Electric vs Gas Hot Water in Adelaide: What Each One Actually Costs to Run

Start with the water, not the system

Every hot water comparison starts with the appliance. Start with the water instead, because the energy going into the water is the quantity that does not change when you change the fuel.

Heating 1 litre of water by 1 degree takes 4.2 kilojoules. A household of 3 to 4 people in Adelaide draws around 120 to 160 litres a day, and mains water arriving at about 20 degrees in February and 13 degrees in July has to reach 60 degrees in the tank. Take 120 litres and an average 45 degree rise: the arithmetic gives 22.6 megajoules, or 6.3 kilowatt hours, of heat into the water every day.

That is the honest baseline, and no system beats it. Systems differ only in how much energy they consume to deliver it. An electric element converts almost all of what it draws, then the tank loses some through the wall. A gas burner sends a share of the fuel up the flue. A heat pump differs in kind: it moves heat from the outside air rather than creating it, which is how it puts 6.3 kilowatt hours into the water while drawing under 2 from the wall.

Running cost, system by system

South Australia carries the highest residential electricity prices in the National Electricity Market and has held that position for years. Any comparison built on national average rates understates the case for efficiency here, which is why national guides get Adelaide wrong. Pull out a recent bill before applying any of this to your own house, because your retailer and your plan move the arithmetic more than the state average does.

The gap between the top and the bottom of that table is roughly 30 times for the same 120 litres of hot water. That gap is the entire argument, and it is why an old electric storage tank on a general usage tariff is the most expensive appliance in a lot of Adelaide houses without anyone realising it.

There are 2 lines worth a note. The gas storage row carries a permanently lit pilot and a tank losing heat 24 hours a day, which is why its effective efficiency lands near 62% rather than the burner figure on the label. The heat pump rows assume a seasonal coefficient of performance of about 3.5, which is conservative here: Adelaide air is mild, and mild air is what a heat pump wants.

Upfront cost runs the other way. A heat pump costs more to buy and install than an electric or gas unit and much less to run, so the payback depends entirely on what it is replacing. Replacing an old electric storage unit sitting on a general tariff cuts the running cost by around 6 times and pays for itself well inside the life of the new unit. Replacing a working gas continuous flow unit, in a house that keeps its gas connection for cooking and heating, saves far less and the payback can stretch past the service life of the heat pump. Same product, same city, same installer, opposite answer.

Service life belongs in that sum. Electric storage tanks typically last 10 to 15 years, gas storage 10 to 12, a heat pump 10 to 15, a gas continuous flow unit 12 to 20, and solar thermal 15 to 20. A payback period longer than the life of the appliance is not a payback.

Site work moves the installed price of any of them: a new electrical circuit, a compliant drain, a change of position because the old location will not suit the new unit, or a narrow side passage that means everything is carried in by hand. Marc looks at the position, the power and the drain on site, and the price is discussed before the work starts.

The daily supply charge decides it

The factor that settles most gas-versus-electric arguments in Adelaide is not a usage rate and it is not on the comparison tables. It is the natural gas daily supply charge.

Gas carries a fixed daily charge whether you burn a megajoule or not, purely for being connected. Over a year it adds up to a substantial share of a hot water bill. If hot water is the only gas appliance, the entire charge belongs to the hot water bill, and a continuous flow unit that looked comfortably cheaper than electric storage lands about level with electric storage on a controlled load tariff, and nowhere near a heat pump.

If the house also runs a gas cooktop and gas heating, the picture inverts. The supply charge is paid regardless, hot water carries usage only, and gas continuous flow is competitive with everything except a heat pump running on self-consumed solar. Disconnecting gas there saves the supply charge but costs a new cooktop and a new heater, which is a much larger conversation.

So the question that comes before the comparison is simple: what else in your house runs on gas? If the answer is nothing, the full daily supply charge belongs to both gas options before you compare anything, because you are paying it to run one appliance. If the answer is the cooktop and the heater, that charge is sunk and gas hot water is a far better proposition than a usage-only comparison suggests.

When gas is still the right answer

Heat pumps win on running cost in almost every Adelaide scenario, and there are still real cases where a gas continuous flow unit is the better installation.

• No workable outdoor position. A heat pump needs open airflow around it and a compliant drain. On a narrow inner-south allotment where the only spot is a 900mm side passage boxed in by a fence and a carport, the unit will not perform and may not be compliant.
• Noise-sensitive positions. A heat pump compressor runs for 2 to 4 hours at a stretch. Mounted 1.5 metres from a neighbour's bedroom window in Unley or Hyde Park, that becomes a dispute, and no running cost saving is worth it.
• The house already runs gas cooking and gas heating. The supply charge is sunk, and the gap between gas hot water and a heat pump narrows considerably.
• Very high, spiky demand in a small footprint. A continuous flow unit never runs out, which matters for a household of 5 with 1 bathroom and a morning schedule.
• The switchboard needs upgrading to take a new circuit. That work can consume several years of savings on its own, and it needs to be in the comparison rather than discovered afterwards.

When the right answer is to do nothing

Plenty of people arriving at this question have a working system, a high bill, and an assumption that the fix is a new appliance. Frequently it is not. Here is what costs almost nothing and works this week.

• Ask your retailer to move an electric storage unit onto the controlled load tariff. That cuts the running cost of the unit by roughly a third, and it is a phone call rather than a plumber.
• If you have solar PV, put the unit on a timer to heat between 10am and 3pm. Exported solar is worth close to nothing now, so heating on your own generation is close to free.
• Check the thermostat is at 60 degrees and not higher. Every 10 degrees above that costs money and accelerates corrosion inside the tank.
• Insulate the first 2 metres of hot pipe leaving the tank. It is quick, it is simple, and standing losses in that section run 24 hours a day.
• Fix the dripping hot tap. Water dripping from the hot side is water you paid to heat, and it also keeps the system cycling.

None of that requires replacing a system that works. A hot water unit under 8 years old and running properly does not justify replacement on running cost alone, and if yours has years left in it Marc will tell you so.

What is worth doing now is deciding what you will replace it with, and checking that the position, the power and the drain suit that choice. The worst time to decide is 6am on a winter Sunday with cold water and 1 supplier answering the phone. Marc will look at the site, tell you what the existing unit has left in it, and text an arrival time before setting off.

Questions we get asked

References

• Australian Energy Regulator: the Default Market Offer
• Energy Made Easy (Australian Energy Regulator): compare retail energy plans
• energy.gov.au (Australian Government): hot water systems