Gas vs Electric Hot Water Systems: Which is Best for Perth Homes?

Gas and electric remain the two most common hot water fuel types in Perth homes.

You know how confusing the energy market feels right now?

We see it every day.

Homeowners are caught between rising gas tariffs and the push for electrification.

Since founding Hot Water System Perth in 2021, we have helped thousands of locals navigate this exact decision.

It is rarely a simple choice between one fuel source or another.

The “right” choice actually depends on your specific suburb, your roof space, and how your family uses water.

This guide breaks down the real costs and considerations for 2026.

The Quick Answer

Making a quick decision often comes down to upfront budget versus long-term savings.

Gas hot water generally costs less to run than an old-school electric storage tank.

It does require a gas connection and usually has a higher upfront installation cost than a standard electric tank.

Electric storage is the cheapest to buy and install.

The trade-off is that it has the highest running costs of any system.

Electric heat pumps are the game changer here.

These systems combine an electric connection with efficiency that rivals or beats gas.

They use about 70% less energy than standard electric tanks.

Let’s break down the details.

Running Cost Comparison

Running costs have shifted significantly in Western Australia over the last two years.

For a typical Perth family of four, the differences are stark.

Gas systems typically cost roughly one-third to run compared to standard electric storage.

This efficiency gap is the main reason many Perth homes historically chose gas.

However, electric heat pumps now match or beat gas running costs.

If you have solar panels and set your heat pump to run during the day (on a timer), your hot water is essentially free.

Upfront Cost Comparison

The initial price tag often dictates what homeowners choose during an emergency replacement.

Note: Heat pump prices often include the deduction of Federal STC rebates, but always check if the quote is “out of pocket” or pre-rebate.

Electric storage is cheapest to buy and install.

This makes it a common choice for rental properties or emergency swaps.

Gas systems cost more due to the copper pipework and gas fitting labor required.

Heat pumps have the highest upfront cost but the lowest running costs, creating a return on investment usually within 3 to 5 years.

Gas Hot Water: Detailed Look

Gas Storage Systems

These units consist of a storage tank (typically 130L to 170L) with a gas burner underneath that keeps the water hot.

Advantages:

• Lower running costs compared to standard electric storage.
• Proven reliability in WA conditions.
• High recovery rate, meaning you can reheat a tank faster than electric.
• No time-of-use constraints; it heats whenever you need it.

Disadvantages:

• Gas supply charge applies just for being connected to the grid.
• Placement issues are common as flues must meet strict clearance regulations.
• Heat loss occurs through the tank walls constantly.
• Lifespan limits exist, with steel tanks typically lasting 10 to 12 years.

Gas Continuous Flow (Instantaneous)

These small, wall-mounted boxes heat water on demand as it flows through the unit.

We install many of these because they free up valuable side-passage space.

Advantages:

• Unlimited hot water, so you never run out during back-to-back showers.
• Space-saving design since there is no bulky tank.
• Efficiency is high because you only burn gas when the tap is open.
• Durability is excellent, with copper heat exchangers often lasting 15 to 20 years.

Disadvantages:

• Minimum flow rates mean the unit might not ignite if you only open the hot tap a tiny bit.
• Water waste can happen while waiting for the cold water in the pipes to clear (the “lag”).
• Gas line upgrades are often needed because these units require a higher volume of gas instantly.
• Electrical power is required for the ignition and fan (no hot water during a blackout).

Gas Installation Requirements

Gas work is strictly regulated in Western Australia.

A compliant installation requires:

• An existing gas connection to the property.
• A correctly sized gas line to the hot water location (many old 15mm pipes are too small for modern instant systems).
• External power points for continuous flow units.
• Certification by a licensed gas fitter.

If you do not have gas connected, bringing a new line from the street can cost thousands.

In those cases, sticking with electric is almost always the smarter financial move.

Electric Hot Water: Detailed Look

Electric Storage Systems

This is the classic “kettle” design: a tank with an element inside that heats the water.

Advantages:

• Lowest upfront price, making it accessible for tight budgets.
• Silent operation with no fan or burner noise.
• Indoor or outdoor installation is possible depending on the model.
• Low maintenance compared to complex gas or heat pump units.

Disadvantages:

• Running costs are severe, often adding hundreds to quarterly bills.
• Carbon emissions are high if powered by the standard grid mix.
• Slow recovery means once the hot water is gone, you wait hours for more.

Off-Peak Electric Tariffs

Many Perth electric storage systems run on controlled load tariffs or time-of-use plans like Synergy’s Midday Saver.

Heating water during the “Super Off-Peak” window (9 am to 3 pm) costs roughly 8 cents per unit compared to the standard 30 cents.

This strategy reduces costs significantly.

However, you must ensure your tank is large enough (usually 315L+) to store enough hot water to last through the evening and morning.

Electric Heat Pumps

Heat pumps work like a reverse-cycle air conditioner.

