Gas vs electric hot water - which is right for Melbourne homes?

Gas storage and electric storage units cost roughly the same to install - $2,100-$2,900 fully fitted for most family-size systems. Gas continuous flow adds $400-$500 to that. If gas isn't already connected, add $1,500-$3,000 to run a new line - which usually kills gas as an option.

On grid electricity alone, a resistive electric tank is the most expensive to run - roughly $700-$1,100 per year for a family of four. Gas continuous flow lands around $500-$800 per year at current Melbourne tariffs. But with solar panels, a heat pump uses about 1/3 the electricity of a resistive tank and easily beats gas on running cost.

Bottom line: if you have solar, heat pump wins. If you don't, gas continuous flow is usually cheapest to run.

Gas storage units last 8-12 years. Gas continuous flow units 10-15 years. Electric storage 10-12 years. Heat pumps 10-15 years. Solar hot water 15-20 years on the panels, with the tank replaced at ~10.

Victoria offers up to $1,000 off a heat pump replacement through the Victorian Energy Upgrades program. There are no rebates for replacing gas with gas, or electric with electric. If rebates matter, heat pump is the winner.

For most Melbourne homes in 2026 with existing solar: heat pump. See the heat pump vs gas comparison for the deep dive.

For homes without solar and existing gas: gas continuous flow is still hard to beat on price and performance.

For rental properties or short-term ownership: like-for-like replacement is usually most cost-effective.