Heat pump vs gas hot water - Melbourne 2026 comparison

Gas continuous flow: $2,600-$3,400 fully installed. Heat pump (Reclaim, iStore, Sanden): $3,900-$5,500 fully installed after the Victorian Energy Upgrades rebate of up to $1,000. Heat pumps still cost $1,000-$2,000 more upfront - the question is whether the running-cost savings pay that back.

A heat pump uses electricity at roughly 1 unit in for every 3-4 units of heat out. On grid electricity alone, running cost is similar to gas continuous flow. With a solar system, running cost drops to near-zero during daytime heating cycles. Family of four with solar typically saves $400-$700 per year vs gas.

With solar: 2-4 years to recoup the extra install cost. Without solar: 5-8 years. Both units last 10-15 years, so both scenarios still save money long term.

Heat pumps need an outdoor location with airflow - similar footprint to a split-system AC condenser. They do make a soft fan noise. Gas continuous flow can go on a wall in a garage or side of house and is silent. For apartments and townhouses with tight external walls, gas is often still the practical choice.

Heat pumps produce about 1/4 the carbon emissions of a gas hot water unit on Victoria's current grid mix. On solar, that drops to near-zero. Gas will get progressively more expensive as Victoria transitions away from gas connections.

For most Melbourne homes with solar - heat pump. For homes without solar staying in the property 5+ years - heat pump. For rentals, apartments, or houses without space for an outdoor unit - gas continuous flow.