Gas, electric, solar or heat pump? Choosing a hot water system in 2026

Hot water is the second-biggest energy user in most Melbourne homes. The system you choose makes a real difference for the next 10–15 years.

Gas storage is the most common — relatively cheap to install (estimate $1,575–$3,675 supplied & fitted, VIC market average), reasonable running costs, lasts ~10 years.

Electric storage is the cheapest to install (estimate $1,250–$3,150) but the most expensive to run unless you have solar PV.

Heat pumps cost more upfront (estimate $3,150–$6,300, VIC average) but slash electricity use by 60–70% — eligible for VEU rebates that make them very competitive.

Solar hot water has the best long-term economics if your roof faces north and you've got 4+ people in the home.

Our honest take: for most Melbourne homeowners, a heat pump with the VEU rebate is the smart 2026 choice.