just click the link below to find out more.

Best-Rated Hot Water Systems

Original reporting by Dean Heckscher
Image Source: nikkytok/Shutterstock.com