What is the cheapest option for hot water?

Which would be cheaper to run, an electrical or propane tankless water heater?

– David

Hi David,

That would depend on the energy prices in your area. Usually natural gas is the cheapest way to heat water, followed by electricity, with propane being the most expensive.

To find out, plug in the prices you pay for electricity and propane on your utility bill in the hot water energy cost calculator in our article on Choosing a Hot Water Heater to compare the fuel prices in your area.

The calculator is designed for tank type water heaters, and tankless models are 20% to 30% more fuel efficient, but it should still give you a comparison of which type of fuel is the least expensive for heating water in your area.

While electric tankless water heaters are available, they’re usually smaller “point of use” units designed to supply hot water to a single sink or shower. Most of the tankless water heaters used to heat water for an entire home run on gas, since it would take a very large electrical line and breaker to supply enough electricity for multiple hot water users.

Also, keep in mind that gas tankless water heaters requires a larger gas line, so you will probably have to replace the gas line you have now running to your tank type water heater.

Good luck with your project,

Below is a breakdown of the benefits of gas, solar and electric to help you assess which is the cheapest hot water heater to run based on your household hot water usage, budget and location.

So, what hot water system do we think is the cheapest to run? Well, the answer varies for different situations. It depends on your roof space (necessary for solar), energy tariffs and access to natural gas.

When it comes to the most economical hot water system to run, it’s all about the storage.

Basically, there are two types of hot water systems;

1. systems that store hot water for use,  and
2. instantaneous water heaters that heat water as it is needed.

Previously, the debate was in favour of taking advantage of off-peak electricity or gas prices and heating and storing water systems.  With the increase in fuel options (eg, gas and solar), and a decrease in off-peak savings, this argument is no longer as relevant now consumers have more choice available to them.

Are storage tanks or instantaneous hot water cheaper?

Tanks that heat and store hot water can be great for households whose hot water usage is relatively consistent.  If daily hot water usage increases however hot water can run out, taking time to heat back up. This is not very energy efficient.

Before installing a storage tank system, it is important to determine the hot water usage of your household.  Ask our hot water specialists to help you calculate your hot water usage and determine what size storage tank is required.

If your hot water usage is sporadic or very low, then an instantaneous hot water system may be cheaper simply because you’re not paying to keep the water hot inside a storage tank. Heating hot water

The methods available to heat hot water are as follows:

• Electric – traditional and in many homes, most electrical systems heat water overnight to take advantage of off-peak rates. They come in various sizes.
• Gas – gas hot water systems can come in instantaneous or storage systems. These are common in areas that have access to natural gas as running them off bottled LPG can be expensive.
• Solar – becoming more and more popular, solar is cheap to run because the sun is free. Many run in conjunction with other systems to ensure hot water is always available.
• Slow combustion wood – these systems heat hot water using the wood fire that you may use to keep your house warm. By using this method you are getting double use of one resource.
• Geothermal and Oil – not common here in Australia.

Solar hot water vs gas / electricity hot water

There are many great advantages to solar hot water, both environmentally and economically.  Some people think that if the sun isn’t shining that they won’t have hot water. This is not the case – read our article “How reliable is solar hot water“.

Back-up systems installed alongside a solar hot water system (eg, an instantaneous gas hot water system) to pick up any shortage that they may be.

Important is the placement of your solar panels.  If your solar panel is on your roof facing a northerly aspect then you will benefit from at least some free hot water every day all year round.

Although solar power may be the cheapest option to run day to day it can also be one of the more expensive systems to purchase. If you are looking to stay in your residence for more than five years you may find that a solar system will return the investment that you put into it.  Contact our experienced solar hot water installers and repair technicians for more information on the costs of installing solar hot water at your home.

NEED ADVICE?

For more information and advice on what hot water heater is the cheapest to run based on your household hot water usage requirements, contact our hot water specialists. We’re happy to help.

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