They extract heat from the ambient air and transfer it into the water tank.

Advantages:

• Massive energy savings of up to 75% compared to electric storage.
• Solar compatibility is perfect; they act as a “thermal battery” for your excess solar power.
• Government rebates (STCs) help offset the higher purchase price.
• No gas bill, allowing you to potentially disconnect from the gas grid entirely.

Disadvantages:

• Compressor noise means you must position them away from bedroom windows (yours and your neighbor’s).
• Maintenance is higher, requiring filter cleaning to maintain airflow.
• Ambient temperature affects performance, though modern units handle Perth winters easily.
• Electrical load can be an issue on very old switchboards.

Perth-Specific Considerations

Water Quality and “Hard Water”

Perth water has a high mineral content, particularly calcium.

We see this cause significant issues in storage tanks.

Mineral buildup can eat through steel tanks if the sacrificial anode isn’t replaced every 3 to 4 years.

Continuous flow gas units are generally more resistant to hard water than storage tanks, but they still require occasional flushing.

Natural Gas Availability

Most established Perth suburbs have reliable natural gas infrastructure.

However, many new developments in the outer northern and southern corridors are being built as “all-electric” estates.

If gas is not available in your street, your choices are effectively limited to:

• Electric storage (high running cost).
• Electric heat pump (best long-term value).
• Bottled LPG (extremely expensive and requires manual bottle swaps).

The “Synergy Midday Saver” Factor

Western Australia has a unique energy challenge: too much solar power entering the grid during the day.

Synergy incentivizes using power between 9 am and 3 pm.

Shifting your water heating to this window is the single most effective way to lower your bills in Perth.

A timer on a simple electric tank or a smart heat pump can save you hundreds of dollars a year.

Making the Decision

Choose Gas If:

• You already have a gas connection and meter.
• Your home has limited electrical capacity or an old switchboard.
• You want a system that is “fit and forget” with minimal maintenance.
• You have high hot water demand (large family) and want continuous flow.
• Space is tight and you cannot fit a storage tank.

Choose Electric Storage If:

• Your upfront budget is very limited (under $1,500).
• You are installing for a rental property where tenant usage doesn’t impact your bills.
• You plan to move house soon and won’t see the payback from a heat pump.
• You have a massive solar system that generates far more power than you can use.

Choose Electric Heat Pump If:

• You want to “future-proof” your home against rising gas prices.
• You have solar panels (PV) and want to self-consume your power.
• You are aiming to disconnect from the gas grid to save on the daily supply charge.
• You plan to stay in the home for at least 3 years.
• You have a suitable outdoor location with good airflow and noise clearance.

Future Considerations

WA Gas Policy vs East Coast

You might have heard about Victoria and the ACT banning gas in new homes.

The WA Government has taken a different approach.

As of 2025, there is no ban on gas connections for new homes in Western Australia.

Gas remains a supported fuel source here, though the market trend is heavily shifting toward electrification due to solar uptake.

Solar Integration

The combination of rooftop solar and a heat pump is currently the gold standard for efficiency.

Using your own electrons to heat water bypasses the grid entirely.

Smart controllers (like the SolarEdge Hot Water Controller or specific heat pump timers) can automate this process.

Property Value and Appeal

Energy efficiency is becoming a key selling point in the Perth real estate market.

Buyers are increasingly wary of homes with high fixed costs.

A modern heat pump or a high-efficiency gas continuous flow unit is viewed as an asset, while an old, rusty electric tank is seen as a liability that needs replacing.

Real Cost Examples

Scenario 1: Gas to Gas Replacement

Situation: Existing gas storage unit is leaking; gas connection is already in place.

Verdict: Replacing like-for-like with gas is usually the most improved financial decision here unless you are planning to disconnect gas completely.

Scenario 2: Electric Storage Replacement

Situation: Old electric tank has failed; no gas connection exists at the property.

Verdict: The heat pump is the clear winner. The high running cost of standard electric storage destroys your savings within a few years.

Scenario 3: New Build

Situation: Building a new home in a suburb where gas is available.

Verdict: If you are installing solar panels on the new build, the heat pump offers the lowest lifetime cost by far.

Our Recommendation Process

We avoid pushing a specific technology just because it is trendy.

Our team looks at the practical realities of your home.

We assess five key factors before providing a quote:

1. Existing Infrastructure: Do you have gas pipes? Is your switchboard modern?
2. Usage Patterns: Do five people shower at 7 am, or is usage spread out?
3. Solar Capacity: Do you have excess solar power to dump into a water heater?
4. Budget: Are you focused on the install price or the next five years of bills?
5. Location: Is there a spot for a noisy compressor, or do you need a silent unit?

Based on these factors, we identify the system that solves your problem without creating new ones.

Contact us for a free assessment to determine whether gas or electric best suits your Perth home.